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Chapter 4
Project Formulation, Preparation, Feasibility
Analysis and
Project Design
Objectives of this Chapter:
1. Know the major steps in institutional planning.
2. Enumerate the important procedures in designing of programs/projects and the
organization structure.
3. Understand the major parts of the proposed program/project.
4. Prepare project proposal.
Introduction
Our
main objective now is to deal with the program and
project proposal preparation.
After studying the previous chapter, you are now very much
familiar with the meaning of programs and projects.
The scope of programs and projects could be national, regional, provincial, municipal,
or just local. Nowadays we have programs which are global in scope.
How do we get started in the program/project preparation?
Before we go to this let’s have a look at a broader spectrum where program
preparation/design is only a part, and this is institutional planning. Under this there are 13
major steps categorized under three captions:
I.
Thinking and Self-Appraisal
1.
2.
3.
4.
II.
Know Yourself
Know Your People
Know Your Resources
Know Your Environment
Evolving a Conceptual Framework
5.
6.
7.
8.
Form General Ideas from Self-Appraisal
Design Conceptual Framework
Consult Constituents on Conceptual Framework
Work Towards Board Approval of Conceptual Framework
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III.
Designing Programs/Projects and Organization Structure
9. Assess Existing Programs/Projects Based on Conceptual Framework
10. Decide Which Programs/Projects are to be Improved, Phased Out
and/or Created
11. Design Programs/Projects and New Organization Structure
12. Work Towards Obtaining Board Approval of Programs/Projects and New
Organization Structure
13. Initiate Final Review for Implementation
Now that you have an overview of the different principal components of institutional
planning, let’s concentrate on the third major category, designing of programs/projects and
the organization structure.
Consider the following important procedures:
1. Assess Existing Programs/Projects Based on Conceptual Framework

Program/Project Assessment Based on Conceptual Framework
This includes the organization of study groups, establishing a linkage and
monitoring mechanism, scheduling of activities and time frame, and program/project
assessment.
1. Organization of Study Groups
The volume and nature of work to be done must be determined so
that the number of members and the expertise needed will be known.
2. Establishing a Linkage and Monitoring Mechanism
The different persons, offices and agencies must be identified inside
and outside the institution so that time and cost may be determined.
3. Scheduling of Activities and Timeframe
Schedule of activities and timeframe must be prepared and
approved by all members concerned and management for the smooth flow
of work.
4. Program/Project Assessment
The following are areas of concerns which should be answered if
you want to avoid bottlenecks in the future.
a. Problem Area
What are the specific problem areas that the program/project is
presently encountering?
b. Pro-Factor
What does the program/project have in terms of men, money
and materials?
c.
Con Factor
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What constraints are present or what does the program/project
need, in addition to what it already has if any?
d. Mission
What mission should the program/project address itself?
e. Strategic Action
What strategic actions are to be recommended so that the
problem areas identified can be minimized if not completely solved, and
the mission recommended attained?
2. Decide Which Programs/Projects are to be Improved,
Phased Out and/or Created
The decision here will depend on the related policy statements in the conceptual
framework.
3. Design Programs/Projects and New Organization Structure

Program/Project Proposal Format
The format for a program/project design may vary according to the needs and
perceptions of the individual groups. However, it is recommended that a uniform format
be used for purposes of comparative analysis, evaluation and monitoring.
Six major parts of the proposed Program/Project:
1. Program/Project Summary
This part should contain the following:
a. The general objective of the program/project accompanied by a statement of
the general idea of the proposal.
b. The general thrusts of the proposal.
c. The relationships that the program/project will forge from within and without
the organization; stressing the general benefits of such linkages.
d. The outputs of the program/project.
e. Organization and management of the program/project.
f. Implications for development in the immediate environment, region and the
country as a whole.
g. The legal basis/bases of the proposal if any and its relevance to regional
and national policies.
h. Total financial requirement and a proposal on how this is to be allocated
among the program/project major activities in percentages.
2. Rationale Statements
For this part some aspects must be considered:
a. Needs. These are the gaps between the supply and demand in terms of
different resources.
b. Justifications. The rationale behind the needs.
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c.
Objectives. These are general and specific statements describing
observable and measurable performance likely to indicate change due to
the impact of the program/project.
d. Special Features. Distinct concepts and strategies unique to this
program/project.
e. Implementation and Development
This shows the timetable, options, resources and the ultimate results once
the program/project is fully implemented.
f. Organization and Linkage
This presents the organization structure design of the program/project,
indicating the vertical and horizontal relationships of the structure. Strategies
to operationalize the linkages drawn within and outside are indicated and
explained.
3. Program/Project Structure
This should show the relationships of concepts to activities. This is important
and critical towards making decisions whether the program/project really
reinforces all others to be developed or simply duplicates some concepts or
projects already in existence
4. Major Assumptions
a. Clientele
a.)
b.)
c.)
d.)
Topics
Qualifications desired
Desired number to be served in the target years
Screening process that they will have to go through
b. Resident/Resource Staff
a.)
b.)
c.)
d.)
Total staff requirement
Field specialization and title of position
Screening process
Staff development program to be matched against the overall longrange staff development program of the institution
e.) Salary range recommended
f.) Policy statements on staff management
c.
Equipment
a.) Major equipment with a description of its use
b.) Other smaller equipment and their uses
d. Library Needs / Other Needs
Indicate the quantity and costs
e. Physical Plant and Site Development
a.) Description of the plant and its major components
b.) Desired design of the plant and the preferred materials to be used
c.) Location or where the plant will be built, which direction it should
face, etc.
d.) Recommended alternatives where activities may have to start if the
plant will not be finished on time as projected
e.) Other details on cost per square meter and total floor space
requirements
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f.
Evaluation and Monitoring
a.) This is the manner and method of evaluating the program/project
from planning to implementation process.
b.) The manner and method how end-result evaluation is to be
undertaken.
c.) How those involved in it may go through the process and what
decision are expected of it.
d.) How the above processes can be a part of the entire evaluation
process of all projects and programs in the institution, based on the
conceptual framework.
g. Budget Requirements
The budget requirements of the proposed program/project must
be presented in the prescribed forms of target benefactors.
5. Design Organization Structure
The policy statement is the basis of the design of an organizational
structure because the policy statement embodies the general principles of
management and operations. The components of the organization structure are
the programs and projects of the institutions and their support services.
6. Work Towards Obtaining Board Approval of Programs/Projects
and New Organization Structure
a. New Programs. There should be prioritization on the proposed
programs/projects and these should be submitted to the board earlier for
approval
b. Organization Structure. The rationale for this new organization structure
design is based on the intent and purpose of the policy statement on
organization in the conceptual framework, on the interrelationships of the
programs and projects as well as their support as they fall under various
administrative levels.
A checklist of terms accompanied by function descriptions whether
they are line or staff positions. The profile of the people who are occupying
or are going to occupy the positions. A brief bio-data of each indicating the
person’s educational qualifications and administrative experiences are
considered necessary. The organization structure is the key to the success
or failure of institutional planning and development.
7. Initiate Final Review for Implementation
Focus must be directed at people – what they will do, how they will do it,
and how their performance will be measured. Their functions must be translated
into operational activities. The activities of all those occupying positions in the
organization structure must be determined and programmed. These are
reflected in the program of work.
A monitoring system will then be devised to track down the process of
analyzing and making decisions about the periodic results of the projected
activities in each program of work, from bottom to middle and top management,
and their corresponding staff units and vice versa.
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The program of work and its monitoring system should first be designed
and understood and accepted before any attempt at implementing the new
organization structure is done. The program of work and its monitoring system
should be made clear to all. All the participants should therefore be thoroughly
oriented on the instrument, how to accomplish it, when to pass it for analysis
and decision-making, and when to retrieve it.
Unless this is adopted as a matter of strategy, any modified or
completely new organization structure would meet extreme difficulty in
subsequently implementing programs and projects. Only when the new
organization structure meets the above requirements should the new programs
be implemented.
Project Formulation, Preparation and Feasibility Analysis:
Major Planning and Operating Functions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Refine project objectives and targets
Define potential components or elements
Evaluate and rank alternative potential design configurations
Determine appropriate project size and location
Refine project justification analysis
Provide detailed cost estimates and estimate potential benefits
Prepare financing plan
Secure preliminary government review and approval
Obtain preliminary review by possible funding agencies
Analyze preconditions for successful implementation
Perform site and location studies
Perform technical, commercial, financial and economic pre-feasibility evaluation
Obtain market and demand studies
Calculate preliminary least-cost or cost-benefit estimates
Prepare formal project prospectus
Obtain formal feasibility study
Begin data collection for appraisal
Secure initial commitments of counterpart funding.
Let’s have a break.
You may have your snacks.
Read the day’s paper.
After reading so many pages I know that you start to feel that the task of
program/project preparation is quite a big task. I felt the same way when I first started to
prepare a program for education and project feasibility for business and hospital.
The key or solution of course is to see a sample of a program and a project. After
reading 3 or 4 samples, I was ready to start my own. So, as a starter I have included
herewith samples of programs, projects, and project feasibility study.
The Project Proposal
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Do you know what a project proposal is?
A project proposal is a plan of action for undertaking a project.
