BIBLIOGRAPHY ATINYAO, GLADYS P. APRIL...
BIBLIOGRAPHY
ATINYAO, GLADYS P. APRIL 2009. Cooperative Growth through the Credit
Operation of Topdac Multi-Purpose Cooperative, Benguet State University, La Trinidad,
Benguet.
Adviser: David Joseph L. Bognadon, MSc
ABSTRACT
The study was conducted to determine the growth that might have occurred the
cooperative brought by the credit operation of the Topdac Multi-purpose Cooperative in
2003-2007 as to income, share capital and asset and to determine the level of patronage
of members in the credit operation.
Financial documents were taken as the primary data used in the analysis of the
study. The manager and some officers were also interviewed to validate some
information from the financial data.
It was observed that in the credit operation, it has a minimal contribution to the
total revenue compared to the consumer service, But in the later years there was a
significant increase in the credit operation and this could be attributed to the interest on
loans released and partly from the service fee and fines of past due loans and also from
the increased share capital. In terms of asset, credit operation has a very significant
contribution to the cooperative growth in 2007, due to increased loan releases and
number of borrowers.
The amount of loan released had been increasing yearly from 2003 to 2007 and so
with the number of borrowers. This finding implies that there is an increasing demand for
credit by the members.
ii
TABLE OF CONTENTS
Page
Title Page…………...…………………………………………………………...
i
Abstract………… ………………………………………………......................
i
Table of Contents …………………………………………………..................... iii
INTRODUCTION…………………………………………………....................
1
Rationale of the Study…………………………………………………...
1
Statement of the Problem………………………………………………..
2
Objectives of the Study…………………………………….....................
2
Importance of the Study…………………………………………….…...
3
Scope and Limitation of the Study………………....................................
3
REVIEW OF LITERATURE……………………………………………………
4
Cooperative Define……………………………………………………...
4
Contribution of cooperative to
Community Development………………………………….....................
4
Cooperative Growth……………………………………………………..
5
Credit Cooperative Define………………………………………………
7
Aims and Objectives of Credit Cooperatives…………………………....
7
Problems Encountered in Credit
Affecting the Growth of Cooperatives…………………………………..
8
Success Factors of Credit Cooperatives………………………………....
8
iii
METHODOLOGY……………………………………………............................
10
Locale and Time of Study……………………………………………….
10
Respondents of the Study………………………………………………..
10
Data Collection………………………………………………………….
10
Data Analysis……………………………………………………………
10
Location Map……………………………………………………………
11
RESULTS AND DISCUSSION………………………………………………...
12
History of Topdac Multi-Purpose
Cooperative………………………………………………………….…..
12
Total Loans Released by the
Cooperative……………………………………………………………...
13
Contribution of the Credit Service
to Total Revenue………………………………………………………...
15
Contribution of the Credit Service
to Net Surplus……………………………………………………………
17
Contribution of Credit to
Paid-up Share Capital……………………………………………………
19
Contribution of the Credit Service
to Total Asset……………………………………………………………
21
Total Liabilities of the cooperative……………………………………...
23
Total Receivables of the Cooperative....................................................... 25
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS………………. 27
Summary………………………………………………..…………….....
27
Conclusions……………………………………………………………...
28
Recommendations……………………………….....................................
29
iv
LITERATURE CITED………………………………………….........................
30
APPENDICES…………………………………………………………………..
32
A. Guide Questions……………………………………………….........
32
B. Comparative Financial Condition…………………………………...
33
C. Comparative Financial Operation…………………………………...
35
D. Cooperative Picture…………………………………………………. 37
v
1
INTRODUCTION
Rationale of the Study
Cooperatives are able to reach and benefit sectors of the population that would not
normally be served by other private sector institutions or direct government programs.
The relatively permanent institutions created by cooperative development in the Third
World provide an institutional framework through which other resources and programs
can be channeled. The high premium placed on member participation in the operations
and decision making of the cooperative promotes independence and self-reliance
encouraging members to take an active role in their own development.
Cooperatives offer an attractive alternative to public sector programs. The
paternalistic approach of governments and absence of competition provide little incentive
to seek efficient methods of product or service delivery. A cooperative, because it is
recipient owned, has an automatic incentive to maximize benefits to the members
(Cooperative Development, 1985).
One successful cooperative in Atok, Benguet is the Topdac Multi-Purpose
Cooperative and it was organized on 1980. A consumer service was opened with ninety
(90) initial members. Later on new service was added like the credit service which
opened on August 1999 with thirty-six (36) member depositors. It has 3 branches, one
offering both consumer and credit while the other two offer consumer service.
As of December 2007, Topdac Multi purpose Cooperative accumulated a total
asset of P 3,768,205.53 with 349 regular members and 140 associate members.
Through credit operation, the cooperative had been providing loans to its
members, which also contributed to its progress and development. In this connection, this
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
2
study aims to look on how credit service patronage of members affects the growth of the
cooperative.
Statement of the Problem
The main aim of this study was to look on how the credit service patronage of
members affects the growth of the cooperative with the following questions;
1. What is the growth in credit operation from 2003-2007 as to
a. Income
b. Share capital
c. Asset
2. What is the level of patronage on credit services from 2003-2007 as to
a. Number of borrowers
b. Amount of loan releases
3. What recommendations can be given for the improvement of the credit services?
Objectives of the Study
The specific objectives of this study were the following:
1. To determine the growth in credit operation from 2003-2007 as to
a. Asset
b. Income
c. Share capital
2. To determine the level of patronage on credit services from 2003-2007 as to
a. Number of borrowers
b. Amount of loan releases
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
3
3. To suggest for the improvement of the credit services?
Importance of the Study
The result of the study will determine the growth of the cooperative as to the
credit operation of the Topdac Multi-purpose Cooperative. The findings will serve as a
guide for the officers and employees in decision making for the improvement of the
cooperative especially in credit operation.
For students’, especially cooperative majors, this study would help them to gain
knowledge about growth of cooperatives through credit operation and it would serve as
reference for the further similar studies.
Scope and Limitation of the Study
This study focused on the growth of TMPC based on the credit operation. The
analysis is limited in the 2003- 2007 financial report as basis in determining changes or
growth of the cooperative.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
4
REVIEW OF LITERATURE
Cooperatives are socially and environmentally sustainable enterprise based on the
principle of caring for their members and communities where they operate. This makes
them substantial contributions to achieving a coherent balance of growth, productivity,
employment and concern for the environment (Henry, 2008).
