HISTORY OF
COOPERATIVE
MOVEMENT
Coop 002 – Cooperative Management
MARILYN P. GAOAT
Instructor
In the World
Robert Owen (1771–1858)
• OWEN first cooperative theorist and credited with inspiring the
Rochdale Pioneers, who in 1844 began the cooperative
movement at Rochdale, Lancashire
• Fathered the cooperative movement. A Welshman who made
his fortune in the cotton trade
• Owen believed in putting his workers in a good environment
with access to education for themselves and their children.
These ideas were put into effect successfully in the cotton mills
of New Lanark, Scotland.
• Owen had the idea of forming "villages of cooperation" where
workers would drag themselves out of poverty by growing their
own food, making their own clothes and ultimately becoming
self-governing. He tried to form such communities in Orbiston
in Scotland.
In the World
Dr William King(1786–1865)
• King believed in starting small, and realized that the
working classes would need to set up cooperatives for
themselves, so he saw his role as one of instruction.
• King advised people not to cut themselves off from
society, but rather to form a society within a society,
and to start with a shop because, "We must go to a
shop every day to buy food and necessaries—why then
should we not go to our own shop?“
• He proposed sensible rules, such as having a weekly
account audit, having 3 trustees, and not having
meetings in pubs (to avoid the temptation of drinking
profits)
In the World
Charles Fourier
• The Pioneers established the first
consumer cooperative, leading to a
worldwide
movement.
They
also
experimented
with
a
producer
cooperative, which soon failed
In the World
The Rochdale Pioneers
• A few poor weavers joined together to
form the Rochdale Equitable Pioneers
Society at the end of 1843. The Rochdale
Pioneers, as they became known, set out
the Rochdale Principles in 1844, which
have been highly influential throughout
the cooperative movement.
In the World
The Rochdale Pioneers
• A few poor weavers joined together to form the Rochdale
Equitable Pioneers Society at the end of 1843. The Rochdale
Pioneers, as they became known, set out the Rochdale
Principles in 1844, which have been highly influential
throughout the cooperative movement.
• In modern form, cooperatives date from 1844, then a group
of 28 impoverished weavers of Rochdale, England, founded a
mutual-aid society, called the Rochdale Society of Equitable
Pioneers.
• As its initial project, the society organized a grocery store, a
venture that rapidly prospered. The principles developed for
the guidance of this enterprise and others organized by the
Rochdale Society have served, with codifications in emphasis,
as the basic code of the consumer cooperative movement
since that time.
In the World
The Rochdale Pioneers
• A few poor weavers joined together to form the Rochdale
Equitable Pioneers Society at the end of 1843. The Rochdale
Pioneers, as they became known, set out the Rochdale
Principles in 1844, which have been highly influential
throughout the cooperative movement.
• In modern form, cooperatives date from 1844, then a group
of 28 impoverished weavers of Rochdale, England, founded a
mutual-aid society, called the Rochdale Society of Equitable
Pioneers.
• As its initial project, the society organized a grocery store, a
venture that rapidly prospered. The principles developed for
the guidance of this enterprise and others organized by the
Rochdale Society have served, with codifications in emphasis,
as the basic code of the consumer cooperative movement
since that time.
In the World
The Rochdale Pioneers
• The successful example of cooperative business
provided by the Rochdale Society, which also
established between 1850 and 1855 a flour mill, a
shoe factory, and a textile plant, was quickly
emulated throughout the country.
• By 1863 more than 400 British cooperative
associations, modeled after the Rochdale Society,
were in operation. Thereafter the English
movement grew steadily, becoming the model for
similar movement worldwide.
• By the mid-20th century, it comprised almost 2,400
associations of all types. The Cooperative Wholesale
Society is the largest distributive agency in England.
In the World
World Cooperative Movement
• Worldwide, some 800 million people are
members of cooperatives, and it is estimated
that cooperatives employ some 100 million
people.
In the World
DENMARK
• A notable feature of agriculture in
Denmark is the influence of the
cooperative movement. Cooperative
associations dominate the production of
dairy products and bacon. A large
percentage of agricultural produce is
sold through marketing cooperatives.
In the World
ITALY
• This gives totals of 7,100 social cooperatives,
with 267,000 members, 223,000 paid
employees, 31,000 volunteers and 24,000
disadvantaged people undergoing integration.
• Combined turnover is around 5 billion euro. The
cooperatives break into three types: 59% type A
(social and health services), 33% type B (work
integration) and 8% mixed. The average size is
30 workers.