We are preparing proposals for various reasons. Can you identify some of your
reasons? At this point, please write your reasons in separate paper. Check them against
those given here.
Project proposals are used as:
a) a means of communication
b) a plan of action
c) a contract
Have you written in separate paper all the above reasons? If yes, Very Good!
We are writing proposals because they serve to communicate the proponent’s plan
to those who provide consultation, give consent, and provide funding. The quality of
assistance, the economy of consultation and the probability of financial support will all
depend directly or indirectly on clarity and thoroughness of the proposal.
The proposal serves as a plan of action. It includes the activities to be done, the
strategies to be used, the people involved, the budget and other resources needed.
The approved grant proposal results in a contract between the project proponent
and the funding source.
We have already enumerated the purposes for preparing project proposals. What
would be the parts or elements of your project proposal? You know, the formats of a project
proposal differ according to funding agencies but the basic elements are similar to each
other.
A project proposal, when used for applying financial assistance, is prepared with the
evaluation criteria of the target donor in mind. This means that it has to fit the donor’s
priorities, concerns, terms of reference, format if any, following endorsement channel and
finally following the right administrative channel in the donor agency.
A well-written research project proposal is expected to include the following
sections:
I.
Executive Summary. This is the capsule of the proposal which includes needs;
justification; expected beneficiaries; expected benefit; the technical details:
objective; procedure; kind of research; duration; what support is requested, and
information about the proponent.
II.
Justification. This includes why the study is needed; who the intended beneficiaries
are; what the expected benefits are; why the proponent is doing the research; and
what the capability of the institution to do the project is.
III.
Technical Proposal. This includes the research problem; research objective;
research approach; procedure/methodology; duration; phases; and work plan
IV.
The Proponent. This is important for marketing the proponent institution. This
should include: mandate; track record; capability; assets; present thrusts; human
resources; and leadership.
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V.
Project Organization and Management. Here, it is described how the project will
be structured organizationally and how it will function in relation to the proponent
agency.
VI.
Implementors. This should include the resumes and CVs of the people who will be
involved in the project. Availability, special training, experience and previous work
should be emphasized.
VII.
Institutionalization. It is important to cite what commitment the institute has to
continue working on beyond the project’s duration.
VIII.
Budget. Details of items of expenditure, number of units and cost should be
included. This is usually broken down into: personal services; maintenance and
operating expenses; capital outlay; and administrative cost.
Stages and Phases in Project Formulation
There are three stages of the project cycle which are carried out in sequence. Under
each stage are constituent phases. The framework for project formulation is as follows:
Stage of Formulation
Identification
Phase
Preparation for project formulations
Reconnaissance and preliminary
project design
Preparation
Project design
Analysis of expected results
Project of documentation and
Submission
Appraisal
Negotiating the project
Steps and Outputs in the Project Formulation Process
Phase I. Preparation for Project Formulation
This involves all activities required to prepare a sound formulation of the project.
Step 1 – Project inception. The project formulation process starts with the project
idea. At this point, it is desirable to prepare a brief project description and draw out terms of
reference setting up the geographical boundaries, institutions involved and target group.
A logical framework is also required at this point which will set the indicators or
criteria; means of verification; and major assumption.
Step 2 – Formulation of a work plan. This step involves planning for effective work
implementation.
The output from Phase I is the program of work for project formulation.
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Phase II. Reconnaissance and Preliminary Project Design
There are four steps involved in this phase.
Step 3 – Analysis/diagnosis of the project situation. This step is intended to
understand the development problems in the area relative to aquaculture and/or fisheries,
and the possible solutions. Under this activity, the following are done: review of national,
regional and sectoral background; general evaluation of the project sub-sector which include
the physical feature; infrastructures, economic activity, socio-economic features, institution
and policies; and identification of possible courses of action.
Step 4 – Analysis of the project having regard to the people involved. The
questions of concern under this step are: what do people do? What do they consume and
produce? What are the aquaculture or fisheries production systems or practices? The
proposed courses of action are also discussed.
Step 5 – Assessment of the future “without the project”. This involves the
assessment of the impact of the project by analyzing and evaluating prospective changes
which will take place in the absence of the project such as projected demographic, demand,
supply and price changes.
Step 6 – Outline specification of a possible project. This step results in the
preparation of a prefeasibility report which includes biological design criteria; facility
characterization; programming infrastructure; site studies; schematic design; financial
analysis and environmental analysis.
The output of the second phase is a preliminary design of the project which include
identification of its main features (location, type of participants, size, timing, organizational
structure) and management system.
Phase III. Project Design
This phase initiates the formal detailed project preparation stage.
Step 7 – Detailed technical and socio-economic investigation. The information
that may be included in this step are market studies; availability of inputs; costs and
earnings; and farm systems employed among other things.
Step 8 – Definition of project objectives, targets and design criteria. This steps
involves a review and redefinition of objectives; specification of project parameters
(demarcation of project area/zone; selection of agents; confirmation of selected technologies
and management practices; phasing and timing of activities); confirmation of design criteria;
and preparation of work plan.
Step 9 – Design on individual project components. The components are
separated into categories as: production component (facilities such as farms, hatcheries,
etc), production support components (credit, extension, research); social support
components (infrastructures and services); and technical assistance.
Step 10 – Design of organizational structure and management arrangements.
This task is to decide which groups or groups is responsible for project implementation and
operation; and how they are expected to perform these functions.
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Step 11 – Estimation of project costs and revenues and proposals for first
financing. The three main activities under this step are: completion or estimates of all
individual component costs; consolidation of all costs into overall project costs; and
preparation of financing plan.
The output of Phase II is a full description and costing of the project, together with a
proposed financing plan.
Phase IV. Analysis of Expected Results
The fourth phase in concerned with activities necessary to assess project results in
terms of outputs, effects and impact on the sector and other sectors. The basis of the
analysis is the project design report.
The work involves four steps, namely:
Step 12 – Financial analysis
Financial analysis considers the project as a business proposition. There are two main
approaches to financial analysis, namely (1) cash flow and benefit/cost analysis, and (2)
income and expenditure analysis. These analyses are always made to show the expected
impact of the project by comparing the “with- and without-project” situations.
Step 13 – Economic analysis
This is an appraisal of the project in terms of its contribution to economic development
to the society as a whole. It analyzes impact on economic growth; foreign exchange balance
and income distribution.
Step 14 – Social analysis
This step assesses changes in the lives of individual and communities as a result of
the project such as effects on employment, nutritional effects, impact on health, etc.
Step 15 – Environmental impact
This analysis aims to identify renewable and non-renewable resources used by the
project; sensitive points adversely affected; risk of pollution from aquaculture activities and
related processing activities; and ecological sustainability of the production system.
The output of Phase IV is the determination of effects and impacts of the project.
Phase V. Project Documentation and Submission
This concerns activities necessary for the preparation of a final project document,
complete with design and relevant analysis. The work in the fifth phase is described in one
step:
Step 16 – Preparation and submission of the project report
There are four main activities under this step:
a. Deciding the structure of the report
b. Writing and production of the report
c. Submission of the report and its presentation
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d. Finalizing the report
Step 16a – The report structure
The typical sections and potential leaders are:
a. The summary. This is targeted for top policy makers. It provides a self-contained
picture of the project and all its implications, in no more than 2-3 pages.
b. Main report. This might be for non-technical senior managers. This is written in a
consistent style with well-balanced section. It provides a concise description of
the objectives, findings, conclusions and recommendations.
c.
Appendices. This is usually read with considerable thoroughness by heads of
technical departments and technical specialists. These are self-contained
analysis of a single major aspect of the project. These are the building blocks
from which the report is constructed.
d. Working papers. These are for detailed examination by the appraisal team.
These are essentially files on basic data, assumptions, estimates and
calculations from where the appendix are based and analyzed.
Step 16b – The contents of the report
Writing a good report is a skilled job. One must follow the five basic principles in
report writing, namely keeping the report:
a.
b.
c.
d.
Simple, avoiding unnecessary jargon;
Direct, avoiding disgressions, unless necessary;
Lucid, being understandable by an intelligent reader and free of ambiguity;
Vigorous, sustaining the reader’s interest, presenting arguments with convictions
and conclusions with confidence;
e. Brief, but not to the point of sacrificing important material.
For a production project, the report usually includes the following sections:
a. Summary. Highlights key findings and conclusions. Normally it is not longer than
2-3 pages in length.
b. Introduction. Provides a context and setting within which the proposal have been
formulated.
c.
Background. Introduces the important features of current aquaculture/fisheries
development, reviews trends in the sector, describes the functions and
organizations of institutions involved in the sector.
d. The project area or sub-sector. Prepares the ground for explaining project
design.
e. Rationale for the project. This includes a concise description of all major
features of the project; presents a summary of cost estimates and financing
plan.
f.
Organization and management explains how institutions and agencies
participate in the implementation and operation of the project.
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g. Markets and prices show how the inputs and outputs of the project will be traded
and how these are expected to change in the future.
h. Financial and/or economic implications describe the results of the financial and
economic analyses.
i.
Project justification. Other impacts and risk of the project are presented in this
section. This is often the first part of the main report to be read by the decision
makers. Concentration of the section is on the benefits of the project.
j.
Major outstanding issues which must be resolved and the corresponding steps
to be taken constitute the last section.