Benguet Operators and Drivers Association Multi-purpose Cooperative (BODA-
MPC) defined cooperative as:
C- Capitalized by members with common goal
O- Owned by members
O- Operated by members
P- Patronized by members
Marquez (2004) also defined cooperative as a voluntary association of at least 15
persons with common interest not capital. It begins with people who wish to provide
themselves with good and services they need. Although capital or money is not the
beginning of cooperative, it is the very life- blood of its successful operations. A
cooperative must have adequate funds and these must be manage efficiently for the
maximum benefits of its members and community. Much of the success of the
cooperative depends on how its financial resources are used and allocated.
Contribution of Cooperative to Community Development
According to Zueli (2005), cooperatives have the potential to foster economic
growth at the community and the regional level, building on the spirit of cooperation that
is already prevalent in rural areas. With local ownership and control, and net profits
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
5
distributed to those who use its service, cooperatives are considered by some to be an
ideal model for economic development. She also stated that cooperatives offer a way for
a group of individual to pool unlimited resources to achieve critical mass and cooperative
combine people, resources and capital into larger, more viable and economically
competitive units.
Abella and Fajardo (1999) defined community development as a way for the
people in a community to work together in order to build a better community and thereby
improve the welfare of all. They organized themselves under the free will and work as a
team to solve problems of their community. Both are concerned with the development of
human resources and consider man as the most important factor of development.
A previous study at Topdac Multi purpose Cooperative by Marquez (2004) found
that TMPC contributed an extensive service to the community in terms of health and
economic.
Thus, the researcher recommends that there is a need to expand the contributions
on economic aspect. Officers should find ways to increase their capital to cater more the
needs of the members. There should be better cooperation among community people in
helping their cooperative to succeed, encourage all members to patronize the cooperative
and expand the space in order to sell agricultural products.
Cooperative Growth
“Growth does not always lead a business to success. All too often it converts a
highly successful business into mediocre large business” (Richard Branson, 1950).
Growth is the process of expanding or developing, especially rapidly (Microsoft
Encarta, 2006).
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
6
Ordinary least squares results that both diversification and advertising strategies
are important determinants for Investor Owned Firms (IOF) growth, while the
cooperative growth depends on the capital structure and intensity (Karantininis et al.,
2002).
Lerman et al. (1993) also stated that cooperatives grow if they maintain their
competitive posture and continue providing services to their members and for it to remain
viable. In addition, it was stated that cooperatives need to grow to take advantage of a
continuum of new technologies, new opportunities for the economies of size and
increased efficiency.
Onagan et. al. (1973) also added that cooperation through cooperation of its
principles and doctrine is actively dynamic. One of its inherent characteristics is growth.
It develops and expands to all directions until the whole world is merged to the system.
As a unit a cooperative increases in size to a point where all people in its trading area are
absorbed. The cooperative system has its own remedies to accomplish this goal. Its
services grow both in quantity and in quality commensurate the needs of members. By
the operation of patronage refund and by their watchful guidance and encouragement
given by their cooperative to improve their economic status, members find themselves
actually and actively accumulating wealth as the years go by. This dynamic accumulation
of wealth is the characteristics of the cooperative system; therefore, growth is
characteristic of, and inherent to, cooperativism.
The Cooperative Management Manual by Cooperative Development Authority
(CDA) stated that one big factor for cooperatives growth is the ability to campaign for
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
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membership and develop them as new members to conform to the norms of cooperative
organization.
Credit Cooperative Defined
Llanto (1994) stated that credit cooperatives are community based and grassroots
financial institutions, which operate in both rural and urban areas, providing those
communities with variety of financial services not otherwise available from the
traditional lending institutions.
Abella et. al. (1999) mentioned that credit had been derived from the Latin word
“creditum” which means trust. If there is trust, there is credit. Trust can be exchange with
money, goods or services. Thus, credit refers to the ability of an individual or institutions
to acquire goods, money or services now in return for promise to pay at a definite time.
Aims and Objectives of Credit Cooperatives
According to Onagan et. al (1973), the aims and objectives of credit cooperative
is to teach members to save regularly and continuously a portion of their income; to
extend credit to members at low rate of interest and on terms ideally favorable and
beneficial to members; to educate members in wise and productive use of money and to
fully enlighten members on the true nature and aim of cooperation and make them realize
that mutual action offers the most effective means of obtaining social and economic
benefits.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
8
Problems Encountered in Credit Affecting the Growth of Cooperatives
Patricio (2006) enumerated that the following factors affect the failure of Loo
Consumers Cooperative Inc. such as: a) Negative influence of competitors b) High cost
of maintaining assets c) Non- payment of loan/ credit d) lack of cooperative education e)
Lack of cooperation in the cooperative
In addition, she found out that loan delinquency on payment of loan or credit
mostly causes the cooperative failure.
Cawaon as cited by Todyog (2006) stated that the practice of requiring loan
collateral for loaning is the protection of the investors for losses due to the failure of the
business and bad faith of borrowers.
Credit cooperatives are faced with viability problem caused mainly by the
delinquency on loan receivables. Loan capacity is impaired by such delinquency so that
other possible beneficiaries lose opportunity to borrow and use loans as complements for
sustaining capital.
Success Factor of Credit Cooperatives
The success of cooperatives rests on two important factors: strength and support
of its members, and the efficiency and effectiveness of its management. (Saldo, 2005)
As cited by Abella et. al. (1999) based on the survey of successful credit
operation in the Philippines, the following factors have been responsible for their success:
1. Continuous training and education of officers, members and employees.
2. Appropriate and adequate organizational structures to cope with the varying
and increasing needs and problems of the cooperative members and the
community.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
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3. Progressive and people- oriented policies on loans, savings, education,
management and community development.
4. Presence of effective, honest and dedicated cooperative and community
leaders.
5. Active involvement and participation of the officers and members in the affair
of their cooperatives and the community.
6. Trust and confidence in cooperative officers.
7. Dependence on self- help process in achieving their programs and projects.
8. Wise selections of officers.
9. Spirit of cooperation and camaraderie prevails among the officers, members
and employees of the cooperatives.
10. Efficient service for the promotion of social and economic advancement of
the cooperative members.
11. Good public relations
12. Availability of competent and honest manager.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
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METHODOLOGY
Locale and Time of Study
The study was conducted in Topdac, Atok, Benguet where the Topdac Multi-
purpose Cooperative is located. It was conducted from December to February 2009.