In the World
MALAYSIA
• 4,771 co-operative with a total
membership of 5.5 M members. This
represents about 5% of Malaysia’s total
population with a total fund of RM 6.06 B
with a total asset of RM 25.7 B
• 8 types of coops: banking, housing,
consumer, transportation, agriculture,
small-medium industry, development &
service
In the World
JAPAN
• Japan has a very large and well
developed consumer cooperative
movement with over 14 million members;
retail co-ops alone had a combined
turnover of 2.519 trillion Yen (21.184)
billion U.S. Dollars [market exchange
rates as of 11/15/2005]) in 2003/4
In the World
THAILAND
• Agricultural cooperatives are engaged in
business in response to members’ need in
five areas:

credit business

savings & deposits

purchasing business

marketing business

agricultural services
In the World
SINGAPORE
• National Coop Federation 74 coops classified
as: campus coop sector, credit coop sector,
NTUC co-op sector, service co-op sector
combined membership of 1.6 M
2011
7,290,848
members
Dr. Jose Rizal, had
organized Agricultural
marketing cooperative
in Dapitan while on
exile in 1896.
Cooperative Efforts (1906-1940)
1915
1907
Government
Initiated
1938
Strengthen
Cooperatives
Rural
Credit
Act
Rural
Credit
Bill
1927
1919
Coop
Marketing
Laws
PA 3425
Grant loans to
Credit
Associations
P.A. 3872
PA 3425 was
amended by PA
3872 provided
incorporation of
FACOMA
Common Wealth Act 565
Gen, Basic Cooperative
Law
1940
Cooperative Efforts (1906-1940)
1940
1938
Credit
Union
in
Church
Vigan
Initiated
Government
Initiated
1941
National
Cooperative
Administration
Common
Wealth Act 585
Cooperative Act
Expansion of Cooperativism in the Philippines
(1950-1969)
1952
1952
1952
Government
Initiated
RA 821 Farmers
Cooperative
Marketing
1967
Philippines
In 1969 (R.A
the Code of
6389)
CodeReform
of
Agrarian
Agrarian Reform
(Rep Act No. 6389
Church
Sponsoredd
RA No. 821 known as
RA 2023
the Agricultural
Credit
and Credit
Non
Cooperative
Agricultural
Financing Act
Cooperative
law
1963
Philippine
National
Cooperative
Bank
Cooperative Under the 1973
Constitution (1973-1986)
n April 14, 1973 the President issued a decree
on "Strengthening the Cooperative Movement
PD 175
Government
Initiated
On July 9, 1973 Implementation No. 23 by President Marcos
which set forth the regulations for implementing the decree
on Strengthening the Cooperative Movement
Electric Cooperatives Under PD 269 Presidential Decree was issued in August
1973 creating the National Electrification Administration giving responsibility
for administering a nationwide program of rural electrification thru non stock
cooperatives and granting the power to "organize, register, supervise, and
finance electric cooperatives."
Cooperative Under the 1973
Constitution 1973-1986
Presidential Decree No. 775 On August 24, 1975
decreed that sugar planters and or producers'
cooperatives shall be developed by the Philippines
Sugar Commission.
Government
Initiated
Transport Cooperatives under Executive Order No. 893 on
October 19, 1973, A Commission on Transport Cooperatives
to promote and supervise the development of transport
cooperative to serve drivers of public vehicles
Government
Initiated
RA. No. 6938
The bill was passed and signed as law by
President Aquino on March 10, 1990. A
companion law was also passed creating
the Cooperative Development Authority
(Rep. Act No. 6939) which provided for
the abolition of BACOD and the transfer
of its functions, qualified personnel and
budget to the CDA.
RA 9520
Government
Initiated
• Amended the Coop Code
promulgated in 1990;
• Discussed in four (4) Congresses
(starting the 11th Congress up to the
14th) spanning over ten (10) years;
• Approved by the Bicameral
Committee on November 18,2008;
• Signed into law last February
17,2009
RA 9520
• The Philippine Cooperative Code
of 2008 (Article1)
• Signed on February 17, 2009
• Published on March 7, 2009
• Effective March 22, 2009
the first cooperatives in the Philippines were the product of a
series of legislative measures. Cooperatives did not begin as
people’s movement. Neither did they evolve from people’s
initiatives at mutual self-help and cooperation. There is,
however, one instant in Philippine history where a cooperative
was formed ahead of the passage of the cooperative laws.
That was the agricultural
marketing cooperative which the
national hero, Dr. Jose Rizal, had
organized in Dapitan while on
exile in 1896. Nothing much is
recorded about the cooperative. In
may be safe to assume that with the
execution of Dr. Rizal in the same
year, the cooperative must have
died with him.
The first legislation to attempted in
the country was the “Rural Credit
Cooperative Bill”. It was
introduced in 1907 develop the
agricultural interest of small farmers.
The bill was passed by the Philippine
legislature in 1908. Unfortunately it
was disapproved by Philippine
Commission. It took another seven
years before the first cooperative law
in the Philippines; the “Rural Credit
Act” (Act No. 2508) was passed in
1915.