Step 16c – Report submission and preparation
A covering letter is a useful addition to a project formulation report. This
letter includes information on the circumstances in which the formulation
study was commissioned, who carried out the report and when. If a verbal
presentation is made, it should be carefully prepared. It should be concise,
but complete with relevant details and well-illustrated by several visual aids.
A case is presented here for you to analyze. This is a very good example of
what is happening whenever we submit proposals, whether it is
development project or research project proposals. Please read this
carefully.
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THE CASE
“Rejections, Why?”
Dr. Vera Cruz is a successful project officer connected with an
international foundation supporting research and development programs.
She has been going around Africa, Asia and Latin America promoting
certain ideas on rural development and evaluating research proposals. She
can be considered an expert in project assessment and evaluation. During
her home leave, a number of her old friends, knowing how successful she is
in her career sought her out for some advice.
Ms. Lita Barsana is a niece of Dr. Cruz. She is currently Executive
Director of a non-government organization whose mandate is to provide
training and management services in depressed provinces in the country.
She is new in this job. For many years she taught and did management
research in a prestigious management school in Manila. She has 2 books
and 15 journal articles to her credit.
Ms. Barsana invited her aunt to her institution ton show off its
accomplishments. While the institution is viable because of a large
endowment and trust fund largely coming from donations of rich unmarried
women, lately it has not been that flattering to Ms. Barsana. In the year that
she has been Executive Director, she has received five rejections out of six
proposals she has presented to foreign and local donors for funding. In fact
she is quite disappointed with herself. These regret letters are reflecting on
her executive abilities even if the actual details of proposal preparation are
done by her project officers.
Ms. Barsana asked her aunt for advice on how to improve her track
record in obtaining project grants. Dr. Cruz, who is really adept at this kind
of a problem, thought that she should first know the background and
circumstances of the five proposals which were turned down and the one
which came through.
Ms. Barsana was just too happy to give her aunt an exhaustive
briefing on each of the proposals. The folders foe each proposal were pulled
out and given to Dr. Cruz for study. Ms. Barsana seemed confused and
dejected. She thought she did what was supposed to be done in proposal
preparation.
In all the six proposals, Dr. Cruz noticed that the need and
justifications were highlighted. The areas of concern chosen were noble.
They were related to rural poverty and its alleviation. Of the five proposals
which were turned down, three were related to research and publication,
which was the strength of Ms. Barsana. The other two were sent to UN
agency dealing with foreign political refugees.
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In her endorsement letter Ms. Barsana thought she did the right
thing. For instance, she appealed thus “Our institution is composed of highly
dedicated and intelligent, fresh graduate (BS degrees). Their good services
would be felt by the institution for many years. If only they would be given
funding for their research, they would acquire research experience which
could be an asset to the institution ten years from now. Our institution at
present does not have budget for research and publication that is why we
are appealing to your generosity.”
Another rejected proposal was reviewed by a researcher (as
commissioned by the donor) who had done practically the same study for
the past three years.
In four of the six proposals submitted for funding that year, the project
insiders were part-timers from the university where Ms. Barsana used to
work. In fact, these four highly qualified individuals have been doing that
kind of research and are merely transferring the venue because their
University projects just terminated.
Participant’s Task
Assume that you are Dr. Cruz. The next day, you are to give a seminar to the
technical staff of the institute. What is it that you would be telling the institute staff so that
they will improve their track record in getting external funding?
Are you through reading the case? Did you understand it? Please answer the
following questions:
1. Please cite at least four reasons why the proposals were not approved.
2. What is the mandate of the NGO?
3. What is the main objective of the proposals?
If you were Dr. Cruz who is requested to give a seminar to the technical staff of the
Institute, what would you discuss with them so that they will improve their track record in
getting external funding?
Please write an outline of your talk before you turn the page.
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Thank you and congratulations! You may now turn the page and read through the
Expert’s Analysis. (Please read only after analyzing the case)
EXPERT’S CASE ANALYSIS
Rogelio V. Cuyno
Introduction
Apparently this organization is indeed a highly committed group giving
service to a selected client group. Most non-government organizations are
like that. Their mission is service and they attract young people who are
idealistic. They are more ________ and action-oriented and are not as
internally differentiated as a huge government bureaucracy. It is not
surprising to see people doing a variety of things at the same time in this
type of organization.
By going back to the facts of the case we can discern certain reasons why
Ms. Barsana has not had much luck in having project proposals approved.
While the justification and need in the proposals were noble and strong
because they dealt with humanitarian concerns such as rural poverty, there
are other practical and administrative technicalities which resulted in default.
The first technicality was on the mandate of this non-government
organization (NGO). This NGO is basically an action and service-oriented
institution, yet there are proposals whose objective is research and
publication-related. Most donors would want to examine proposals to find
out if these proposals contribute to organizational goals. Donors would want
to be of help to organizations trying to fulfill their mandates and thrusts. Any
disgression from organizational mandates and thrusts is suspect because
this is an indication that the project would have a problem of sustainability
and could lead to lack of focus. Ms. Barsana might have her strength in
research and publication, but this does not mean that she can impose her
personal interest on the organization which clearly was not established for
this purpose. In fact her own board should have called her attention to this
disgression. Any disgression like this will surely affect attainment of the
main “business” of the institution, which is rural development through field
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action and service programs. The second technicality was that the potential
donor to whom the proposals were sent was the wrong kind. A UN agency
dealing with foreign refugees would certainly not use its resources for the
purpose of rural development no matter how noble this objective is. This is a
form of technical malversation, something that is heavily sanctioned.
The third problem is the lack of internal organizational capability. Research
work requires advance training and experience. Any donor would want to
see the recipient succeed in the project. Donors, knowing that they can only
support the recipient in a limited way, would want to put their resources
where there is greater absorptive capability and capacity. In this particular
NGO, the research to be involved in the project were raw talents without
much training in research. If the purpose of this project is to train future
researchers the project rationale and purpose should be so stated. Some
donors have capability-building as one of their mandates.
The fourth problem is duplication of effort. It was tough luck that the
potential donor got a project reviewer who happened to have personally
been working on the same problem. Donors would want their resources
applied to a specific concern. They would rather add funds to current
recipients to make them more effective than spread thinly to more research
institutions doing the same thing. Spreading resources thinly to more
research institutions engaged in the same problem would only foster
destructive competition.
The fifth problem is lack of effective commitment. The fact that in most of
the proposals the proposed project leaders were not employees of the said
NGO and would only be doing this on a part-time basis, had worked against
the proposals. In their experience, donors know that part-timers would have
problems dividing their time between the project and their regular work. This
would invariably compromise project completion and quality work.
To conclude and summarize, we can cite certain principles in program generation and
proposal preparation relevant to this case.
1. Project proposals must be consistent with and supportive of proponent’s mandate and
thrust. Disgression or diversion from the institution’s mandate and thrust indicates that
the project will have a problem of sustainability within the institution.
2. The project proposal has to match the objective, mandate and thrust of the potential
donor. Donors have the account for their project support funds to their own board.
Disgressions from mandate and approved priorities are severely sanctioned because
they constitute technical malversation.
3. Donors provide assistance to potential recipients who have the capability to absorb and
use resources wisely. This capability is in terms of trained manpower and experience.
4. Project proponents must show that they are putting in equity too much requested
support. This equity includes effective time of implementors, operational funds,
equipment and fixed assets.
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5. Project proposals that duplicate existing efforts are perceived to have low project yield
and negative political implications.
Read the following samples carefully and try to conceptualize what program or
project you may want to prepare.
Have a nice day!
Prior to the study of given sample for programs or projects, summarily, take note of
the brief outline of the different components of a typical program.
Major Parts of the Proposed Program
1. Program/Project Summary
1.)
2.)
3.)
4.)
5.)
6.)
7.)
8.)
General Objective
General Thrusts
Linkages
Outputs
Organization and Management
Implications for Development
Legal Bases
Financial Requirement
2. Rationale Statements
1.)
2.)
3.)
4.)
5.)
6.)
Needs
Justifications
Objectives
Special Features
Implementation and Development
Organization and Linkages
3. Program/Project Structure
4. Major Assumptions
1.) Clientele
a.) Types
b.) Qualifications
c.) Desired number
d.) Screening process
2.) Resident/Resource Staff
a.) Total staff requirement
b.) Field specialization and title of position
c.) Screening process
d.) Staff development program
e.) Salary range requirement
f.) Policy statements on staff management
3.) Equipment
a.) Major equipment
b.) Smaller equipment
85
4.) Library Needs / Other Needs
5.) Physical Plant and Site Development
a.) Description of the plant and major components
b.) Desired design and materials
c.) Location
d.) Activities or fall back if plant will not be completed on time
e.) Cost per square meter and total floor space requirements
5. Evaluation and Monitoring
6. Budget Requirements
It is good to have this outline in mind so that as you read the samples you know what
part you are reading.
This is a sample of a government program prepared for
its long-term development plan.
86
COOPERATIVE
DEVELOPMENT
PROGRAM
The spirit of cooperation is not new
in our communities. Customs and
traditions show that the people, especially
in the rural areas, work together for the
attainment
of
common
objectives.
Bayanihan or self-help still pervades in
our culture. In the provinces, not a few
help each other in agricultural and social
activities.
