St.

Paul University Philippines

Tuguegarao City Cagayan 3500

“BUSINESS PLAN TOWARDS DEVELOPMENT OF MULTI-PURPOSE COOPERATIVE

OF PAGBANGKERUAN ALCALA, CAGAYAN”

A Business Plan presented to the School of Accountancy and

Business

In partial fulfillment of the requirements for the degree of

Bachelor of Science in Accountancy

Business Plan

Adviser

Dr. Giged Battung, CPA

By:

Mark Noel L. Rivera

Danica Myn L. Capili

Maxine Steffanie T. Toledo

I. Introduction

Agriculture really plays a crucial role in the overall

objective and effort to achieve economic progress. Many of

today's developed economies first strove to strengthen their

agricultural sectors. They still provide financial support to

their farmers, even scientists and researchers who aim to enhance

further their agricultural production.

In every country in the world agriculture is a very

important industry it connotes self sufficiency and economic

stability. Philippines is one of the identified countries that

had agriculture as its main industry, but the irony behind it is

the Philippines is importing agricultural products from Vietnam,

Malaysia, Thailand and Laos just to sustain the demand of its

population. According to the PhilMech, the inability of the

Philippines to be self sufficient is because the Filipino farmers

are not capable of making their production at its expected level,

rice production for example is experiencing a loss of 16% of

harvest because of lack of machinery in the country’s farmland.

The PhilMech added that if only we can make the loss percentage

to single digits Philippines will not import rice anymore and

export rice instead.

Moreover agricultural sector provide raw material for

industries like manufacturing entities and merchandising

entities. It also contribute to economic progress, earlier it is

stated that the Philippines is importing rice from other

countries but if the agricultural industry progresses, the

country can export agricultural product instead of importing

them, thus, making it a good source of revenue for the

government. The agricultural sector also provides millions of job

it employs most of the people in the rural areas of the country

and lastly a progressive agricultural sector can support other

sectors of the economy like manufacturing, trade and services by

supplying the needed raw materials. This is why when a country

dream of industrialization, it needs to expand and improve its

agricultural production. But expanding production alone is not

enough to develop the agricultural sector. We have to remember

that it makes up the substantial part of the country's population

- people who are potential customers of other products and

services. Alongside efforts to expand production, it is necessary

to improve people's condition in order to strengthen their

capacity as consumers. Through this, a more vibrant exchange

between productive sectors will take place and progress in both

urban and rural areas is expected to follow.

But unfortunately, the lifeblood of the Philippine

agricultural sector the Filipino farmers are experiencing many

problems that cause its inefficiency. One of them is the high

interest rates of loans that are acquired through local

investment agents, according to our inquiry farmers in region are

levied with 5-7% of interest monthly or 60-84% annually which is

beyond the normal interest rates of banks. They also experience

low farm output price and high cost of farm inputs. With all this

problems that the Filipino farmers are faced it results to

poverty of farmers and hinder the flourish of Philippine

agricultural sector

With this, the proponents are proposing a multipurpose

cooperative specifically catering the needs of the farmers, the

cooperative will offer agricultural loans to its members that has

far lower interest than the prevailing rate, the cooperative will

also sell farm inputs to the members with minimal mark up. And

eventually the cooperative will buy the harvest of the members

with a fair price.

The cooperative will also look into product and services

that the people of the community can offer for additional and

alternative income. The proponents selected Pagbangkeruan,

Alcala, Cagayan as its pilot barangay because of the expressed

approval of the resident to put a multipurpose cooperative in the

place. Almost all the community population is involved in farming

directly or indirectly and portrays the identified problem that

we ought to target.
 The proponents will establish the multipurpose cooperative

with the help of the local leaders we will conduct forums and

information drive in the community in the initial stages of the

organization and will train its residents on how to handle the

their cooperative. The proponents plan to supervise the

cooperative until the preparation of training and educating the

residents about how the cooperative is done.

The proponents are expecting a cooperative that will cater

to the needs of the people of the barangay and establish a sense

of cooperativism and unity among the resident of the said

barangay together with establishing a center of product

development and financial stability among the target individuals.

A cooperative is a voluntary organization of people who have

agreed to pool their resources together in order to undertake an

economic enterprise for the purpose of meeting their common

needs, and which they themselves democratically manage and

control, and share the economic benefits on the basis of

participation and patronage.  Correspondingly, cooperatives are

also business enterprises which the members themselves own,

manage and control in accordance with accepted democratic

principles. They are neither organized primarily for profit nor

to serve other people but to serve the needs of their own

members.
 The business or enterprise of the cooperatives may be

classified according to the involved activities. These may be: a

credit union cooperative which promotes thrift among its members

and creates funds in order to grant loans for productive; a

consumer cooperative wherein the primary purpose is to procure

and distribute commodities to members and non-members; a

producer cooperative which undertakes joint production whether

agricultural or industrial; a marketing cooperative which engages

in the supply of production inputs to members, and markets their

products; a service cooperative that is engage in medical and

dental care, hospitalization, transportation, insurance, housing,

labor, electric lights and power, communication and other

services, and, other services; or, a multi-purpose cooperative

which is a combination of two or more of the business activities

of these different types of cooperatives, e.g. credit lending and

production, production and provision of goods and services, etc.