The law, patterned after the
Raiffeinsen experience in Germany,
promoted the organization of rural
credit cooperatives. Some 591 rural
credit associations were organized in
amended in the same year and its
administration was given to the
Bureau of Agriculture. Thus began the
more active involvement of the
government in cooperative organizing
and supervision.
Three years after,
in 1919, Act No. 2818 was enacted
primarily to grant loans to members of rural credit
association. The P1 million fund appropriated for rice
and corn production under the law spurred the
organization at the end of 1926 of 544 rural credit
cooperatives in 42 provinces. Because the members
and the leaders have these cooperatives had not
adequately imbibed the principles of cooperativism and
because government wanted to short-circuit the
cooperative principle of autonomy self-reliance and
voluntarism, not surprisingly, the cooperatives failed
and the loans were never paid.
Thereafter, other legislative measures were enacted to address the
particular needs of farmers. For instance, to support the marketing of
farmer’s production, the “Cooperative Marketing Law” (Act No.
3425) was passed in 1927. The law gave the Bureau of Commerce and
Industry the responsibility of organizing farmers into marketing
cooperative. Another law, Commonwealth Act No.116, was enacted to
provide loans to marketing cooperatives. By 1938, there were some
560 cooperative marketing associations. Unfortunately, the
cooperatives ultimately turned out to be dismal failures due mainly to
the lack of education in cooperative principles not only of the members
and leaders of the cooperatives themselves but also of the government
which had impatiently pushed for the adoption of cooperatives
prematurely.
1n 1938, an American minister of the Church of
Christ, Rev. Allen R. Huber, organized church
members in Vigan, Ilocos Sur into the country’s
first privately-initiated credit union. Significantly,
the cooperative generate savings internally from
among its members. The internally-generated savings
showed that cooperatives need not be dependent upon
government financial support to get started.
Inspired by the success of Vigan
cooperative, the Protestant Church in the
Ilocos region organized other cooperatives.
Because of the achievements of church
initiated cooperatives, the government
passed Commonwealth Act No. 287 in
1938 to strengthen the cooperatives. Also
in the same year, the privately organized
consumer’s cooperatives were forged into
the Consumers League of the Philippines
under government-sponsorship.
The government’s active involvement in the cooperative
movement continued unabated into the early 1940’s. For,
instance, in 1940, Commonwealth Act No. 585, the
“Cooperative Act”, was passed. It provided for the
organization of all types of cooperatives; authorized the
National Trading Corporation (NTC) to promote and
supervise cooperatives; establish the National Cooperative
Fund (NCF) ; gave permission for the organization of a
cooperative of not less than 15 members; and granted
cooperatives exemption from government taxes and fees
for the first 5 years of their operation.
In 1941, the National Cooperative
Administration (NCA) was established. The
functions of NTC and the management of
the NCF were transferred to it.
Cooperatives multiplied under the NCA.
Unfortunately the Second World War
intervened in December of that year. There
is, thus, no way to assess objectively how
those cooperatives qua cooperatives
performed
During the war, the cooperative movement ceased to
function effectively. Many cooperatives became
inoperative. But after the war, cooperatives were
once again organized or reorganized to help in the
distribution of relief goods under the supervision of
the Emergency Control Administration (ECA).
More than 1,500 cooperatives were enlisted in the
relief distribution effort but they folded up when
there were no more relief goods to distribute.
By 1947, the government revved up attempts to
consolidate its hold on the cooperative movement. For
instance, the merchandising functions of the NCA over
cooperatives were transferred to the Philippine Relief and
Trade Rehabilitation Administration (PRATRA). From that
year up to the 1960’s various regulation shunted the
responsibility to promote, organize an supervise
cooperatives from one agency to other. matters.
Executive Order No. 95, for example,
transferred those powers to the National
Cooperative and Small Business Corporation
(NCSBC). Then, in 1950, the NCSBC was
abolished. In its place, the Cooperative
Administration Office (CAO) under the
Department of Commerce of Industry was
created to take change of cooperative matters
Thereafter, several other measures and cooperatives
were enacted by government. The government, for
instance, created the Agricultural Credit and
Cooperative Financing Administration (ACCFA) in Rep.
Act No. 821, otherwise known as the Agricultural
Cooperative Law, the Farmers Cooperative Marketing
(FACOMA) was organized, financed by ACCFA and task
to organize, supervise and support the agricultural
cooperatives. Non-agricultural cooperatives however
continued to be under supervision of CAO.
The FACOMA law offered to farmers large scale
government financing with counterpart funding coming
from the United States Agency for International
Development (USAID) through various types of loans
without any collateral. At the end of five years, 455
FACOMAs had been organized with aggregate paid up
capital of over P5, 125,077 representing 259,029 farmers in
about 10,700 barangays in 50 provinces.