The first attempt in cooperative
society in the Philippines was in 1907
when Governor Sandiko of Bulacan
drafted a bill for the creation of a
Raiffeisen-type credit union. Its main
objective was to promote the agricultural
interest of the country. The Sandiko rural
Cooperative Bill had been approved by
the Philippine Legislature but rejected by
the Philippine Commission. In view of the
pioneering efforts of the governor, he has
been called the “Father of cooperative
credit movement in the Philippines.” In
1915, a rural credit law was approved
through the initiative of Rep. Corpuz, and
sponsored by Palma and Singson.
However, the law had remained
inoperative for one year, until it was
subsequently amended placing on the
Director of the Bureau of Agriculture the
responsibility
of
expediting
the
organization of rural credit associations in
the entire country.
Rural Credit Cooperatives
In the early course of the
cooperative movement in the country,
Prautel was very instrumental. He arrived
in 1898 after his active involvement for
many years in rural credit movement in
India. he had traveled far and wide, and
he realized the credit needs of the
masses. When Sandiko Bill was
presented in 1907, Prautel supported it
with his articles appearing in various
newspapers in Manila. Later on, in 1916
when the rural credit section of the
Bureau of Agriculture was organized, he
became the chief. Prautel has been
credited as the organizer of rural credit
societies in the Philippines.
The first rural credit cooperative
association in the country was organized
in Cabanatuan, Nueva Ecija on October
19, 1916. The progress of the movement
was quite rapid. By December 1926, there
were rural credit cooperatives in 42
provinces, numbering 541. In 1939, there
were 570 agricultural credit cooperatives
in actual operation with 105,084 members
and P3,376,411 circulating capital.
The Raiffeisen-Type Credit Union
Allen R. Huber founded the first
credit union of the Raiffeisen-type in the
Philippines at Vigan, Ilocos Sur in August,
1938. He first came in the country in
1926. He was disturbed to find the
masses, underprivileged and in debt
bondage to money lenders. For five years
he sought in vain for a solution to the
problem. In 1931, he returned to the
United States to study at the University of
Chicago. From there he went to Frankfurt,
Indiana to serve a s a pastor of the First
Christian Church. He discovered that
hundreds of the members of the
congregation had been under chattel
mortgage. The pastor had discussed with
them their problems, and consequently,
they put up a credit union, the first
Protestant Church credit union in
America.
When Huber returned to the
Philippines in 1937, he conferred with D.
Howe,
a
technical
adviser
on
cooperatives. Based on the observations
of Howe, he claimed that our cooperative
movement remained only in theory. He
impressed upon Huber the importance of
training at least 50 Filipinos to become
cooperative specialists. Such force would
be responsible in spreading the
cooperative program throughout the
87
country. Soon afterwards, the first credit
union was organized in Vigan, followed by
other 30 credit unions until 1941 with
some 2,000 members. Before the war, the
most remarkable growth of a credit union
grew within two years into 590 members
with P22,000 capital and P38,000 loans. It
contributed much to the welfare of its
members. The credit union helped them
in burial expenses, education of their
families, construction of their houses,
purchase of rice lands, medical needs
and other essential needs. The members
relied on their own resources and none
from the government. During the war, said
credit union loaned out funds to the
resistance movement in their region for
the foods of the soldiers.
Performance of Past Cooperatives
After the war, new interest in the
credit union movement was stimulated by
Santiago Manongdo, a government
cooperative specialist. His enthusiasm
was aroused by foreign associates, such
as Huber and Kagawa who were both
cooperative leaders. Several years later,
many cooperatives were organized,
mostly farmers marketing cooperatives.
Unfortunately, many did not become
successful. Only very few survived and
really turned out to be progressive. One of
the most spectacular achievements in
Philippine cooperative movement is the
case of san Dionisio Credit Cooperative in
San Dionision, Parañaque. It was founded
in 1961 and it is now reputed to be the
biggest credit union in Southeast Asia.
students of cooperatives all over the world
have been visiting the credit union in San
Dionisio to study its programs.
Why cooperatives failed in the past
The history of agricultural credit
cooperatives in the country shows their
early achievements, rapid rise and fall. In
spite of attempts by the government to
save them, still many cooperatives failed.
The ningas cogon attitude has persisted
in many of our new endeavors. Some of
the reasons for failures of cooperatives in
the past were:
1. Lack of adequate character and
moral
responsibility
of
management.
2. Inefficient management due to
lack of basic understanding of the
basic principles of cooperation.
3. Borrowing money under false
pretenses.
4. Defective securities.
5. Heavy political interference with
respect to collection of overdue
loans.
6. Lack of adequate safeguards
against underprincipled officers
who granted loans to themselves
and their families and friends.
7. Too much government financial
assistance in proportion to the
money of the association.
8. Lack of democratic procedure in
the election of officers, particularly
the treasurer.
9. Inadequate supervision.
Cooperatives Development Program
under the Marcos Regime
A vast majority o f the people in the
Philippines live and work in the rural
areas. It is in this particular sector where
greater social and economic inequalities
pervade. This situation is not only true in
our country but also in all other poor and
developing nations. It would be difficult for
an industrialization program to succeed if
it stands on a weak rural base. To correct
the imbalance between the urban rural
conditions, government programs have
shifted their emphasis towards rural
development.
Rural
electrification,
agrarian
reform,
family
planning,
agricultural development, feeder roads,
irrigation
systems,
agro-business
industries and cooperatives have been
given top priority by the New Society.
However, all these program require
coordination, cooperation and integration
in order to achieve a common goal: social
and economic development of the
country. Cooperatives have been proven
to be effective in promoting such objective
as experienced in Europe, United States,
Israel, Japan and Taiwan.
88
Ex-President Ferdinand Marcos
declared that it was the policy of the
government to foster the organization and
growth of cooperatives to serve as tools
of increasing the income and purchasing
power of the poor, and of attaining a more
equitable distribution of wealth and
income in our country. There is a big gap
between the rich and the poor. The few
rich own many of the wealth while the
many poor have only a few of the wealth.
The Department of Agriculture and
Food through the Bureau of Cooperatives
Development
administered
the
cooperative development program. The
latter evolved the following basic
premises:
1.
2.
3.
Cooperatives
facilitate
the
redistribution of wealth and
income, and, therefore, be given
special consideration by the
government.
Cooperatives are means for rural
and urban development.
Cooperatives development must
be systematic and system
oriented.
Stages of Development
The cooperative program under the
old society had several shortcomings,
such as:
1. Self-reliance was neglected.
2. Absence of systematic linkages
among the various types of
cooperatives.
3. Training, education, discipline and
savings programs were not
adequate.
4. Many cooperatives were hastily
organized as a result of crash
programs of the government.
5. Promotion,
organization
and
administration of the cooperative
program by the government were
unsystematic and inefficient.
To correct the shortcomings of the
past cooperative program, it has been
rationalized to meet effectively the
requirements of social and economic
development. Decree No. 175 on April 14,
1973
entitled,
“Strengthening
the
Cooperative Movement.” Henceforth, all
types of cooperatives were under the
supervision and administration of the
Ministry of Local Governments and
Community Development through the
Bureau of Cooperatives Development.
However, since 1980 the Bureau of
Cooperatives Development has been
placed under the Department of
Agriculture and Food. Before, agricultural
cooperatives
were
under
the
administration of the Agricultural Credit
Administration while the non-agricultural
ones were under the Cooperative
Administration Office. Knowing the
limitations of the previous cooperatives
development program and the reasons for
the failures of past cooperatives,
Department introduced a systematic
development process in the organization
and management of cooperatives. The
process involves four stages which starts
from a preparatory stage from the bottom,
to a well-integrated cooperative system
with horizontal and vertical linkages.
Samahang Nayon – Stage 1
Samahang Nayon is a body
corporate which is composed primarily of
small farmers residing and/or farming
within the geographical limits of the barrio
for the purpose of improving the quality of
life of the people. It is a pre-cooperative
organization based on and operated
according to cooperative principles. Its
principal objectives are to increase the
income of the farmers, and to improve the
social and cultural aspects of barrio life.
Social and economic conditions in
the rural areas leave much to be desired.
Since the rural sector constitutes the
foundation of our economy and nation, it
would be only proper and wise to start the
cooperatives development program from
the barrio level. For any significant socioeconomic development plan, if it is
intended to benefit more people, must be
barrio-based and mass-oriented. As
President Marcos said, the less fortunate
segments of our society who are in need
of social and economic amelioration
should have the right to enjoy the
privilege of self-development, social
89
growth and economic independence
under a truly just and democratic society.
Operation of Samahang Nayon
Since the Samahang Nayon serves
as the foundation of the whole
cooperatives
development
program,
extensive and rigid trainings, and other
requirements, such as discipline and
savings have been imposed by the
Bureau of Cooperatives Development.
This is to ensure a very strong foundation
of the program. With emphasis on
education and training, a total of 65
weeks of seminars and trainings are given
to members of Samahang Nayon. Subject
areas are:
1. Agrarian reform program;
2. Cooperatives
development
program;
3. Agricultural skills;
4. Products specialization; and
5. Management skills.
Capital Formation
Funds are very important in any
organization. The members of the
Samahang Nayon build their own capital
through their savings program which is
composed of Barrio Guarantee Fund and
Barrio Savings Fund. These funds are
intended for the following purposes:
1. To guarantee the payment of land
amortization of members under
the land reform program.