The primary objective of every Cooperative is to provide

goods and services to its members and thus enable them to attain

increased income and savings, investments, productivity and

purchasing power and promote among them equitable distribution of

net surplus through maximum utilization of economies of scale,

cost-sharing and risk-sharing without however, conducting the

affairs of the cooperative for eleemosynary or charitable

purposes. Meaning, through cooperatives, you can look for other

sources of loans at low interest rates instead of borrowing from

informal lenders or usurers. The cooperative can also be a

mechanism of marketing your produce.

In our adapted community—the barangay of Pagbangkeruan

Alcala, Cagayan, the primary occupation of the resident is in

agriculture. Their prime resources are corn and tobacco. They

have a huge portion of land for agriculture however the farmers

do not have sufficient capacity to support the financial and

other need of their cultivation. With this, we, the researchers,

have come up with the idea of proposing a Multi-purpose

Cooperative for the people of the said barangay.

II. Need and Resource Analysis

Pagbangkeruan is a barangay in Alcala, Cagayan with a

population of 236 family heads in which 30% is a farmer. Their

main source of living is farming. Hence, enormous region in the

place is a farmland with an area of 70 hectares. Their prime

produces are corn and tobacco which they harvest twice a year

with a capacity of 80%. The people of Pagbangkeruan lack

financial assistance, thus, farmers tend to borrow cash and

inputs from traders nearby the place with monthly interest

ranging from 5-7%.

 The common problems in the community are lack of capital for

farming, high cost of borrowing and low prices of farm outputs by

the local traders. As we have observed, the resident of

Pagbangkeruan has deficiency in financial aid, hence, we propose

a Multi-purpose Cooperative where people of Pagbangkeruan,

especially the farmers, can ask financial assistance with better

interest rate and wherein they can also get critical inputs in

farming. The said Cooperative also offers different services

which help the inhabitant of the place, especially the farmers,

maximize the use of their resources and become more productive.

III. Marketing Plan

The proponents will establish a Multipurpose cooperative for

the people of Pagbangkeruan, Alcala, Cagayan. The cooperative

will offer agricultural loans to the members, sell farm inputs

with a relatively low mark up as compared to its commercial

counterpart, buy farm outputs of the farmers and accept short

term investment from the members that will be given fair

interest. The proponents will uplift the quality of life of the

farmers that tend to stagnate and dwindle because of high

interest rates and costly farm inputs.

 The proponents will directly compete with local farm input

suppliers, local lenders, and corn and rice traders in the

locality. The proponents' primary advantage to the expected

competitors are lower prices of farm inputs, lower interest rates

to loans granted, higher price will be offered to farm outputs,

and eventually the spirit of investing and helping build your

community by being a member and part of the cooperative.

Market Study

Target Market

Farmers need resources to grow crops. Farmers need natural

resources, such as land, air, nutrients, water and sunlight.

Farmers themselves need energy so they can work the land. Farmers

need human-made tools to work the land. Some resources can be

bought at the local market. So farmers also need money to buy

resources that are not available on their land. To acquire these

resources farmers need money. Thus, the proponents target market

is primarily farmers and persons who need financial aid and

members of the cooperative of Brgy. Pagbangkeruan, Alcala. Our

target individuals will eventually join the cooperative to reap

the benefits that they can derive form it like lower borrowing

cost, higher offered price to farm outputs and eventually

members’ dividend from the institution.

Market Area

The researchers chose Barangay Pagbangkeruan, Alcala as

their adopted community in which they will develop and organize a

cooperative. The researchers decided to put up the business at

this area because of their need for financial aid, especially

that their prime source of living is farming.

Mode of the Distribution

     For starters, the proponents’ plan is to have a pre-

membership seminar to encourage people of Pagbangkeruan to join

the cooperative. Encourage all the farmers of the barangay to be

members of the cooperative. Then later on, to market the

cooperative to other neighboring barangays to avail the services

offered by the cooperative by giving away flyers and brochures,

and also do seminars/talks. The products and services of the

cooperative will only be availed and processed from the main

office of the cooperative and only members of the cooperative can

avail of the products and services to ensure that the members are

the ones directly benefiting from the cooperative.

Study of Competition

4P’s of Marketing
Price

The proponents will levy a 3%-4.5% monthly interest to the

loaned borrowed by the members, in case of the farm inputs we

will maintain a markup of 5% based on cost and farm outputs sold

to the cooperative will only be lower by 20 cents than the

contracted price to the national food authority.

