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OVERVIEW

In September - October 2012 and February - March 2013, member cooperatives of MASS SPECC came together for their bi-annual gathering now known as “Ownership Meeting.” This 2-day event, held in six (6) regions of Mindanao, affords owners of the federation the opportunity to discuss matters of important concern to them individually and as a group. Below are the issues and the recommendations that came out of this latest round of meetings.

I. PRODUCTS / SERVICES

The two issues related to the federation’s products and services centred on education and the emerging preoccupation of cooperatives in agriculture and agricultural development. A. Education RA9520 now requires coop officers to attend trainings to improve their individual performance as well as the performance of the cooperative. To transform this legal requirement into real opportunity, cooperatives should take advantage of the required training, not just for compliance, but as investment in capacity building. At the same time, MASS SPECC through the Institute of Cooperative Studies (ICS) should mainstream cooperative education by developing and offering leadership and management programs.

RECOMMENDATIONS:

1. For CDA to revisit the training requirements and take into account the capacity of cooperatives and the capability of coop officers. 2. For ICS to partner with colleges and universities and seek recognition of its courses by the government. 3. For Coop NATCCO Partylist to allocate at least 10% of its PDAF for training and consultancy. B. Agricultural Development Cooperatives should establish more purposeful involvement in agriculture and contribute to agricultural development. There are already cooperatives that are directly involved in agriculture and some have ventured into organic production. But they need support from government. MASS SPECC can do its part in advocacy, marketing, external linkages, and investment.

RECOMMENDATIONS:

1. Through the Department of Agriculture and the Department of Agrarian Reform, government can support cooperatives venturing into organic agriculture in terms of certification, technology, education, and financing. It can help lower the cost of agricultural inputs through some form of subsidy. 2. Through the Department of Agriculture and the Department of Agrarian Reform, government can support agro industry-based cooperative federations in terms of technology, marketing and investment.

3. Government can also assist in opening up market opportunities, including promoting joint venture between cooperatives and corporations. 4. MASS SPECC should promote involvement of cooperatives in agriculture, particularly organic agriculture, by mobilizing financing and investment and developing linkages within and outside the cooperative sector. 5. MASS SPECC can also assist cooperatives in marketing contracts and joint venture agreements by ensuring fair trade practices. 6. MASS SPECC can develop support structures that can attend to the specific needs of agricultural cooperatives through such interventions as organizing, training and investment.

II. SUPPORT SYSTEM

As a federation, MASS SPECC can promote the development of its member cooperatives through effective support systems. Already, cooperatives are growing in resources and, in keeping with the cooperative tradition of self-reliance, such support systems have to be built from within. A. General Reserve Fund (GRF) Cooperatives set aside at least 10% of net surplus for the reserve fund, which “shall be used for the stability of the cooperative and to meet net losses in its operations” (Chapter X, Article 86 (a) of RA9520). This fund is an internal resource designed to ensure the stability of the cooperative. It can be raised to a level of a support system at the federation level, to further strengthen individual cooperatives and the cooperative system as a whole.

RECOMMENDATIONS:

1. Cooperatives should set aside a portion of their accumulated GRF to be pooled into a second-tier fund to be managed by MASS SPECC, for the purpose specifically of rein forcing and strengthening the internal reserves of individual cooperatives. 2. MASS SPECC should spell out clear guidelines for the mobilization, management and use of this second-tier fund. Such guidelines should satisfy the requirements of the law the need boldas well C as OO PER A T I Vof E individual D E V E L O P M cooperatives ENT CENTER for stability.

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B. Stabilization Fund (SF) The other support system that has been tried and tested by successful cooperative movements around the world is the Stabilization Fund. The SF is a second- or third-tier fund designed to protect cooperatives from systemic risk. Like other business enterprises, cooperatives are subject to the instability and vagaries of open market systems. By contributing a portion of their income to the SF, they can strengthen their capability to protect themselves individually and as a group against unforeseen but real threats in the market environment.

RECOMMENDATIONS:

1. MASS SPECC should establish the Stabilization Fund based on successful models, with clear guidelines, mechanisms and support structures. It should set aside part of its income every year as contribution to the SF. 2. Member Cooperatives of MASS SPECC should agree on an annual contribution to the SF, the basis and amount to be determined after careful study. C. Disaster Risk Reduction Management (DRRM) Recent natural calamities that have visited Mindanao affected many cooperatives, particularly the lives of thousands of members. There is now a need to prepare for these catastrophic events. Cooperatives have responded generously to those events after the call for help but it takes time to mobilize such help. Cooperatives would do better if they set aside funds for this purpose and pool these funds at the federation level. Such funds can be utilized immediately and can respond to the call for help in a timely manner.