2. To capitalize the organization of
full-fledged cooperatives, such as
credit cooperatives, producers
cooperatives
and
consumers
cooperatives.
3. To purchase shares of stocks of
and/or to capitalize rural banks
and development banks.
4. To be used for other purposes as
may be authorized by the
Department of Agriculture and
Food.
Simple Economic Functions
A Samahang Nayon, although not
yet cooperative, performs simple business
activities. The members buy their
production supplies on a wholesale basis,
and then sell their products collectively.
Thus, in both instances, the middleman
who gets the biggest profit is eliminated.
Furthermore, the process of buying and
selling
provides
the
farmers
an
experience in business and cooperative
efforts. Another function of the Samahang
Nayon is to coordinate and facilitate
government services and programs, such
as family planning,
land reform,
agricultural programs and the like. The
foregoing functions serve as a training for
the members of Samahang Nayon in
planning, organization, decision making
and other management skills.
Disciplinary Measures
Discipline is an effective policy of
management as long as it is fair.
Otherwise, it leads to misunderstanding
and bitterness. The goals of an
organization are more likely to be realized
if the members and officers are
responsible. In the Samahang Nayon,
delinquent
members
are
either
suspended or expelled depending upon
the nature and degree of their violations
of the policies of the association, such as:
1. Failure to pay membership fees,
dues and contributions.
2. Failure to comply with the terms
and conditions of the membership
agreement.
3. Acts or omissions which are
prejudicial to Samahang Nayon.
Likewise, the operations of the
Samahang Nayon may be suspended or
its registration cancelled by the Ministry
on the following conditions:
1. Such Samahang Nayon fails to
function within a period of six
months from
the date of
registration.
2. The percentage of amortizing
owners in default in such Samahang Nayon exceeds 20 per cent.
3. Such Samahang Nayon fails to
exercise any of its powers or
discharge any of its duties and
responsibilities under the membership agreement.
90
4. Such Samahang Nayon violates
any
rules
or
regulations
promulgated by the Ministry
through the Bureau.
Kilusang Bayan – Stage II
As defined under P.D. 175, Kilusang Bayan or full-fledged cooperatives
shall mean only organizations composed
primarily of small producers and
consumers who voluntarily join together to
form business enterprises which they
themselves own, control and patronize.
Their purposes, among other things, are:
1. To encourage scientific production
among its members.
2. To provide goods, services and
other needs to the members.
3. To encourage thrift among its
members.
4. To build houses or to acquire lands
for its members.
5. To promote educational, social and
economic conditions of its members.
6. To
establish
and
operate
cooperative
rural
banks,
development banks, cooperative
insurance,
and
cooperative
wholesale and retail complexes.
Federation of Kilusang Bayan –
Stage III
Two or more Kilusang Bayan may
form a federation on the provincial,
regional and/or national levels. This stage
involves the promotion, organization and
development of consumers cooperative
complexes in the thickly populated areas.
They shall serve as ready markets for the
produce of Samahang Nayon and other
producers cooperatives.
There is more unity and strength
when several cooperatives combine their
resources. In a very competitive
economy, such as ours, federation of
cooperatives is indispensable. In many
instances, cooperatives find difficulties in
competing with big and well-established
business corpo-rations. However, if
cooperatives pool their resources, they
develop more efficient internal economies
of scale in terms of costs, funds,
management, specialization and division
of work. This maximizes the social and
economic benefits to the members, and
improves the performance of cooperatives
in a highly competitive market.
Union of Kilusang Bayan – Stage IV
This involves the organization and
development of federations and/or unions
of Kilusang Bayan. There will be only one
national union of Kilusang Bayan to which
all types of cooperatives from the
Kilusang Bayan may affiliate. At this
stage, all types of cooperatives at
different levels are integrated to provide
systematic
horizontal
and
vertical
linkages. Such integration has been
programmed
to maximize
benefits
through cooperative financing, production,
marketing
and
consumption.
The
combination of resources and functions of
all types of cooperatives greatly
contributes to the growth and success of
the cooperative development program of
the country. This strategy further
generates economic activities which
induce backward and forward linkages.
Other Institutional Support
The government, in its desire to
ensure the successful implementation of
the cooperatives development program,
has provided assistance in the form of
funds, training, information, management
and development councils:
1. Cooperative Development Loan
Fund serves as (1) sources of
loanable funds to cooperatives; (2)
guarantee for loans granted to
cooperatives; and (3) sources of
advances to cooperatives for the
purchase of equity in rural banks.
This fund shall be coursed through
government and private financial
institutions.
2. Regional Information and Training
Centers which assist the program
on promotion, information and
education through training courses,
radio
programs
and
printed
materials.
91
3. Rural Development Councils which
are composed of local government
officials and community leaders
participate in the planning and
implementation
of
rural
development programs.
4. Management
and
Training
Assistance Program which is
composed
of
competent
cooperative managers are assigned
to manage cooperatives for the
purpose of training understudies
who will eventually assume the
management of their cooperatives.
Cooperative Development ProgramAquino Regime
The
Bureau
of
Agricultural
Cooperative Development under the
Department of Agriculture was abolished
upon the approval of the Cooperative
Code of the Philippines on March 10,
1990. The said Bureau has been replaced
by
the
Cooperative
Development
Authority. This is under the Office of the
President. It is headed by a Chairman and
six administrators.
Article 2 of the Cooperative Code
states the declared policy of the State to
foster the creation and growth of
cooperatives as a practical vehicle for
promoting self-reliance and harnessing
people power towards the attainment of
economic development and social justice.
The State shall encourage the private
sector to undertake the actual formation
and organization of cooperatives and
shall create an atmosphere that is
conducive to the growth and development
of these cooperatives.
Toward this end, the Government
and all its branches, subdivisions,
instrumentalities and agencies shall
ensure the provision of technical
guidance, financial assistance and other
services to enable said cooperatives to
develop into viable and responsive
economic enterprises and thereby bring
out a strong cooperative movement that is
free from any condition that might infringe
upon the autonomy or organizational
integrity of cooperatives.
Further, the State recognizes the
principle of subsidiarity under which the
cooperative sector will initiate and
regulate within its own ranks the
promotion and organization, training and
research, audit and support services
relating to cooperatives with government
assistance where necessary.
In the case of the creation of the
Cooperative Development Authority, it
has been declared that the State shall
promote the viability and growth of
Cooperatives as instruments of equity,
social justice and economic development
and to create an agency, in fulfillment of
the mandate in Section15, Article XII of
the Constitution. Toward this end, the
State shall recognize cooperatives as
associations organized for the economic
and social betterment of their members,
operating business enterprises based on
mutual
aid,
and
founded
upon
internationally
accepted
cooperative
principles and practices.
In furtherance of this policy, the
appropriate national economic planning
agency shall include the promotion of
growth and expansion of cooperatives as
a major and indispensable component of
national
development
plans.
All
departments, branches, subdivisions and
instrumentalities of the Government shall
promote the formation of cooperatives
under their respective programs by
providing them with appropriate and
suitable incentives.
The
State
recognizes
the
cooperative
sector
as
primarily
responsible
for
the
institutional
development
of
cooperatives.
Accordingly, the State recognizes the
rights of the cooperative sector to initiate
and foster within its own ranks
cooperative
promotion,
organization,
training, information gathering, audit and
support services, with government
assistance where necessary.
Government
assistance
to
cooperatives shall be free from any
restrictions and conditionality that may in
any manner infringe upon the objectives
and character of cooperatives as provided
92
in this Act. The State shall, except as
provided in this Act, maintain the policy of
noninterference in the management and
operation of cooperatives.
Program Evaluation
Many cooperatives in the past were
organized without proper and adequate
trainings and discipline. Others were
hurriedly put up in compliance with the
crash programs of the government. Not a
few cooperatives were established simply
to take advantage of the promised
assistance from the government. Such
situations only served to undermine the
spirit of self-reliance of the people. It only
firmed up to the people’s dependence on
the government. As a result, they failed to
realize the fact that more lasting benefits
could be developed through their own
plans and efforts.
Crash programs are not effective
tools of change. it was used before in the
desire of the government to accelerate
the slow pace of the cooperative program.
The results were meaningless and
temporary. Fundamental principles in
organization and management were
disregarded in exchange of faster and
more results. As a rule, plans and
decisions must come from those who are
directly involved in the program. Interest
must
be
stimulated
within
the
organization. Field workers during the old
society had no choice. They had to fill up
the quota which was imposed from above.
An excellent plan and program
Learning a good lesson from the
past, our new cooperative development
program has been designed to eliminate
the shortcomings of the old cooperative
programs, and to assume a more
meaningful role in social and economic
development. The new cooperative
development program has evolved a
more systematic and bigger plan,
embodying the features of good
organization and management. The
blueprint is comprehensive and wellintegrated which can be classified as one
of the best cooperative development
programs.
However,
the
problem
of
transforming an excellent program into
reality lies in actual implementation and
the subsequent viability of the project.
There are many different variables which
should be taken into consideration, such
as attitudes of the people and those who
are responsible in the implementation of
the program. The interaction of the
aforementioned factors determines the
success of the program.
