Michael M. Alunan is reminding me for the second time in his BusinessMirror column last Wednesday, with the title ‘Duterte reforms in coop sector key to poverty alleviation,’ how important the expansion of the cooperative movement would be in the Philippines to address the poverty in agriculture. I was appalled to learn from him that it takes three to 10 months to get registered with the Cooperative Development Authority. Looking at my investment in coffee growing in Camarines Norte and having convinced young farmers there to create a cooperative, I can just imagine how enthusiastic they will be to wait up to 10 months to get their initiative approved by the government. There is no doubt that the economic team of the Duterte administration should look into this together with the Department of Agriculture secretary.
What will the administration gain by actively supporting the creation of more cooperatives? If farmers are getting together, developing a social form of business that relies on a sense of community, it will lead to competitive farming, mechanization of farms, the application of the latest technologies, the focus on high-value crops, the exclusion of the middle-man and the creation of effective supply and value chains.
Allow me to remind you that over 20 million people in Germany are members of cooperatives; organizations that work according to the motto: “What one person cannot accomplish alone can be accomplished by many.” This enables them to establish enterprises they would not be able to finance alone.
The Philippines has a long history in creating cooperatives but only a few cooperatives are successful. What are the reasons early cooperatives failed?
- Incompetent management;
- Lack of proper understanding of the principles, practices and true aims and purposes of cooperatives;
- Improper use of credits by the borrower,s who, instead of using the money for production, spent it on nonessentials;
- Defective securities;
- Inadequate character and moral responsibility in handling the other fellows’ money; and
- Lack of adequate safeguards against unscrupulous officers who took advantage of their position to benefit themselves.
Heavy public and private investments into agriculture will allow the consolidation of farm land as farm consolidation is of great importance. The best models of Philippine cooperatives should be copied and cascaded. The adoption of advanced farming technologies can only be achieved by management systems that can focus on competitive land sizes, good research and development in coordination with existing research institutes in the country, supported by increased extension service to be provided by government.
If cooperatives are the key for the future of agriculture and having examples of very successful cooperatives, isn’t it high time that the government and the private sector got together to jointly find solutions to cascade the successful cooperatives throughout the country? There are many options for cooperatives, from farming to food production, from finance to marketing and sales. As mentioned above, cooperatives can be main players in creating and driving agri-food supply and value chains, always assuming that they are managed by people with experience and integrity.
Comments are welcome; e-mail me under Schumacher@mcasia.org.