Philippine co-ops insure themselves.

Here is a short article on Philippine Co-ops. I gather that most Philippine co-ops are rather small and as this article points out members sometimes run off with co-op funds! Co-ops are a good way to enable smaller producers to gain by combining operations and purchases that will give savings because of size. This is from Malaya.


Coops insure themselves
By AMADO P. MACASAET
There is a snake in every forest, so old folks say. It turns out that are a few scalawags in some cooperatives. It’s hard to run after them once they have absconded with the money.
According to Rep. Agapito "Butz" Aquino, replacing an absconding coop member is simply not enough. Those left behind need continuing education, a process going on for many decades. But the record of success is less than desirable.
Two weeks ago, the Federation of Cooperatives and the National Cooperative Movement headed by Aquino gathered to galvanize what they have always thought of as the solution to thievery in some cooperatives.
Sixteen large cooperatives with a combined membership of close to one million signed up to contribute to a fund. They used the word "contribute" to escape from the jurisdiction and control of the Insurance Commission.
But the contributions are actually insurance premiums remarkably similar to what banks pay the Philippine Deposit Insurance Corp., to protect its members.
According to Aquino, the growth of cooperatives specially in the small rural communities is stymied by scalawags who run off with the members money. They are hardly punished; worse, seldom do they return the stolen money.
With an insurance cover, members need not be afraid. The Federation of Cooperatives collects the contributions or premiums, puts them in safe investment instruments and assures the paying coops they will get their money in the event that one of their members runs off with their money.
Providing insurance cover to cooperatives is a messy job. To begin with, there are just too many of them, estimated at close to 60,000 coops with an estimated three million members.
Funds of cooperatives put together is estimated to be more than P6 billion. But the bulk of it belongs to bigger ones. The smaller ones are hardly growing.
Butz Aquino points out that one of the biggest problems is continuing education. The culture of the Filipino in working as a brigade for each other’s benefit is hard to instill.
In this, the Bureau of Cooperatives is focused on almost one single objective. It wants to organize a farm cooperative for land reform beneficiaries. The idea is to put back the commercial sizes of divided land to bring back the economies of scale.
Aquino says the prospective members in practically all cooperatives invariably ask what they can get, not what they can do so that in the end they can get more.
There are many different types. Members of credit cooperatives lend money to one another at interest rates which are close to commercial rates.
Marketing cooperatives sell almost exclusively to its members with hefty discounts.
At the end of every year, these cooperatives find themselves with some profits which in the language of the members is called surplus. The money is either used to make the cooperatives expand or is distributed to members as their patronage dividends.
Borrowers from credit cooperatives are not required to put up collateral. The security is the guarantee of another member.
While there is a very large percentage of failures among many types of cooperatives, there are quite a number that have become giants with hundreds of millions in operating funds.
One is Lipa Marketing Coop in Lipa City. It started out as a marketing coop that has expanded into the likes of a commercial establishment that sells everything that its members need.