Strong cooperative development
foundation
Our cooperative program appears
to stand on a very solid base. A strong
foundation is vital in the stability of any
organization. Considering the rigid and
extensive preparations in the Samahang
Nayon, which is the foundation of the
cooperative development program., the
possibility of failure is not expected to
occur. Samahang Nayons which are
inefficient can not become full-fledged
cooperatives
or
Kilusang
Bayans.
Therefore, only well-developed and
trained individuals should constitute the
membership in the cooperatives. With
these highly qualified human resources
with proper attitudes, values, knowledge
and skills, the success of the cooperatives
development program seems to be
attainable.
Introducing
the
cooperative
development program of the New Society
is introducing change. Sociologists claim
that the process of change is a slow
process. It was a standard joke in the past
that government fieldmen should not
make it slower. Attitudes and values must
conform with the requirements of change.
Moreover, institutional arrangements must
be restructured to create a favorable
environment in order to sustain the growth
of change. it is to be hoped that the
cooperative development leaders will not
fail in their noble endeavor. They deserve
the people’s support and cooperation.
PROBLEMS AND PROSPECTS
93
The history of cooperation prior to
the time of the Rochdale Pioneers
suffered from many weaknesses and
failures. Except perhaps some primitive
societies all over the world which
practiced group cooperation to protect
themselves from natural dangers and to
secure their basic physiological needs.
Nonetheless, the failure of past
cooperatives were not in vain. The
Rochdale Pioneers learned their lessons
well from such mistakes. Thus, they were
able to establish the framework of a real
cooperative movement. They created the
principles of cooperation for all others to
follow and spread its ideals and benefits.
Many communities in Europe, United
States, Canada, Japan and other
countries have greatly improved their
social and economic conditions through
their various cooperative societies.
Institutional Barriers
More than a decade ago, Gunnar
Myrdal, a famous economist, conducted a
field research on the conditions pervading
in Asia, especially South Asia. These
observations were recorded in his
monumental book, ASIAN DRAMA: An
Inquiry into the Poverty of Nations,
published in 1968. He found out, among
other things, that cooperatives were
introduced by the governments of South
Asia and other Asian countries as a
program to improve agriculture and the
economic life of the farmers.
Unfortunately, these cooperative
programs had very superficial impact on
the welfare of the poor farmers, especially
the tenants and the sharecroppers. In
general, the concept and practice of
cooperatives were not appreciated and
accepted by the farmers. In view of the
unequal social structure in the region, the
benefits of cooperatives go to the
landlords and other affluent members of
society. Naturally, the millions of
sharecroppers, particularly in India, have
not been interested to participate in
cooperative organizations. According to
Prof. Myrdal there should be a radical
land reform program to attain social
equality. Such restructuring of society
creates a favorable environment for the
acceptance and growth of government
reform programs, like cooperatives.
Negative Values and Attitudes
It is common among orientals that
they do not mean what they say in their
desire to please people. More often than
not, they do not like to say no. When they
are invited to attend a community
meeting, they say yes. But they do not
attend and instead make good excuses.
Filipino cultural values like mañana habit,
ningas cogon, bahala na, etc. constitute a
hindrance
to
the
promotion
of
cooperatives.
The concept of cooperative is a
form of change in people. When a person
becomes a member of a cooperative, he
undergoes a continuing process of
change in attitudes and values. He begins
to think of and work for group interests.
He has to reform his uneconomical habits.
Moreover, he learns to involve himself in
the problems of his community and join
others in achieving the goals for the
welfare of all.
One fundamental experience in
sociology is that it is not easy to change
people. It requires a slow and long
process of training and education.
Precisely, this is the main reason why
people are slow to practice the program of
cooperatives. By nature, people resist
change if it involves radical reforms in
their ways of life. More so if the changes
impose inconveniences and sacrifices on
their part. Some government programs in
the past were introduced with the use of
pressure or material and financial
rewards. Under these conditions, many
people were stimulated to accept the
government programs in a very short
period. However, such changes in the
people were not real and did not last. To
some extent these programs only eroded
the attitudes and values of people.
Records of Filipino Associations
It has been a common knowledge
that most cooperatives in the past failed
94
because the officers mismanaged the
funds of the organization. Not a few
treasurers and presidents of the
associations
absconded
with
the
contributions of the members. These graft
and corruption were not only true among
other Filipino associations at present. As
usual it is only the officers who get the
benefits.
These are some of the more
important reasons why until now many
are still reluctant to join cooperative
organizations. In fact, it is not even easy
to organize a simple cooperative
organization like the credit cooperative in
colleges and universities. Compared to
the Rochdale Pioneers, employees in said
institutions are in a better position to
organize cooperatives, considering their
resources.
It has been observed that the main
problem is organization and management.
Who is going to sacrifice his time and
effort in initiating the organization of a
cooperative? Who is encouraged to
organize a cooperative when most of the
prospective members are not even
interested to attend the first meeting?
Again, it is a matter of attitudes and
values. We are not like the Rochdale
Pioneers or the priests of St. Xavier
University of Antigonish.
The people are not to be blamed
on their lukewarm reactions towards the
cooperative organizations. They know the
value of cooperatives and its advantages.
What they doubt, however, is the viability
of the organization and the honesty of the
officers. Their lack of trust and confidence
is without baseless reasons. As a matter
of fact, even under the New Society there
are still several associations whose funds
have been stolen by their officers.
The Need for Honest and
Competent Managers
Management is considered as one
of the main factors of the success of a
cooperative organization. The most
qualified are persons of honesty, integrity,
competence
and
above-average
intelligence. Evidently, this type of
individuals are highly paid and many
cooperatives can not afford them. While it
is true that the Bureau of Cooperatives
Development subsidizes the management
requirement of new cooperatives, it
seems that this assistance has been
directed more to cooperatives organized
by the farmers.
In some communities, there are
individuals from among the residents who
are good materials for management. But
they have no time for such organizations.
This lack of socially-oriented community
leaders contribute to the slow movement
of our cooperative program. Most likely if
there are professionals in the community
who will sacrifice their time and labor in
organizing cooperatives, like the San
Dionisio
leaders,
the
growth
of
cooperatives will be faster.
The Role of the Government
In a poor and developing economy,
the government assumes a more
aggressive
role
in
developmental
programs. It lays the foundation of
development, such as education, roads,
bridges, hospitals, electricity and other
social investments. These integrated
components of investments usher in an
atmosphere which is conducive not only
for the growth of trade and commerce but
also the programs of the government,
such as agricultural production, cottage
industries,
community
development,
agrarian reform and cooperatives.
The promotion of cooperative
development is one of the major
programs
of
the
New
Society.
Cooperatives are not only known for their
effectiveness in improving the social and
economic conditions of the poor but also
for their useful role in developing human
resources and communities. Since the
early 1900’s, there were attempts by the
government to organize cooperatives.
However, as stated earlier in this book,
the cooperative program was not
systematic and it violated principles of
organization
and
management.
Consequently, the movement did not
accomplish many of its objectives.
95
Nevertheless, there were few cooperative
organizations which became successful,
organized mostly by the priests, ministers
and teachers.
Prospects of the Cooperative
Development Program
A good program – well planned and
systematic – such as our cooperative
development program does not invariably
ensure success. There is still the problem
of implementation and management. In
the past, we had many excellent
programs but they failed in the actual
implementation.
It has been often said that a good
program is measured in terms of its social
and economic contributions to the welfare
of the poor. If the benefits of the
cooperative program have not seeped
down to the level of the masses then it is
not considered a good program. There
are programs which improve only the
economic positions of the upper and the
middle classes of our society. These only
widen the gap between the rich and the
poor. Cooperatives are known for their
social-equalizing effects for they are
effective instruments of redistributing
income and wealth. The resources of the
cooperative program of the government
should therefore be directed towards this
objective.
The Social Philosophy of the
San Dionisio Cooperative
In the case of the San Dionisio
Credit Cooperatives, its leaders are more
concerned with the social implications of
their cooperative. They are after the
development of human resources in order
to attain their ultimate mission which is
community building. To them, the
improved attitudes, values and skills they
have imparted to the community are far
more important than the millions of pesos
they have created since their operation in
1961.
With the huge financial resources
of the San Dionisio Credit Cooperative,
they would earn more if these would be
invested in more lucrative investment
ventures. Thus, the members of the
cooperative would get more dividends or
interests for their money, and they would
be economically benefited. The leaders of
the cooperative are aware of such
financial
prospects
which
would
considerably promote the economic wellbeing of the members. But they have
resisted the temptation of making more
profits for their cooperative. According to
them, this better business alternative
defeats the very essence of a credit
cooperative. They claimed that they would
only bolster the forces of capitalism which
is profit-oriented and competitive. Such
values of the leaders of San Dionisio
Credit Cooperative are very rare in an age
of materialism and individualism.
The Quality not Quantity of
Cooperatives Organized
The performance of the new
cooperative development program, in
terms of the number of cooperatives
which were organized is quite impressive.
However, in evaluating the success of the
program, it is the quality that counts.
Supposing after the financial and
management
assistance
of
the
government has already expired, could
these existing cooperatives still function
effectively? Another test of viability is the
presence of dynamic leadership in the
cooperative
organization.