Respondents of the Study
The respondents of the study were the manager and credit committee of Topdac
Multi-purpose Cooperative.
Data Collection
Financial documents were taken as a primary data used in the analysis of the
study. The manager and some officers were also interviewed to validate some
information from the financial data.
Data Analysis
The collected data was analyzed, tabulated and summarized according to the
objectives of the study.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
11
N
BUGUIAS
W
E
KIBUNGAN
CATTUBO
S
PASDONG
PAOAY
K
K
I
NAGUEY
A
B
B
A
U
Y
N
A
G
N
A
ABIANG
N
POBLACION
TOPDAC
Topdac
MPC
BOKOD
TUBLAY
CALIKING
LEGEND Mun. Boundries
Brgy. Boundries
Area of Cooperative
Figure 1. Map of Atok showing the location of Topdac Multi-Purpose cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
12
RESULTS AND DISCUSSION
History of Topdac Multi-Purpose Cooperative
The organization of the Topdac-Multipurpose Cooperative was an offshoot of the
agricultural skills training project of Dr. Carlos T. Buasen implemented in the place on
September 1, 1978. The objective of this project was to train farmers to become
entrepreneurs and self-reliant. The skill taught during the training was on mushroom
production, poultry production and hog raising. In August 1979, ninety seven (97) farmer
trainees were graduated from the training program.
While the farmers were undergoing the skills training, they were also oriented
about cooperative by Mr. Robert A. Cayanos. In 1980, the cooperative was organized
with the 90 farmers who graduated from the training became the pioneering members.
The cooperative started with only P7, 290.00 as initial capital. Of this amount, P5, 000.00
came from the proceed of the animal demonstration project while the P2, 290.00 was the
initial share capital of the members. The cooperative started its initial operation on
October 25, 1980.
To ensure the viability and proper management of the cooperative, Mr. Cayanos
conducted continuous education on leadership and values formation, proper recording
and others. The operation started with cash trading for one year. Since it cannot hire a
store keeper, members volunteered and rotate as storekeepers for free. In the same
manner, the board of directors and the committee members also rendered free services.
In February 23, 1983, the cooperative was registered as Topdac Consumers
Cooperative, Inc.. It bought a parcel of land at Cadian and opened a new branch in the
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
13
same year. In that year also, Department of Trade and Industry (DTI) and Plan
International donated P455, 735.00 for building construction at Pual and Cadian.
In August 9, 1993 the cooperative was registered at the Cooperative Development
Authority and was renamed Topdac Multi-Purpose Cooperative which it carries until
present. It was also in 1993 that the cooperative was affiliated with Northern Luzon
Federation of Cooperative and Development Center (NORLU). Then in August 1999, the
cooperative opened a credit service at Km.32, Topdac, Atok, Benguet.
Total Loans Released by the Cooperative
The amount of loan released, number of borrowers, average loan released per
borrower, amount of loan receivable, interest income, service fee, and fines/surcharge are
presented in Table 1. It can be gleaned from the table that the amount of loan released
had been increasing yearly from 2003 to 2007 and so with the number of borrowers. In
fact, between 2006 and 2007 there was an increase in total loans released by 246%. The
amount of loan released per borrower increased in 2004 from P4,655 to P5,353. In 2005
there was an increase in the amount of total loans released but the average amount
released per borrower decreased by 7%. In 2006 average loan released increased by 15%
and in 2007 it increased by 166%. This finding implies that there is an increasing demand
for credit by the members.
The trend in the past due loan was decreasing except in 2005 when past due
increased to 15% of the total amount of loans released for that year. Fines or surcharge is
imposed on past due loan and it can be figured out from the decreased collection of fines
in 2005 that payment of past due loan was small thus it piled up in 2005.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
14
Interest income and service fee are based on the amount loan released. It can be
seen from the table that both are related to the amount of loan released. When the amount
of loan released increased, the interest and service fee also increased. However, this was
not true for 2005. There was an increase in the amount of loan released but there was a
decrease in both the interest income and the service fee. One possible explanation for the
interest income is that it is based on the actual interest paid by the borrowers. Notice that
past due loan increased in 2005 thus it could explain the smaller interest income for the
year. However, for the decrease in service fee collection, this could not be explained from
the data obtained.
Table 1. Trend in loan releases by the cooperative from 2003 -2007
PARTICULAR
2003
2004
2005
2006
2007
Total loans released
237,393 278,375 303,070 360,781 1,247,599
Percent change
17
9
19
246
Number of borrowers
51 52 61 63
82
Average Loan released
4,655 5,353 4,968 5,727
15,215
Percent change
15
-7
15
166
Past Due Loan
41,600
20,249
44,601
32,880
63,987
Percent to Loan released
18
7
15
9
5
Interest income
61,321
59,706
54,374
61,136
160,899
Service fee
17,158
18,866
17,079
18,815
40,334
Fines/Surcharge
7,540
17,516
11,873
15,638
40,434
Source: Financial reports of the cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
15
Contribution of the Credit Service to Total Revenue
of the Cooperative
The revenue of the cooperative comes from two sources: the consumer service,
the main source, and the credit service which is the secondary source.
As presented in Table 2 and Figure 2, it was observed that there was a continuous
increase in total revenue from 2004 up to 2007 except in 2005 that total revenue
decreased. This is due to the temporary closure of Pual Branch during the year. In 2007,
the officers implemented a new management strategy like Capital Build-up, Savings
mobilization, conduct of seminars for the members and expansion of credit service that
lead to the cooperative’s increased revenue. The result of the analysis showed that the
contribution of the credit operation had gradually increased from its initial operation in
2003 to 2006. In 2007, its contribution to the total revenue of the cooperative
substantially increased. Its contribution increased from only 9.45% in 2003 to 22.14% in
2007 while the contribution of the consumer section is 89.60% in 2003 to 74.91% in
2007.
It was observed that the increase in credit operations income was the effect of the
increased in the number of borrowers and increase in amount of loan per borrower as
found earlier.