People

The proponents plan to establish the cooperative initially

for the people of Pagbangkeruan, Alcala, particularly for the

farmers. This is in response with the Barangay Captain's request

to form the cooperative exclusively for Pagbangkeruan resident.

Promotion

The proponents plan to advertise the cooperative by

conducting seminars about the necessary information about

cooperatives, its benefits and the services that the cooperative

will offer. We will also distribute leaflets and brochures to the

target individuals in the barangay to encourage the target

individuals to join the cooperative.

Place
 The proponents’ plan is to establish the cooperative at

Pagbangkeruan, Alcala, Cagayan. Specifically near the commercial

buildings and market place as to take advantage of the proximity

of the barangay to the marketplace.

IV. Management Plan

Vision

Pagbangkeruan Mutipurpose cooperative will become a

nationally renowned cooperative, empowering people and boosting

community potential by producing financially capable individual

in a sustainable industry, creating quality jobs and products

that will be marketed nationally and internationally.

Mission

Pagbangkeruan Multipurpose cooperative is an organization

that stimulates economic stability, cooperativism and camaraderie

among its members. It Provides financial assistance, quality

sustainable products and creates a sustainable community for the

residents of Pagbangkeruan, Alcala Cagayan thus promoting equal

opportunity to contribute to nation building and national

economic development.

Type of Organization
The entity will be operating as a cooperative and will be

registered in the Cooperative development authority.

Below is the organizational chart of the business:

Cooperatives Organizational Structure

Board of
Trustee’s

Auditor

Manager Treasurer Secretary

Cashier Bookkeeper

The following are the steps in organizing a cooperative:

FIRST. Get organized. You must have at least 15 members to do

that.

At once determine the common problems you would want solved and

the basic needs you would want provided for through a

cooperative. You may want to include increasing your production,

marketing your produce, credit assistance, power generation,

banking or insurance and other similar needs. Determining your

problems and needs will also help you classify the kind of

cooperative you will be organizing. Even before a cooperative is

set up, a dedicated core group people who will do all the

organizational and paper works is a must. From this core group,

working communities may be formed to set things moving. These

committees may include membership, finance, executive,

secretariat to name a few.

SECOND. Prepare a general statement called an economic survey

This statement will help you measure your cooperative’s chances

of success.

THIRD. Draft the cooperative’s by-laws.

The by-laws contain the rules and regulations governing the

operation of the cooperative.

FOURTH. Draft the articles of cooperation.

Mandatory contents of the articles of cooperation are the

following: (a) the name of the cooperative, which must include

the word “cooperative”; (b) the purpose or purposes and scope of

business of the cooperative; (c) the term of existence of

cooperative;(d) the area of operation and the postal addresses of

the registrant-cooperators; (e) the common bond of

membership; (f) the names of the directors who shall manage the

cooperative; (g) the amount of share capital; (h) the names and

residences of its contributors, and (i)the type of cooperative,

whether it is primary, secondary or tertiary.

FIFTH. Secure bond for accountable officer(s).

The accountable officers normally are the Treasurer and the

Manager. The amount of the bond is to be decided upon by the

Board of Directors, based on the initial net worth of the

cooperative which includes the paid-up capital, membership fees

and other assets of the cooperative at the time of registration.

SIXTH. Register your cooperative with the Cooperative Development

Authority CDA.

Submit the following required documents:

 Four (4) copies each of the Economic Survey, Articles of

Cooperation and By-Laws duly notarized;
 Bonds of accountable officer(s) (any directors, officers and
employees) handling funds, securities, of properties in
behalf of the cooperative;
 Sworn statement of the treasurer duly notarized showing that
at least 25% of the authorized share capital has been
subscribed, and at least 25% of the total subscription has
been paid. The paid-up capital must not be less than Php
2,000.00.

It must be noted that no member may own more than 20% of the

subscribed share capital and each share must not be less than

Php 1.00.
 After complying with all the requirements set by Cooperative

development authority the initial members of the cooperative will

elect the board of trustees and after the election of the board

of trustees the screening for the key officers will be conducted.

The following are the organizational chart of the cooperative and

below the latter is the qualifications of the officers.

Qualifications for membership

1. Should be a certified resident of Brgy. Pagbangkeruan,

Alcala Cagayan.

2. of legal age and without prior credit negligence or

misdemeanor.

3. Has a farm land or a tenant to farm land.

4. Payment of necessary membership fee.

Job Description and Qualifications

In the initial formation of the Cooperative the Members of

the Board of Directors and the Auditor will not be coming from

the residents of the community but from expert individuals that

will act as a transitional trustee’s but eventually after the

formal organization of the cooperative the members will elect

board of trustee’s coming from the members of the cooperative and

they will be trained for future take over.