RECOMMENDATIONS:

1. Cooperatives should set aside a portion of their Community Development Fund (CDF) as contribution to a Disaster Risk Reduction Management (DRRM) fund to be managed by MASS SPECC. The fund will be used for information campaign towards disaster preparedness and mitigation, and for relief and recovery efforts in response to disaster. In both instances, MASS-SPECC should work directly with cooperatives, local community organizations and the local government. D. Cooperative Education & Training Fund (CETF) Cooperatives are mandated by law to set aside “an amount which shall not be more than ten per centum (10%) of net surplus... The fund shall provide for the training, development, and such other cooperative activities geared towards the growth of the cooperative movement.” Note that the 5% that is remitted to the federation or union is really a fund to grow the “cooperative movement.” MASS SPECC uses the CETF remitted to it to fund its development activities – namely: member development

like ownership meetings, Regional Steering Committee activities and annual general assembly, and providing consultancy services and developing training programs. By contributing CETF, cooperatives not only benefit from these development activities but contribute to the development of other cooperatives as well.

RECOMMENDATIONS:

1. Member-owners of MASS SPECC should contribute the CETF due to the federation. MASS SPECC in turn should account for these contributions and inform its member-owners accordingly.

III. MOVEMENT BUILDING

After over hundred years of development, cooperatives in the Philippines have remained underdeveloped: According to the latest CDA data (Dec 2011), 92% of registered cooperatives are micro and small. If we are to strengthen the cooperative movement in the country, we have to build our base. Merger and consolidation are key to this process. At the national level, we need a unifying center that can provide leadership and direction for all cooperatives. Efforts at unification and integration from the local to the national level should be premised on building cooperatives as a movement. A. Merger/Consolidation of Primary Cooperatives MASS SPECC has started this advocacy among primary cooperatives. CDA has come up with guidelines for merger and consolidation. Some cooperatives have started discussions towards this end. The time has come to bring cooperative development in the country to the next level.

RECOMMENDATIONS:

1. MASS SPECC should actively promote merger and consolidation among primary cooperatives and facilitate this process at the local level. MASS-SPECC should involve CDA in this advocacy, especially in the implementation stage where government can provide effective legal support. B. Merger/Consolidation Between MASS SPECC and NATCCO Discussion between MASS SPECC and NATCCO has been on-going since their respective general assemblies passed a resolution to this effect. MASS SPECC consulted its member cooperatives on this matter during its Ownership Meetings. The majority agreed that merger or consolidation should come at the end of the process of functional collaboration, partnership or complementation of services. From the “movement building” perspective, this process should be inclusive and should lead to the COOPERATIVE DEVELOPMENT CENTER realization bold of a strong cooperative movement in the country.

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RECOMMENDATIONS:

1. The MASS SPECC General Assembly should amend its standing resolution to reflect clearly the process of functional collaboration and complementation with NATCCO as the way to merger or consolidation. 2. MASS SPECC should pursue merger and consolidation to serve the greater purpose of realizing a strong cooperative movement in the country and should work with other federations and unions to this end.

B. Branching Ethics Branching has become the norm especially for big cooperatives in recent years. This development has been “self � driven and has not contributed to the growth of cooperatives as a system. MASS SPECC has deemed it important to regulate this development. As a start, it conducted a series of consultations with membercooperatives to develop ethical standards that will guide their market behaviour in the interest of all.

IV. SELF-REGULATION/REGULATION

RECOMMENDATIONS:

Organizations, whether business or not, need regulation to mature. If such regulation is not provided effectively by government, voluntary groups have opted for self-regulation. This has been the case with successful cooperative movements around the world. At the ownership meetings, the following issues were taken up in relation to self-regulation. A. Interest Rates The CDA has issued Memorandum Circular 2012-05 implementing the Truth and Lending Act as applied to cooperatives. Cooperatives owe it to their member-owners to be transparent in their dealings and transactions. And they can best do this when they stick to the Cooperative Values and Principles. At the same time, cooperatives have to be market-based and competitive in their interest rates, for both deposits and loans.

RECOMMENDATIONS:

1. MASS SPECC should work towards standard rates of interest, for both deposits and loans. Such rates should serve as benchmark or reference for cooperatives. These rates should be reflective of market conditions and consistent with the values and principles adhered to by cooperatives as member-based enterprises. 2. MASS SPECC should consider representing its member-cooperatives in negotiations with banks or lending institutions to leverage their number and to lower the cost of external borrowings.

1. The MASS SPECC General Assembly should adopt the proposed Branching Ethics developed by the federation. 2. MASS SPECC should secure legal support from CDA for the branching ethics and other initiatives at selfregulation in the future.

V. MEMBER ENGAGEMENT

Finally, MASS SPECC has improved its democratic governance system by engaging its member-cooperatives in regular dialogue and consultation. This is now institutionalized in the bi-annual Ownership Meeting (OM) and Regional Steering Committee (RSC). Much more needs to be done to deepen member engagement through these organizational mechanisms. In particular, the RSC needs to be equipped with more authority and responsibility to oversee member-cooperative activities at the provincial and regional levels. The RSC can play a very important role in ensuring that MASS SPECC as a federation remains organically connected to its membership.

RECOMMENDATIONS:

1. MASS SPECC should include the Regional Steering Committee (RSC) in the governance structure of the federation. 2. MASS SPECC should define clearly the roles and functions of the RSC as well as the rules and regulations that can make the RSC an effective mechanism for7 member engagement.

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Ownership Meeting 2012