It was observed that in credit operation, it has a minimal contribution to the total
revenue compared to the consumer service but in latest years there was a significant
increase in credit operation and this could be attributed from the interest on loans released
and partly from the service fee and fines of past due loans.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
16
Table 2. Gross revenue of the cooperative from the credit and the consumer operations
from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Gross Revenue
Consumer
815,515 899,773 836,074 813,160 817,887
Percent change
10
-7
-3
0.6
Credit
86,019
96,088 83,327 95,589 241,667
Percent change
12
-13
15
153
Others
8,636
8,234 13,974 13,785 32,220
Percent change
-5
70
-1
134
Consolidated
910,169 1,004,094 933,375
922,534 1,091,775
Percent Contribution (%)
Consumer
89.60
89.61
89.58
88.14
74.91
Credit
9.45
9.57
8.93
10.36
22.14
Others
0.95
0.82
1.50
1.49
2.95
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
17
1,200,000.00
1,000,000.00
s
800,000.00
eso
n
p
others
u
e i
600,000.00
Credit
even
Consumer
R
400,000.00
T
o
t
al
200,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 2. Breakdown of total revenue according to source
Contribution of the Credit Service to Net Surplus
Table 3 and Figure 3 show the net surplus of Topdac Multi-Purpose from 2003 to
2007 including the percent contribution of the credit and the consumer sections. It is
observed that the total net surplus of the cooperative had been increasing every year
except in 2005 because of the decline in total revenue as presented earlier. However, in
2006 this picked up a little then increased by about 29% in 2007. It can be seen from the
table that the net surplus of the consumer section decreased a little in 2006 but was offset
by an increase in the net surplus of the credit section. The higher increment in 2007 was
due to an increase in the net surplus from both sections. Much of the increase however
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
18
was contributed by the credit section. Net surplus of the credit section in 2007 was 531%
while that of the consumer was 11%. The analysis further shows that the contribution of
the consumer section to net surplus of the cooperative decreased from 2003 to 2007 while
that of the credit increased.
This finding implies that the contribution of the credit service to the overall
performance of the cooperative is becoming more significant.
Table 3. Net surplus of the cooperative from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Net Surplus
Consumer
199,333 227,739 197,891 197,357 218,392
Percent change (%)
14
-13.11
-0.27
11
Credit
19,176 16,882 5,673 7,355 46,425
Percent change (%)
-12
-66
30
531
Consolidated
218,509 244,620 203,564 204,713 264,817
Percent change (%)
12
-17
0.56
29
Percent Contribution
Consumer
91.22
93.10
97.21
96.41
82.47
Credit
8.78
6.90
2.79
3.59
17.53
Consolidated
100 100 100 100 100
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
19
300,000.00
250,000.00
s
e
s
o
p
n 200,000.00
s
i
l
u
r
p
u
Credit
150,000.00
e
t
S
Consumer
f
N
t
o 100,000.00
n
u
o
m
A 50,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 3. Breakdown of net surplus according to source
Contribution of Credit to Paid-up Share Capital
Table 4 and Figure 4 present the trend in the total paid up share capital of
members from 2003 up to 2007 for the whole cooperative as well as the share capital in
the consumer and the credit sections. The total share capital had been increasing
continuously from 2003 to 2007. There was a decline in the growth rate in 2005 from
about 10% in 2004 to only about 5% in 2005. Although there was an increase in the
growth rate in the consumers section from about 11% to 15% this was negated by the
decline in growth rate of the credit section from 10% to only 3%. The opposite happened
in 2006. There was a slight decline in the growth rate in the consumers section but this
was more than offset by an increase in the credit section thus, the overall growth rate
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
20
increased a little. It is the rule in the cooperative that every time a member avail the
credit service, he/she must add to share capital in order for them to avail the said service.
As presented in Table 1, the loans released increased from 17% in 2003 to 246% in 2007
and so with the number of borrowers and this is the factor why the share capital
increased.
Table 4. Paid-up share capital of members from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Paid-up share capital
Consumer
802,120
879,921
906,386 960,575 1,074,673
Percent Change
11 15 12 25
Credit
195,831 216,754
250,071
279,213 349,223
Percent Change
10 3 6 12
Consolidated
997,952 1,096,675 1,156,457 1,239,788 1,423,896
Percent Change
10 5 7 15
Percent Contribution
Consumer
80.37
80.24
78.38
77.48
75.47
Credit
19.62
19.76
21.62
22.52
24.53
Consolidated
100
100
100
100
100
Source of data: Financial report of the cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
21
3,000,000.00
2,500,000.00
a
p
i
t
a
l
2,000,000.00
Consolidated
h
a
r
e
C
1,500,000.00
Credit
Consumer
a
i
d
-
u
p
S
1,000,000.00
T
o
t
a
l
P
500,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 4. Total paid-up share capital of the cooperative
Contribution of the Credit Service to Total Asset
Table 5 and Figure 5 show the growth of the cooperative’s total asset from 2003-
2007. The data shows that asset increased by 7% from 2003 to 2004 but a very slight
decrease was observed in 2005 due to the decreased in merchandise inventory of the
consumer section. These were the merchandise spoiled during the strong typhoon. The
total asset of the credit section, however, increased by 23% during that year. In 2006,
there was again a decrease in the total asset of the cooperative due to the decrease in the
value of the building. The store building in Pual that was destroyed during the typhoon in
2005 was declared condemned in 2006 but for the credit section its asset increased by
16%. In 2007, the asset of the credit section increased by 134% due to the loan acquired
from Land Bank of the Philippines. This money was given out as loans to members. This
also contributed to an increase in the total asset of the cooperative. As observed from the
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
22
table, total asset of the cooperative increased by 65% in 2007 due to the increase in asset
of the credit section and the increase in the common asset. The common asset refers to
the assets that are not classified as asset in credit or in consumer like the properties and
equipments of the cooperative.
Table 5. Total asset of the cooperative from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Total asset
Consumer
359,038 412,945 378,499 387,611
323,895
Percent change
15
-8
2
-16
Credit
545,373
569,179 699,704 813,384 1,906,093
Percent change
4
23
16
134
Common Asset 1,298,571
1,376,464 1,278,177 1,077,513 1,538,217
Percent change
6
-7
-16
43
Consolidated 2,202,981 2,358,588 2,356,380 2,278,507 3,768,206
Percent change
7
-0.09
-3
65
Percent Contribution
Consumer
16.30
17.51
16.06
17.01
8.60
Credit
24.76
24.13
29.69
35.70
50.58
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
23
8,000,000.00
7,000,000.00
6,000,000.00
s 5,000,000.00
eso
Consolidated
i
n
p
Common Asset
4,000,000.00
sset
Credit
A
Consumer
3,000,000.00
T
o
t
al
2,000,000.00
1,000,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 5. Total asset of the cooperative
Total Liabilities of the Cooperative
Table 6 presents the liabilities of the cooperative. It is observed that liabilities of
the credit section had been increasing yearly. The highest increment occurred in 2007
because of the loan from Land Bank as stated earlier. This was also due to an increment
in the savings deposit of members. It was observed that credit has the highest liability in
2007. The increase in total liability of the credit also contributed to an increase in the
total receivables thus, it helps in the operation of credit service that caused the growth in
credit income and in total assets in 2007. While the total liability of the credit section had
been increase, total liability of the consumer section experienced a decreasing trend.