Many
associations stop operating the moment
their presidents or managers resign or
leave. In the past, not a few active barrio
councils collapsed when the government
community development worker or
extension officer left the community. This
shows that such organizations lacked a
chain of leadership.
The prospect of ningas cogon or
natural death for our newly existing
cooperatives which have been initiated by
the government is not likely to happen in
view of the strict requirements of the
government. As long as the practices of
our cooperatives do not deviate from the
cooperative development program of the
New Society, the probability of success
and growth of the cooperative movement
would be greater. Attitudes, values and
96
skills have to be improved to sustain the
viability of cooperative organizations.
Hence, training and education of the
officers and members should not be taken
lightly.
gross national product of the whole
economy. These have been the
experiences of many communities in
Europe, United States, Japan, Canada
and other nations with progressive
cooperative organizations.
The Economics of Cooperatives
The economic contributions of
cooperatives to the welfare of the poor
are many and varied. These are
adequately proven by all successful
cooperatives, such as the Rochdale
Society and the San Dionisio Credit
Cooperative. People were able to build
their houses, send their children to
schools and acquire their other essential
needs through their cooperatives. Without
such organizations, they are at the mercy
of loan sharks and most probably, they
have remained in perpetual debt
bondage. And there is little hope for them
to improve their economic conditions.
Thus, the vicious cycle of poverty clings to
their wretched lives.
If there would be more successful
cooperatives in our communities, like that
of San Dionisio and other few
communities in our country, more people
would have enjoyed the economic
advantages of cooperatives. When people
get more income through the help of their
cooperatives,
this
increases
their
purchasing power. This means people
buy more and this favorably affects all
sectors of the economy. For instance,
they will buy more of their basic needs,
such as food, clothing and shelter. The
producers and suppliers of these goods
will make more sales and income. People
will also demand for more and better
services, such as education, health,
recreation, etc. Likewise, the service
industry will get more income. Producers
and businessmen will be stimulated to
invest more because of the increasing
demand for goods and services.
Consequently, there will be more
production, employment, income, savings
and consumption. These multiplier and
accelerator effects of cooperatives do not
only improve the standard of living of the
members of the cooperatives but also the
whole community, and contribute to the
Economic Benefits for the Farmers
In our case, members of the
Samahang Nayon buy their agricultural
inputs on wholesale basis. They market
their produce collectively. In both
transactions,
they enjoy economic
benefits. By eliminating the functions and
profits of the middlemen, they reduce their
cost of production and obtain higher
prices for the farm products. This
marketing activity is just one of the
several economic gains which the farmers
acquire
through
their
cooperative
associations. They have their cooperative
rural banks to help them in their credit and
other financial problems. Their own area
marketing cooperatives take care of their
marketing
problems.
Consumers
cooperatives in the urban centers buy
their farm products. And for the security of
the farmers and their families, they can
depend on their cooperative insurance.
The whole cooperative system with
its vertical and horizontal linkages offers
considerable economic opportunities to
people who like to join cooperative. It is
open to all consumers and small
producers. It is a business organization
for the poor and it is service-oriented.
With all its integrated economic benefits
and
proper
guidance
from
the
government, the cooperative development
program has a promising future.
Success of the Program Depends
on the People
The success of the cooperative
development program ultimately hinges
on the people. The nature and quality of
their attitudes, values and institutions are
the essential determinants of the future of
our cooperative movement. Therefore,
these variables of development should be
improved to achieve the goals of the
cooperative program. Regressive values
and institutions should be changed with
97
better ones in order to create an
environment which is favorable for the
growth of cooperatives in our country.
Perhaps, it may not be possible to attain a
real successful cooperative program
throughout the country in the next few
years. Changing values and institutions
usually takes a longer time. But what is
important is that we have started with a
good program. As the saying goes: The
journey of a thousand miles begins with a
single step. For sure, we have
accomplished the first step. Along the trail
of the long journey of the cooperative
movement in our country, there are many
obstacles and problems to hurdle and
solve. These are the difficulties and
challenges
of
the
cooperative
development program.
Another sample of a government program.
AGRARIAN REFORM
98
PROGRAM
The Agrarian Reform Program
1.
What is the agrarian reform program?
c.
Answer: It is a program designed to
uplift the farmers from poverty,
ignorance, and stagnation and to
make
the
useful,
dignified,
responsible,
and
progressive
partners in nation-building.
The program is a package of services
extended to the farmers in the form of
credit support, infrastructure, farm
extension,
legal
assistance,
electrification, and the development
of rural institutions.
d.
e.
Its five major components are:
a.
b.
c.
d.
e.
Land tenure improvement;
Institutional development;
Physical development;
Agricultural development; and
Human resources development.
f.
g.
2.
What lands are affected by the
agrarian reform program of the
Philippines?
Answer: The program covers two
kinds of lands: tenanted areas or
private agricultural lands; and the
alienable and disposable public
lands.
3.
What are the objectives of the
agrarian reform program?
Answer:
a. To establish owner cultivatorship
among those who live and work
on the land as tillers, with owner
cultivatorship and the economic
family-size farm as the basis of
Philippine agriculture and, as a
consequence, to divert landlord
capital in agriculture to industrial
development;
b. To achieve a dignified existence
for the small farmers free from
h.
i.
4.
pernicious institutional restraints
and practices;
To create a truly viable, social
and economic structure in
agriculture conducive to greater
productivity and higher farm
income through a cooperative
system of production, processing, marketing, distribution,
credit and service;
To apply all labor laws equally
and without discrimination to both
industrial and agricultural wage
earners;
To provide a more vigorous and
systematic land resettlement
program
and
public
land
distribution;
To make small farmers more
independent, self-reliant, and
responsible citizens, and a
source of genuine strength in our
democratic society;
To give first priority to measures
for adequate and timely financing
of the agrarian reform program;
To involve local governments in
the
implementation
of
the
agrarian reform program; and
To evolve a system of land use
and classification.
What are the two provisions of the
New Constitution on which the
agrarian
reform
program
is
anchored?
a. Article II, Section 6:
The State shall promote
social justice to ensure the
dignity, welfare, and security of
all the people. Toward this end,
the State shall regulate the
acquisition,
ownership,
use,
enjoyment, and disposition of
private property, and equitably
diffuse property ownership and
profits.
b. Article XIV, Section 12:
99
The State shall formulate
and implement an agrarian
reform
program
aimed
at
emancipating the tenant from the
bondage of the soil and
achieving the goals enunciated in
this Constitution.
5.
What is the law governing the
implementation of the agrarian reform
program of the Philippines?
Answer: The Code of Agrarian
Reforms of the Philippines.
6.
What is the Code of Agrarian
Reforms of the Philippines?
Answer: It is Republic Act Number
3844 (enacted August 6, 1963) as
amended by Republic Acts 6389 and
6390 (both enacted September 10,
1971)
and
as
amended
by
Presidential Decree Numbers 2 and
27 (as amended by PD Nos. 57, 84,
85, 152, 175, 251, 266, 315, 316,
583, 584, 772, 815, 816, 1038, 1040,
and 1066).
a. PD No. 2 proclaims the entire
country as land reform area;
enjoins all government agencies
and offices to extend full
cooperation and assistance to
the Ministry of Agrarian Reform
to
ensure
the
successful
prosecution of the agrarian
reform program;
b. PD No. 27 decrees the
emancipation of tenants from the
bondage of the soil transferring
them the ownership of the land
they till and providing the
instruments and mechanisms
therefore; provides that a tenantfarmer, whether in land classified
as landed estate or not, shall be
deemed owner of a portion
constituting a family size farm of
five hectares if not irrigated and
three hectares if irrigated. It
provides that the landowner may
retain an area of not more than
seven hectares if such landowner
is cultivating such area or will
now cultivate it; formulates land
valuation as equivalent to two
and one-half times the average
harvest of three normal crop
years immediately preceding
October 21, 1972; enjoins the
amortization of the total cost of
the land including interest rate of
six per cent annually to be paid
by the tenant in fifteen tears of
fifteen
equal
annual
amortizations. It orders the
membership of the tenant on a
duly
recognized
farmer’s
cooperative as one prerequisite
before the title to the land is
issued to the tenant-farmer; and
further it provides that the land
acquired is not transferable
except by hereditary succession
(promulgated October 21, 1972);
c. PD No. 57 exempts the
landowners from the capital
gains tax on the proceeds of the
amortization paid him by the
tenant-purchaser and likewise,
from income tax due on the
accruing interests paid as an
addition to the total cost of the
land; requires rural
banks
including
the
Agricultural
Guarantee
Fund
constituted
under section twelve of R.A. No.
6390
and
other
financial
institutions to actively participate
in the implementation of the
supervised
credit
program
(promulgated on November 19,
1972);
d. PD No. 84 authorizes and
empowers
the
Minister
of
Agrarian Reform to sign and
issue the Certificate of Land
Transfer pursuant to PD No. 27
(promulgated on December 22,
1972);
e. PD No. 85 creates a special fund
to
meet
the
financing
requirements of the agrarian
reform program as provided in
PD No. 27 and for other
purposes
(promulgated
on
December 24, 1972);
100
f.