The FACOMAs however, suffered from
the problems of low repayment of loans
and poor loan administration. About P500
million FACOMA loans were not paid.
Thus, the FACOMA experiment ended
ingloriously. The FACOMAs are
considered a monumental failure of the
cooperative movement in the country.
The FACOMA debacle taught cooperators that there was a need
to amend the existing laws on non-agricultural cooperatives and
adopt a new law that would define more clearly the thrust of
government involvement in cooperatives in general. Thus, in
1957 with the support of cooperators, the Philippine NonAgricultural Cooperative Law (Rep Act No. 2023) was passed. It
separated the administration of agricultural cooperatives
(farming, fishing, forestry) from the non-agricultural
cooperatives (credit unions, consumers, industrial, services and
multi-purpose cooperatives).
In the 1960’s, the Catholic Church, which has a membership
of more than 85% of the Filipino people, proclaimed an
interest in the cooperative movement as a matter of Church
teaching. The Philippine Church was responding to the call
of the Second Vatican Council for direct participation in the
solution of the problems in the poverty and social in justice.
Thus, in 1967, the Church sponsored a National Rural
Congress which passed resolution officially recognizing the
need to organize cooperative in the parishes.
This became a major plank in the program of
action of the diocesan social action centers. The
cooperatives organized under this program and
those organized by the private sector with the
help of church leaders laid great stress on
education as a tool for economic liberation and
on voluntarism and self-reliance as the
motivating force for leadership and
membership in cooperatives.
By 1963, there were approximately 750 non-agricultural
cooperatives registered with Cooperative Administration
Office with membership of more than 200,000. Of these
cooperatives, credit unions and consumers cooperatives
were the predominant types. In the most successful ones.
Under the provision of the same law, the Philippine
National Cooperative Bank (PNCB) was established to
provide credit to non-agricultural cooperatives. After 10
years of operation, however, it was closed due to
insolvency resulting from mismanagement.
The Church efforts resulted in the
organization of thousands cooperatives.
Primary cooperatives of various types
linked up with one another to form
secondary level organizations called
federations and these were in turn
integrated into the tertiary level
organizations, the national cooperative
networks.
In 1969 the Code of Agrarian Reform
(Rep Act No. 6389) was passed. The
Code Mandated that cooperatives be
utilized as the primary conduits for
credit, supply and marketing services
to agrarian reform beneficiaries
During the martial law regime, President Marcos
issued several decrees that dealt with
cooperatives. Lamentably, Marcos also wanted
the cooperatives to be instruments for the
propagation of his New Society or Bagong
Lipunan. Thus, the cooperatives could not
exercise any freedom to achieve the economic
wellbeing of their members through voluntarism
and self-reliance.
For instance, Marcos issued President Decree No. 1
which recognized the executive branch of the
government. The decree abolished the CAO and
organized the bureau of Cooperative Development
(BCOD) under the Department of Local Government
and Community Development (DLGCD). A month later,
P.D. No. 27, the Agrarian Reform decree, declared the
entire country as an agrarian reform area. To support
the agrarian reform program, Marcos issued a new
decree on cooperatives, P.D. No. 175 and Letter of
Instruction No. 23.
Under these decrees, the cooperatives
were directed to prepare the tenant
farmers for their new role as landowners
and to provide them with the basic
economic and social services previously
given to them by the landlords. With
government sponsorship, many
cooperatives were organized overnight.
Pre-cooperatives called Samahang Nayon (SNs) were
organized at the barrio level. Groups of ten SNs were
formed into the Kilusang Bayan (KBs), which were
supposedly full-pledged cooperatives. Marketing
support for the produce of the KBs was to be provide
by the Area Marketing Cooperatives (AMCs) at the
provincial level. Their financial requirements were to
be serviced by the Cooperative Rural Banks (CRBs).
The government also set up the Cooperative
Development Loan Fund (CDLF) to extend funding
assistance where needed.
Corazon C. Aquino, was catapulted to power as the new
president. With the recreation of democratic space,
cooperative leaders seized the opportunity to push
again for a meaningful legislation – a law that would
define government’s role as a regulator of cooperatives
to prevent abuse and as a provider of incentives to
enhance their growth. The cooperative leaders saw to
the chance to redirect the government’s cooperative
involvement away from direct organizing and
managing to one of support for and promotion of
cooperatives.
Hence, in 1988, cooperative leader all over the country
lobbied aggressively for the adoption of cooperativefriendly legislation. In this effort, they got all out
support form co-author (Aquilino Q. Pimentel Jr.) who
was, then, serving as Senator. He authored and cosponsored the bill that sought to enact a Cooperative
Code. Sen. Agapito Aquino in his capacity as chair of
the Committee on Agriculture was the main sponsor.