HISTORYOFCOOPERATIVEINTHEPHILIPPINES

AFilipinostravelinginEuropeduringthelaterpartofthe19thcenturymusthavebeenimpressedwith thesuccessofaneweconomicmovementineffectingagradualmetamorphosisoftheeconomicand sociallifeofthepeopleionthosecountries.Attheturnofthecentury,Filipinos,inincreasingnumber, traveledandstudiedabroadandbroughthomewiththemnewideas.ItwasthisgroupofFilipinoswho wereincloseincontactwiththeneweconomicmovementinEurope.Twonamesworthyofnotewere Dr.JoseP.RizalandTeodoroSandiko. Rizal,afterhissidetriptoSandakan,Borneoin1892,requestedGovernorDespudolthatheandsome relativesandfriendsbepermittedtomovetothatplaceandfoundacolonyunderthecooperativeplan ofRobertOwen.Instead,hewasarrestedfortreasonandbanishedtoDapitan,ZamboangadelNorte.In Dapitan,Rizalhadhisideasincooperationpartiallyfulfilled.Heputupaschoolforthepoorcommunity onapurelycooperativebasis.Healsoestablishedacooperativestorewiththehelpofhispupils.One noteworthy group organized by Rizal was the La Sociedad de los Abacaleros (Society of Abaca Producers). This functioned for only one year. Rizal returned the members share capital without any loss. Teodoro Sandiko, in his travels in Europe, must have had a close contact with the cooperative movement in Germany where he came across with the Raiffeisen movement. He was very much impressedbythistypeofcooperativeandhelookedforwardforanopportunitytohaveitintroduced hereinthePhilippines.Asdestinymighthaveitschoice,Sandikohadhischancewhenhewasappointed oneoftheearlygovernorswhenCivilGovernment,undertheAmericans,wasestablished. TheRuralCreditLaw.AssoonasCivilGovernmentwasestablished,Filipinoparticipationingovernment was encouraged. Teodoro Sandiko, then governor of Bulacan, prepared a bill patterned after the Raiffeisen type of credit union and had Rep. Albert Barreto of Zambales sponsor the bill in the lower HouseofCongress.Theprincipalaimofthisbillwastoprotectanddeveloptheagriculturalinterestof thecountry.WhentheBarretosponsoredbillwaspresenteditreadilyobtainedunanimousapprovalon January20,1908.ThePhilippineCommissionhowever,turneditdown. Undaunted by this defeat the sponsors of the bill again put it through in the Second Philippine Legislature.ThistimeitwassponsoredintheLowerHousebyRep.RafaelCorpuzwhosucceededRep. BarretofromZambales.ThebillwasablypresentedinbothHousesanditwasfinallypassedintolawon February11,1914andbecameAct2508.WhenthisActwasfinallymadeintolaw,Gov.Sandikoearned atitleofFatherofCooperationinthiscountry. The administration of the Rural Credit Law was entrusted to the Bureau of Agriculture. The first rural creditassociationthatwasorganizedunderthisLawwastheAgriculturalCreditCooperativeAssociation ofCabanatuan,NuevaEcija.ItwasformedonOctober18.1916.Withthisinitialorganizationfarmersin the different provinces were organized. At the end of 1926 there were 544 rural credit cooperatives organizedinthe42provincesandby1930therewere571associationsformedalloverthecountry.In 1935,however,about90%ofthesecooperativeswereinactivewithnofundsleftintheirtreasury.The experimentonruralfinancing,throughcooperativeswasafailure. MarketingCooperatives.Assoonastheorganizationofruralcreditcooperativeswasinfullswing,The CooperativeMarketingLaw(Act2425)wasenactedandapprovedonDecember9,1927.Theruralcredit associations were designed to help finance the productive efforts of the farmers. In order to provide

incentivestothefarmerstoproducemoreanefficientmachineryfortheprofitablemarketingoftheir productsshouldbeprovided.Whereverruralcreditassociationswereorganizedcooperativemarketing societies were also designed to be organized.The apparent weakness of the rural credit cooperatives, however, failed the enthusiasm of farmers to organize themselves into cooperative marketing associations. By 1939 only 164 societies were actually organized with a total membership of around 5,000 farmers. With this number only 35 reported their sale of products to the Bureau of Commerce. Thenumberofassociationsreportingindicatedthatonly20%oftheorganizedassociationswereactive. Causes of the failure of early cooperatives in the Philippines. Filipino economists and students of cooperativesinthiscountryhaveoftenattributedthefailureofcooperativesocietiesinthiscountryto thefollowingcauses: Incompetentmanagement Lackofproperunderstandingoftheprinciples,practicestrueaims,andpurposesofcooperative associations. Improperuseofcreditsbytheborrowerswho,insteadofusingmoneyborrowedforproduction, spentitforfiestasorluxuries. Defectivesecurities. Politicalinterferenceparticularlyinthecollectionofoverdueaccounts. Lackofcompensationofofficers. Inadequatecharacterandmoralresponsibilityinhandlingtheotherfellowsmoney. Lackofadequatesafeguardagainstunscrupulousofficerswhotookadvantageoftheirposition tograntloanstothemselvesandtheircompadreswhichlaterproveddisastroustothesystem. The dominance of the individualistic attitude instead of the spirit of cooperation among the people. Inabilityofcooperativestosecureadequatecapital. Theirdependenceonaliensuppliersanddistributors. Ineffectivenessofthegovernmentandpromotionofcooperativeorganizations. Inadequatemarketingfacilities. Considering the experiences of similar societies in other countries, however, the fundamental causeoffailureinacooperativeenterpriseisthelackofproperunderstandingoftheprinciples andtrueaimsofcooperativeassociations,andthenonadherencetotheminactualoperation ofcooperativeenterprises. TheACCFAFinancingProgram.Inrecognitionofthestrategicpositionoccupiedbyourfarmersinthe social structure and economic development of the country, the Congress of the Philippines in 1952 enactedRepublicAct821.Thislawestablishedasystemofliberalcreditwhichisspeciallydesignedto meettheneedsofthesmallfarmer.ItalsocreatedanadministrativeagencyknownastheAgricultural CreditandCooperativeFinancingAdministration(ACCFA). Toimplementthegreattaskofruralfinancing,fourgeneralandinterrelatedobjectivesofthelawareset forthasfollows: Toassistsmallfarmersinsecuringliberalcredit. Topromotetheeffectivegroupingsoffarmersintocooperativeassociations. To establish an orderly and systematic marketing machinery for, and controlled by, the small farmers. Toplaceagricultureonabasisofeconomicequalitywithotherindustries.