PD No. 52 prohibits the
employment or use of share
tenants
in
complying
with
requirements of law regarding
entry, occupation, improvement,
and cultivation of public lands
amending for the purpose certain
provisions of Commonwealth Act
No. 141, as the Public Land Act
(promulgated on March 31,
1973);
g. PD No. 175 strengthens the
cooperative movement as a
means of increasing income and
purchasing power of the lowincome sector of the population
in order to attain a more
equitable distribution of income
and wealth and enjoy on a lasting
basis the benefits of agrarian
reform;
lays
down
the
cooperative principles of open
membership to all persons who
can make use of its services and
are willing to accept the
responsibilities of membership,
democratic control irrespective of
the number of shares owned
where each member can cast
only one vote in deciding upon
the affairs of the cooperative,
limited interest to capital with the
maximum rate of interests
earned to be established by the
Ministry of Local Government
and Community Development,
and patronage fund where the
net income after the interests on
capital has been paid shall be
redistributed
among
the
members in proportion to their
patronage; qualifies the powers
of the cooperatives whereby it
can exercise the same rights and
privileges given to persons,
partnerships, and corporations
provided under existing laws;
defines the privileges under
certain provisions, preferential
right to supply agricultural
commodities
produced
by
members of the cooperative to
State Agencies administering
price stabilization programs, and
the
exemption
from
the
application of the Minimum Wage
Law upon the recommendation of
the Bureau of Cooperatives
Development subject to the
approval of the Minister of Labor;
creates
the
Cooperative
Development Loan Fund to
financially assist cooperatives;
and enjoins the Agrarian Reform
Fund
Commission,
Greater
Manila Terminal Food Market,
National Development Company
and
facilities
for
storage,
processing and food markets to
be leased or sold to cooperatives
(promulgated on April 14, 1973);
h. PD No. 251 establishes the Land
Bank of the Philippines to provide
adequate financial support on all
phases of the agrarian reform
program; defines the power of
the bank in general as mentioned
in the Corporation Law and the
General
Banking
Act,
as
amended; defines the conditions
for the issuance of bonds
pursuant to Section 76 as
amended and the issuance of
preferred shares of stocks to
finance acquisition of farm lots
and other assets pursuant to
Section 77 as amended of the
General Banking Act; forms a
Special Guaranty Fund which
would be used to pay the bonds,
debentures, and other obligations
issued by the Land Bank in
Section 78 as amended of the
General Banking Act; qualifies
the modes of payment pursuant
to Section 80 as amended and
the uses of bonds pursuant to
Section 84 as amended of the
General Banking Act; and
defines other provisions related
to
the
organization
and
operations of the Land Bank of
the Philippines (promulgated on
July 21, 1973);
i. PD No. 266 provides for the
mechanics of registration of
ownership or title to land under
101
j.
k.
l.
PD No. 27 (promulgated on
August 4, 1973);
PD No. 315 provides that Land
Transfer
Certificates
issued
pursuant to PD No. 27 shall be
accepted by financing institutions
as collateral for loans in the
amount not less than sixty per
cent of the value of the
farmholding as determined under
PD No. 27 with the loan to be
used solely in the improvement
or
development
of
his
farmholding or the establishment
of facilities that will enhance
production
or
market
of
agricultural
products
or
increasing
farm
income
(promulgated on October 22,
1973);
PD No. 316 prohibits the
ejectment of tenant-tillers from
their farmholdings until the
respective rights of the tenantfarmer and the landowner shall
have
been
determined
in
accordance with the rules and
regulations implementing PD 27;
and prohibits any judge of the
Court of Agrarian Relations,
Court of First Instance, municipal
or city court or any other tribunal
or fiscal to take cognizance of
any ejectment case or any other
case designed to harass or
remove
a
tenant
of
an
agricultural
land
primarily
devoted
to
rice
or
corn
(promulgated on October 22,
1973);
PD No. 583 prescribes penalties
for the unlawful ejectment
exclusion, removal or ouster of
tenant-farmers
from
their
farmholding, penalizes any judge
of the Court of Agrarian
Relations, Court of First Instance,
city or municipal court or any
fiscal or other investigating officer
including members of the Armed
Forces of the Philippines who
shall take cognizance of cases of
or shall order the ejectment,
ouster, exclusion, or removal of
any tenant-farmer from the land
titled by him with, upon
conviction, prison mayor and
perpetual
absolute
disqualification; penalizes any
official or employee of the
government including members
of the Armed Forces of the
Philippines who executes an
order for the ouster, removal
exclusion or ejectment of a
tenant-farmer
with
upon
conviction, prison correctional
and
perpetual
absolute
disqualification; and penalizes
any landowner who converts his
tenanted land primarily devoted
to rice and corn into any nonagricultural use or to the
production of any other crop as a
means to avoid the application of
the land reform or decrees to his
landholdings and to dispossess
his tenant-farmers of the land
tilled by him
with, upon
conviction, prison mayor or a fine
ranging from P5,000 to P10,000
or
both
(promulgated
on
November 16, 1974);
m. PD No. 584 establishes a
procedure for small farmers to
acquire equity in rural banks
(Promulgated on November 16,
1974);
n. PD No. 772 penalizes squatting
and
other
similar
acts
(promulgated on August 20,
1975);
o. PD No. 815 amending Section 4
of PD No. 583 penalizes any
landowner,
landholder,
agricultural lessor or anybody
acting for and in their behalf, who
converts his tenanted land
primarily devoted to rice and corn
into any non-agricultural use or
into the production of any other
crop as a means to avoid the
application of the land reform
laws
or
decrees
to
his
landholdings or who employs any
other act scheme or strategy
resulting in ejectment, exclusion,
removal, ouster or dispossession
102
of the tenant-farmer with, upon
conviction, prison mayor or a fine
ranging from P5,000 to P10,000
or both (promulgated on October
21, 1975);
p. PD No. 816 penalizes any
agricultural lessee of a rice or
corn land under PD No. 27 who
deliberately refuses or continues
to refuse to pay the rentals or
amortization payment when they
are due and remain unpaid within
a period of two years. Upon
conviction, forfeiture of the
Certificate of Land Transfer
issued to him; or if his
landholding is not yet covered by
Operation
Land
Transfer,
forfeiture of his right to be issued
a Certificate of Land Transfer.
PD No. 816 vests the Court of
Agrarian
Relations
with
jurisdiction over such cases of
refusal or continued refusal to
pay
rent
(promulgated
on
October 21, 1975);
q. PD No. 1038 strengthens the
security of tenure of tenant-tillers
in non-rice and corn private
agricultural
lands
producing
crops including but not limited to
abaca, banana, coconut, coffee,
mango,
durian
and
other
permanent trees; prohibits any
judge of the Court of Agrarian
Relations, Court of First Instance,
city or municipal court or any
other tribunal or fiscal to take
cognizance of any ejectment
case or any other case designed
to harass or remove a tenant of
an agricultural land primarily
devoted to rice and corn unless
certified by the Minister of
Agrarian Reform as a proper
case for trial; imposes a penalty
of arresto mayor or a fine of
P1,000 or both upon any judge or
fiscal or other hearing officer who
shall take cognizance of any
case designed to exclude, oust,
eject or remove any tenant-tiller
or who shall order the ejectment,
ouster, exclusion, or removal of
r.
s.
the tenant-tiller on the land tilled
by him without first complying
with Sec. 2 of PD 1038; imposes
a penalty of arresto mayor or a
fine of P1,000 upon any officer or
employee of the government,
including members of the Armed
Forces of the Philippines who
executes an order or upon any
landowner,
landholder,
agricultural lessor or anybody
acting for and in their behalf who,
by any act scheme or strategy
shall eject, exclude, oust or
remove the tenant-tiller from his
farmholding (promulgated on
October 21, 1976);
PD No. 1040 prohibits the
contracting of share tenancy in
all agricultural lands covered by
PD No. 27 (promulgated on
October 21, 1976); and
PD No. 1066 exempts from land
reform all tenanted sugar lands
converted
from
sugarcane
production to production of
priority crops such as rice, corn,
feedgrains, cotton, fruits, and
vegetables,
and
livestock
(promulgated on December 31,
1976).
SECTION
4.
Scope.
–
The
Comprehensive Agrarian Reform Law of
1988 shall cover, regardless of tenurial
arrangement land commodity produced,
all public and private agricultural lands as
provided in Proclamation No. 131 and
Executive Order No. 229, including other
lands of the public domain suitable for
agriculture.
More specifically, the following lands
are covered by the Comprehensive
Agrarian Reform Program:
(a) All alienable and disposable lands
of public domain devoted to or suitable for
agriculture. No reclassification of forest or
mineral lands to agricultural lands shall be
undertaken after the approval of this Act
until Congress, taking into account
ecological, developmental and equity
considerations, shall have determined by
103
law, the specific limits of the public
domain;
(b) All lands of the public domain in
excess of the specific limits as determined
by Congress in the preceding paragraph;
(c) All other lands owned by the
Government devoted to or suitable for
agriculture; and
agricultural products raised or that can be
raised thereon.
SECTION
5.
Schedule
of
Implementation. – The distribution of all
lands covered by this Act shall be
implemented immediately and completed
within ten (20) years from the effectivity
thereof.
(d) All private lands devoted to or
suitable for agriculture regardless of the
Evaluation
SAQ 8
Conceptualize and prepare a program. The program’s scope
could be local, regional or national.