Credit service has a very high contribution to total liabilities but it help in
generating a high income and increase in asset in year 2007.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
24
Table 6. Total liabilities of the cooperative from 2003 - 2007
PARTICULAR
2003
2004
2005
2006
2007
Total liabilities
Consumer
730,570
232,585
239,718
219,130 407,536
Credit
97,569
129,248
115,371
173,072 1,354,627
Consolidated
828,140
361,833
355,089
392,201 1,762,162
Percent Contribution
Consumer
88 64 68 56
23
Credit
12 36 32 44
77
Percent Change in Liabilities
Consumer
-68.16
3.07
-8.59
85.98
Credit
32.47
-10.74
50.01
682.70
Consolidated
-56.31
-1.86
10.45
349.30
4,000,000
3,500,000
3,000,000
e
s
o
s
P 2,500,000
Consolidated
s
in
ie 2,000,000
Credit
b
ilit 1,500,000
Consumer
ia 1,000,000
T
o
t
a
l L
500,000
0
2003
2004
2005
2006
2007
Year
Figure 6. Total liabilities of the cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
25
Total Receivables of the Cooperative
Table 7 and Figure 6 present the trend in total receivables of the cooperative and
the proportion of the receivable that is past due. It is observed that total receivables
continuously increased in both the consumer section and the credit section. Furthermore,
it is presented that total loans receivable (credit) had increased tremendously between
2006 and 2007 (233%). This connotes that demand for loan by members had been
increasing through the years. The trend for account receivable in the consumer section
had been increasing through the years also. The implication is that sales on credit had
been increasing from 2003 to 2007. Relating this to the past due, it can be gleaned that
the total past due from the consumer section had been increasing yearly. This was the
same for the credit section. Credit service has a significant contribution in total
receivables, it was derived from the loans released and past dues.
Table 7. Total receivables and past due from 2003 to 2007
PARTICULAR
2003
2004
2005
2006
2007
Total receivables
Consumer
370,476
391,265
438,889
507,360
550,532
Percent change
6
12
16
9
Credit
278,993
298,624
347,671
393,661
1,311,586
Percent change
7
16
13
233
Consolidated
649,469
689,889
786,560
901,021
1,862,118
Percent change
6
14
15
107
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
26
Table 7. Continued…
PARTICULAR
2003
2004
2005
2006
2007
Past Due
Consumer
148,623 196,926 126,404 150,596
141,031
% to Receivable
40
50
29
30
26
Credit
41,600.00 20,249.10 44,600.96 32,879.96
63,986.86
% to Receivable
15
7
13
8
5
Consolidated
190,222.80 217,175.53 171,004.69 183,475.66
205,018.16
% to Receivable
41
46
28
26
13
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
27
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted at Topdac Multi-purpose Cooperative, Km.32, Topdac,
Atok, Benguet in order to determine the growth in the cooperative brought by the credit
operations to asset, income and revenue and to determine the level of patronage on credit
services as to no of borrowers and amount of loan released occurred within year 2003-
2007.
Financial documents were taken as a primary data used in the analysis of the
study. The manager and the officers were also interviewed to validate some information
from the financial data. The collected data was analyzed, tabulated and summarized
according to the objectives of the study.
It was found out that the growth in asset increased for 7% in 2003 to 2004 but it
decreased in 2005 to 2006 because of calamity that affects the one branch of the
cooperative and its operation was temporarily stopped. In 2007, the asset increased for
65%. For the growth in credit operation income, it was observed that there was a
continuous increase from 2003 up to 2007. From 2006-2007, the contribution of credit
was higher compared to the previous past 2 years. In 2007, 22.14% of the gross revenue
came from credit service while 74.91% came from the consumer service. Said growth
could be attributed to the new management strategies of the officers and employees like
capital build-up implementation, savings mobilization, conduct of seminars for members
and expansion of credit service. For the credit operation, the members’ paid up share
capital increased from 19.62% in 2003 to 24.53% in 2007. Share capital affects the
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
28
growth of credit income because every time the member avail the credit service they must
add first their share capital.
The amount of loan released had been increasing yearly from 2003 to 2007 and so
with the number of borrowers. In fact, between 2006 and 2007 there was an increase in
total loans released by 246%. The amount of loan released per borrower increased in
2004 from P4,655 to P5,353. In 2005 there was an increase in the amount of total loans
released but the average amount released per borrower decreased by 7%. In 2006 average
loan released increased by 15% and in 2007 it increased by 166%. This finding implies
that there is an increasing demand for credit by the members.
Conclusions
Based from the findings of the study the following conclusions were made
1. The increase of asset could be attributed to the increase in revenue of credit and
consumer service.
2. The increase in credit income was the effect of the increased in the number of
borrowers and increase in amount of loan per borrower.
3. As the number of borrowers increase, the amount of loan released also
increases, this implies there is an increasing demand for credit by the members.
4. As number of borrowers increase, the share capital contributions of members in
the cooperative also increase.
5. New management strategies like capital build-up implementation, savings
mobilization, conduct of seminars for members and expansion of credit service improves
the performance of the cooperative and the members.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
29
6. Member’s participation was observed especially in year 2007 and it affects the
growth of the cooperative.
7. The past due loan was decreasing except in 2005 when past due increased to
15% of the total amount of loans released for that year. Fines or surcharge is imposed on
past due loan and it can be figured out from the decreased collection of fines in 2005 that
payment of past due loan was small thus it piled up in 2005.
Recommendations
The following are recommended:
1. Topdac Multi-purpose Cooperative should continue its operation and services;
expand more projects for the benefit of their members and the community which also
contributes to its growth and success.
2. Officers should encourage more members of the cooperative to patronize the
credit service.
3. The cooperative should continue the capital build- up scheme for the increase
in share capital contribution.
4. The cooperative should regularly conduct training on cooperative management
for more effective and efficient performance of management staffs.