As to the other Positions the proponents will be training the

residents of the community to hold the positions.

The following is the Positions and Job description that the

members will be occupying.

1. Manager- he/ she must be well versed on farm inputs, has

basic knowledge of inventory system and credit management and

should be a bona fide resident of the barangay.

2. Treasurer- he/ she will be the responsible for the

procurement of farm inputs to the dealers, loan releases,

collection and disbursement of the necessary expenses of the

cooperative.

3. Secretary- he/ she will be responsible for keeping records,

minutes of the meeting of B.O.D., Minutes of Members Assembly and

accumulating facts about the operations for the purpose of future

presentation to the member’s.

4. Cashier- he/she will be the money custodian; he/ she will

also be responsible for depositing the collections to the bank.

5. Bookkeeper- the bookkeeper will be the one keeping records

about sales, inventory and other operational data’s in the field

and will eventually report it the secretary.

Pre-operating activities

The proponents plan to conduct an economic survey first in the

area to study the existing market and their potential resources.

After the economic survey the proponents will conduct information

drives and seminars in the community for the information

dissemination purposes and to know the perception of the

residents to the project. After orienting them of the necessary

information the proponents will start to formally organize the

organization doing the 6 steps given by the Cooperative

Development Authority. After formally organizing and registering

the cooperative the proponents will start to talk to product

suppliers, banks and other pertinent organization that will help

the cooperative before starting operation. And after all this

steps the proponents will have the cooperative start operation.

Pre-Operating Time Table

Estimated
Activity Week
Cost
1 2 3 4 5 6 7 8 9 10 11 12
Preparation of
5,000
Business Plan
Series of Seminars
10,000
and Consultations
Phase 1-Training of

Staffs and Election

20,000
of Board of

Trustee’s
Phase 2-Final Public

Consultation and

Operational

Assessment,

Presentation and

training on 10,000

marketing,

operation, and

financial management

of the adopted

community
Formal Organization
10,000
and Registration
Formalizing the

Suppliers’ and 6,000

Creditors’ Agreement
Accumulation of

Initial funds and

12,000
Supplier Contract

Preparation
Operation
5,000
Simulations
Start of Operation 78,000
 Appendices

Appendix 1

Interview

          We made an interview with the Brgy. Captain of

Pagbangkeruan Alcala--our adapted community, and we obtained the
following data:

 Population of Brgy. Pagbangkeruan  Alcala, Cagayan

o  236 family heads
 Area of farmland in the place
o  70 hectares
 Numbers of farmers
o  30% of family heads
 Prime produce
o  Corn during wet and dry season
o  Tobacco during dry season
 Number of harvest in a year
o  Twice a year
 Capacity of harvest
o  80%
 Source of farmers’ financial needs and inputs
o  There are traders nearby the place and here is where
the farmers of Pagbangkeruan ask for financial
assistance, they are making a loan with monthly
interest ranging from 5-7%. Furthermore, the inputs of
the farmers of Pagbangkeruan are also taken as credit
from the said traders.

The Brgy. Captain is willing to establish the proposed Multi-

purpose Cooperative as long as it is only intended for the people
of Pagbangkeruan.

Questionnaire
 St. Paul University Philippines
Tuguegarao City, Cagayan 3500

Name (optional) ____________________________ Gender___________

Occupation ________________________________ Age _____________

Status ____________________________________

Directions: please read the question carefully. Check the answers

that correspond to your best answer for the following queries.

Cooperative is…..

1.) If a farmer cooperative will be organized in your

barangay, will you be willing to be a member of a
cooperative?
Very much
Much
Not so much
Not at all

What are the products and services you would like to have
in the proposed cooperative to have?
Check as many as you want
a. Financial Assistance/Short Term Loans
b. Selling Farm Inputs
c. Buying Your Farm Yield
d. Product Development/Livelihood Programs
e. Selling General Merchandise
Others, please specify ________________
2.) Would you like to avail a short-term loan in the
proposed cooperative?
a. very much
much
not so much
not at all

If yes, what is the highest rate of interest per month that

you can handle as compared to local loan usurers?

3%
4%
5%
3.) Would you like to buy farm inputs from cooperative?
a. Yes
b. No
If yes, how often will you buy?
c. Everytime its needed
d. When we cannot go to the city
e. When no place else has the product
4.) Will you sell your farm outputs to the cooperative?
a. Yes
b. No
5.) Where do you want the cooperative building be situated?
a. Near the barangay hall
b. Near the residential area
c. Exclusive lot
Others, please specify _________________________
6.) Are you willing to attend seminars and consultations
regarding the cooperative?
a. Yes
b. No
7.) What kind of promotional strategy do you want for the
cooperative?
Check as many as you want.
a. Leaflets
b. Brochures
c. radio ad
8.) how much can be your maximum contribution to the
cooperative?
1,000
500
300
250