5. The cooperative should buy a computer that helps in the efficiency and
effectively in credit operation like making the financial statements and so with the
consumer for inventory system.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
30
LITERATURE CITED
ABELLA F., FAJARDO F., FELICIANO R. and FABIAN P.. 1999. Cooperatives.
Fourth edition. Rex Printing Company, Inc. Quezon City. Pp. 129-130, 237
BODA-MPC. 2008. Manual for Pre-membership Seminar for BODA-MPC Membership.
Pp.1
CDA-JICA Project Office. ND. Cooperative Management Manual. Pp. 24
COOPERATIVE DEVELOPMENT, 1985. USAID: Cooperative Development.
www.usaid.gov/policy/ads/200/coopdev/index.html. Accessed on February 29,
2009
HENRY, H. 2008. Cooperatives. http:// www.ilo.org/Global/about_the_ilo media_ and
_public information/ featured stories/ lang__en/ wems_095980/ index.htm.
Accessed on September 20, 2008
KARANTININIS K.,OUSTAPASSIDIS K. and VLACHVEI K.2002. Growth of
investor owned and Cooperative firms in Greek Diary Industry.
http://www3.interscience.wiley.com/journal/119137085/abstract. Accessed on
September 20, 2008
LERMAN, Z. and PARLIAMENT, C. 1993.Financing Growth in Agricultural
Cooperatives.http://www.cababstractsplus.org/abstracts/Abstract.aspx?AcNo=199
41803593. Accesed on September 20, 2008
LLANTO, G.1994. The Financial Structure and Performance of Philippine Credit
Operation. www3.pids.gov.ph/ris/dps/pidsdps 9404 pdf. Accessed on September
4, 2008
MARQUEZ, C.2004. Contribution of Topdac Multi-Purpose Cooperative to Community
Development.BS Thesis Easter College, Guisad, Baguio City.Pp.17
MICROSOFT ENCARTA. 2006. Definition of growth. Accessed on September 1,2008
ONAGAN, L.D., J.T.SIMANGAN and ESGUERRA M.S. 1973. Cooperative
Principles and Practices. L.D. Onagan and Sons Publishers Co. Quezon
City.Pp.314
PATRICIO, ML.2006. Lessons in Failure: A Case Study of Loo Consumers Cooperative
in Buguias, Benguet. BS Thesis. Benguet State University, La Trinidad, Benguet.
Pp.20-21
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
31
SALDO, A.C. 2005. Profile of Non- operating Cooperatives in Baguilin, La Union. BS
Thesis. Benguet State University, La Trinidad, Benguet. Pp.1
TODYOG, K.2006. Credit Operation of La Trinidad Vegetable Multi-purpose
Cooperative. BS Thesis. Benguet State University, La Trinidad, Benguet.Pp.6-7
ZUELI, K. 2002. The Role of Cooperatives to Community Development.
www.wisc.edu/uwcc. Accessed on September 13, 2008
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
32
APPENDIX A
GUIDE QUESTIONS-OFFICERS
1. What is the growth in credit operation from 2003-2007 as to
· Asset
· Income
· Share capital
2. What is the level of patronage on credit services from 2003-2007 as to
· Number of borrowers
· Amount of loan releases
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
33
APPENDIX B
Comparative Financial Condition
December 31, 2003-2007
2003
2004
2005
2006
2007
Current asset
Cash on Hand
292,445.17
286,083.81
284,121.46
150,768.10
223,322.11
Cash on Bank
168,145.45
138,809.78
134,143.82
244,924.21
467,165.23
Petty cash Fund
1,000.00
1,000.00
1,000.00
1,000.00
2,500.00
Accounts/Loans
Receivable
Current
459,246.49
472,713.45
615,554.96
717,545.07 1,657,100.35
Past Due
190,222.80
217,175.53
171,004.69
183,475.66
205,018.16
Allowance for
probable Losses on
Receivables
(48,413.47)
(54,928.73)
(48,624.52)
(48,624.52)
(45,822.79)
Cash advances to
officers & employees
25,590.90
25,590.90
Unused office/store
supplies
32,164.53
35,123.27
30,431.21
42,767.23
1,740.10
Prepaid expenses
2,134.40
1,363.78
1,852.10
1,740.10
41,661.76
Merchandise
Inventory
326,873.62
377,821.83
348,068.25
344,843.33
282,233.60
Total Current Asset
1,449,409.89
1,500,753.62
1,537,551.97 1,638,439.18 2,834,918.52
Investment
30,686.87
40,686.87
44,000.00
56,000.00
64,000.00
Properties &
Equipment
Land
110,725.25
110,725.25
110,725.25
110,725.25
157,395.75
Building
707,427.00
620,627.61
620,627.61
432,817.63
619,481.43
Accumulated
Depreciation
(155,794.83)
(38,481.09)
(59,313.57)
(49,405.65)
(59,052.84)
Building
Improvement
9,434.50
9,684.50
9,684.50
9,684.50
9,684.50
Office/Store
Equipment
4,460.88
57,970.53
60,562.53
64,405.53
64,524.79
Accumulated
Depreciation
(3,902.09)
(717.95)
(21,347.63)
(41,961.47)
(62,575.31)
Furniture and Fixture
26,770.00
24,272.24
24,272.24
24,272.24
38,534.91
Accumulated
Depreciation
(8,566.56)
(17,133.12)
(25,699.68)
Total Properties &
Equipment
699,120.71
784,081.09
736,644.37
533,404.91
742,293.55
Other Assets
Deposits on
Returnable
Containers
20650.43
26071.93
31,189.43
34,769.43
34,927.43
Kitchenware’s
3113.46
5644.46
5,644.46
5,793.46
8,297.46
Due from Branches
74,600.00
Miscellaneous
1,350.00
1,350.00
10,100.00
9,805.47
Other funds and
Depreciation
73,963.10
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
34
Total Other Assets
23,763.89
33,066.39
38,183.89
50,662.89
126,993.46
Total Assets
Liabilities
Loans Payable
712,990.00
Due to Apex
13,501.33
12,231.01
10,579.66
10,235.65
13,240.85
Due to Main
13,240.85
Savings Deposit
70,312.45
103,063.23
96,226.68
154,237.11
585,161.98
Unearned Income
10,890.20
13,524.00
14,889.60
13,318.00
21,656.00
Dividend &
Patronage Refund
Payable
152,956.44
171,234.13
142,494.53
143,299.04
185,371.88
Total Current
Liabilities
247,660.42
300,052.37
264,190.47
321,089.80 1,518,420.71
Loan Term
Retirement Fund
Payable
17,995.46
5,143.20
4,506.17
4,506.17
Total Long Term
Payable
17,995.46
5,143.20
4,506.17
4,506.17
Mutual Benefit Fund
Payable
34,479.43
43,785.50
85,755.50
66,605.50
239,235.38
Deposit for Share
Capital Subscription
Total Other
Liabilities
34,479.43
43,785.50
85,755.50
66,605.50
239,235.38
Total Liabilities
282,139.85
361,833.33
355,089.17
392,201.47 1,762,162.26
Equity
Common Share-
Authorized Share
Capital 92085 @ 100
Par Value
Paid-Up Share
Capital
997,951.75
1,096,674.87
1,156,456.68 1,239,788.12 1,423,895.91
Total Members
Equity
997,951.75
1,096,674.87
1,156,456.68 1,239,788.12 1,423,895.91
Donation & Grants
570,942.65
569.237.12
507,830.26
290,416.85
242,180.75
Statutory Funds
General Reserved
Fund
178,815.77
157515.86
145,967.01
166,209.95
192,897.12
Education and
Training Fund
(Local)
13,843.30
18,284.25
22,675.86
20,409.69
26,482.39
Optional Fund
(building)
159,288.04
155,042.55
168,361.25
169,480.91
120,587.11
Total Statutory
Funds
351,947.11
330,842.66
337,004.12
356,100.55
339,966.62
Total Liabilities &
Members Equity
2,202,981.36
2,358,587.97
2,356,380.23 2,278,506.98 3,768,205.53
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
35
APPENDIX C
Comparative Financial Operation
December 31, 2003-2007
Revenue
2003
2004
2005
2006
2007
Gross Profit from
sales
815,514.83
899,772.88
836,073.89 813,160.21
817,887.01
Interest Income from
Loans
61,320.61
59,706.20
54,373.90 61,136.10
160,899.49
Service Fee
17,158.47
18,866.00
17,079.00 18,814.50
40,333.62
Fines/Surcharges
7,539.78
17,515.50
11,873.70 15,637.90
40,434.27
Membership Fee
1,300.00
1,600.00
1,400.00
1,400.00
3,500.00
Income/Interest from
Investment
874.37
912.11
7,201.64
4,553.64
7,186.49
Miscellaneous
6,461.30
5,721.50
5,372.50
7,831.75
21,533.76
Total revenue
910,169.36
1,004,094.19
933,374.63 922,534.10
1,091,774.64
Expenses
Financial Cost
Interest on Savings
5,080.14
7,937.71
4,137.80
5,038.88
12,079.50
Interest Expense on
Borrowings
32,932.72
Total Financial Cost 5,080.14
7,937.71
4,137.80
5,038.88
45,012.22
Administrative Cost
Salaries & wages
255,137.40
333,633.16
297,945.60 332,126.30
329,836.60
Employee Benefits
26,978.80
31,278.00
26,957.00 35,097.63
44,844.59
SSS,ECC, Phil.
Health
20,950.70
25,768.75
25,371.50 21,935.80
28,235.40
Honorarium
155,508.26
108,695.00
Retirement Benefit
15,765.00
17,995.46
3,880.24
Light,Power & Water 7,231.69
11,763.92
44,607.22 31,281.39
32,235.66
Travel and
Transportation
31,499.80
27,907.00
120,227.67 116,804.52
177,283.43
Bank Charges
1,483.00
Rental
2,300.00
2,400.00
1,800.00
Repair and
Maintenance
1,869.75
4,261.30
1,147.00
35.50
Office and store
supplies
45,765.30
64,664.62
51,220.13
44,414.39
55,614.50
Taxes and Licenses
6,185.75
7,067.52
6,552.00
8,535.00
8,592.00
Depreciation and
Amortization
21,487.76
14,442.01
Meeting and
Conference
10,789.49
16,583.67
51,782.43 35,173.85
37,541.90
Representation
2,271.95
408.08
2,509.66
736.40
442.95
Communication
6,545.25
10,401.30
14,410.80 11,514.50
18,228.60
Insurance
3,658.90
3,108.50
2,289.78
2,722.10
2,610.10
Spoilage and
Breakage
2,434.57
2,408.08
2,442.89
2,923.19
3,956.88
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
36
General Assembly
Expense
33,753.91
45,975.00
29,000.00 25,100.00
24,040.75
Members Benefit
32,000.00 27,389.00
Collection
3,183.25
322.00
398.00
Affiliation Fees
2,600.00
600.00
400.00
650.25
500.00
Education and
Training
9,236.83
2,494.92
600.00
4,031.74
1,200.00
Provision for
probable Losses
7,463.63
6,515.26
Miscellaneous
Expense
5,195.12
8,484.75
3,964.55
4,684.75
6,201.01
Social Service
Expense
11,946.16
4,680.00
3,381.50
7,304.00
7,825.00
Total
Administrative Cost 686,576.02
751,536.30
725,673.22 712,782.31
781,945.45
Total Expenses
691,660.16
759,474.01
729,811.02 717,821.19
826,957.67
Net Surplus
218,509.20
244,620.18
203,563.61 204,712.91
264,816.97
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
37
APPENDIX D
Picture showing the Topdac Multi-Purpose Cooperative
Km.32 Branch
Consumer Section
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
ATINYAO, GLADYS P. APRIL 2009. Cooperative Growth through the Credit
Operation of Topdac Multi-Purpose Cooperative, Benguet State University, La Trinidad,
Benguet.
Adviser: David Joseph L. Bognadon, MSc
ABSTRACT
The study was conducted to determine the growth that might have occurred the
cooperative brought by the credit operation of the Topdac Multi-purpose Cooperative in
2003-2007 as to income, share capital and asset and to determine the level of patronage
of members in the credit operation.
Financial documents were taken as the primary data used in the analysis of the
study. The manager and some officers were also interviewed to validate some
information from the financial data.
It was observed that in the credit operation, it has a minimal contribution to the
total revenue compared to the consumer service, But in the later years there was a
significant increase in the credit operation and this could be attributed to the interest on
loans released and partly from the service fee and fines of past due loans and also from
the increased share capital. In terms of asset, credit operation has a very significant
contribution to the cooperative growth in 2007, due to increased loan releases and
number of borrowers.
The amount of loan released had been increasing yearly from 2003 to 2007 and so
with the number of borrowers. This finding implies that there is an increasing demand for
credit by the members.
ii
TABLE OF CONTENTS
Page
Title Page…………...…………………………………………………………...
i
Abstract………… ………………………………………………......................
i
Table of Contents …………………………………………………..................... iii
INTRODUCTION…………………………………………………....................
1
Rationale of the Study…………………………………………………...
1
Statement of the Problem………………………………………………..
2
Objectives of the Study…………………………………….....................
2
Importance of the Study…………………………………………….…...
3
Scope and Limitation of the Study………………....................................
3
REVIEW OF LITERATURE……………………………………………………
4
Cooperative Define……………………………………………………...
4
Contribution of cooperative to
Community Development………………………………….....................
4
Cooperative Growth……………………………………………………..
5
Credit Cooperative Define………………………………………………
7
Aims and Objectives of Credit Cooperatives…………………………....
7
Problems Encountered in Credit
Affecting the Growth of Cooperatives…………………………………..
8
Success Factors of Credit Cooperatives………………………………....
8
iii
METHODOLOGY……………………………………………............................
10
Locale and Time of Study……………………………………………….
10
Respondents of the Study………………………………………………..
10
Data Collection………………………………………………………….
10
Data Analysis……………………………………………………………
10
Location Map……………………………………………………………
11
RESULTS AND DISCUSSION………………………………………………...
12
History of Topdac Multi-Purpose
Cooperative………………………………………………………….…..
12
Total Loans Released by the
Cooperative……………………………………………………………...
13
Contribution of the Credit Service
to Total Revenue………………………………………………………...
15
Contribution of the Credit Service
to Net Surplus……………………………………………………………
17
Contribution of Credit to
Paid-up Share Capital……………………………………………………
19
Contribution of the Credit Service
to Total Asset……………………………………………………………
21
Total Liabilities of the cooperative……………………………………...
23
Total Receivables of the Cooperative....................................................... 25
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS………………. 27
Summary………………………………………………..…………….....
27
Conclusions……………………………………………………………...
28
Recommendations……………………………….....................................
29
iv
LITERATURE CITED………………………………………….........................
30
APPENDICES…………………………………………………………………..
32
A. Guide Questions……………………………………………….........
32
B. Comparative Financial Condition…………………………………...
33
C. Comparative Financial Operation…………………………………...
35
D. Cooperative Picture…………………………………………………. 37
v
1
INTRODUCTION
Rationale of the Study
Cooperatives are able to reach and benefit sectors of the population that would not
normally be served by other private sector institutions or direct government programs.
The relatively permanent institutions created by cooperative development in the Third
World provide an institutional framework through which other resources and programs
can be channeled. The high premium placed on member participation in the operations
and decision making of the cooperative promotes independence and self-reliance
encouraging members to take an active role in their own development.
Cooperatives offer an attractive alternative to public sector programs. The
paternalistic approach of governments and absence of competition provide little incentive
to seek efficient methods of product or service delivery. A cooperative, because it is
recipient owned, has an automatic incentive to maximize benefits to the members
(Cooperative Development, 1985).
One successful cooperative in Atok, Benguet is the Topdac Multi-Purpose
Cooperative and it was organized on 1980. A consumer service was opened with ninety
(90) initial members. Later on new service was added like the credit service which
opened on August 1999 with thirty-six (36) member depositors. It has 3 branches, one
offering both consumer and credit while the other two offer consumer service.
As of December 2007, Topdac Multi purpose Cooperative accumulated a total
asset of P 3,768,205.53 with 349 regular members and 140 associate members.
Through credit operation, the cooperative had been providing loans to its
members, which also contributed to its progress and development. In this connection, this
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
2
study aims to look on how credit service patronage of members affects the growth of the
cooperative.
Statement of the Problem
The main aim of this study was to look on how the credit service patronage of
members affects the growth of the cooperative with the following questions;
1. What is the growth in credit operation from 2003-2007 as to
a. Income
b. Share capital
c. Asset
2. What is the level of patronage on credit services from 2003-2007 as to
a. Number of borrowers
b. Amount of loan releases
3. What recommendations can be given for the improvement of the credit services?
Objectives of the Study
The specific objectives of this study were the following:
1. To determine the growth in credit operation from 2003-2007 as to
a. Asset
b. Income
c. Share capital
2. To determine the level of patronage on credit services from 2003-2007 as to
a. Number of borrowers
b. Amount of loan releases
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
3
3. To suggest for the improvement of the credit services?
Importance of the Study
The result of the study will determine the growth of the cooperative as to the
credit operation of the Topdac Multi-purpose Cooperative. The findings will serve as a
guide for the officers and employees in decision making for the improvement of the
cooperative especially in credit operation.
For students’, especially cooperative majors, this study would help them to gain
knowledge about growth of cooperatives through credit operation and it would serve as
reference for the further similar studies.
Scope and Limitation of the Study
This study focused on the growth of TMPC based on the credit operation. The
analysis is limited in the 2003- 2007 financial report as basis in determining changes or
growth of the cooperative.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
4
REVIEW OF LITERATURE
Cooperatives are socially and environmentally sustainable enterprise based on the
principle of caring for their members and communities where they operate. This makes
them substantial contributions to achieving a coherent balance of growth, productivity,
employment and concern for the environment (Henry, 2008).
Benguet Operators and Drivers Association Multi-purpose Cooperative (BODA-
MPC) defined cooperative as:
C- Capitalized by members with common goal
O- Owned by members
O- Operated by members
P- Patronized by members
Marquez (2004) also defined cooperative as a voluntary association of at least 15
persons with common interest not capital. It begins with people who wish to provide
themselves with good and services they need. Although capital or money is not the
beginning of cooperative, it is the very life- blood of its successful operations. A
cooperative must have adequate funds and these must be manage efficiently for the
maximum benefits of its members and community. Much of the success of the
cooperative depends on how its financial resources are used and allocated.
Contribution of Cooperative to Community Development
According to Zueli (2005), cooperatives have the potential to foster economic
growth at the community and the regional level, building on the spirit of cooperation that
is already prevalent in rural areas. With local ownership and control, and net profits
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
5
distributed to those who use its service, cooperatives are considered by some to be an
ideal model for economic development. She also stated that cooperatives offer a way for
a group of individual to pool unlimited resources to achieve critical mass and cooperative
combine people, resources and capital into larger, more viable and economically
competitive units.
Abella and Fajardo (1999) defined community development as a way for the
people in a community to work together in order to build a better community and thereby
improve the welfare of all. They organized themselves under the free will and work as a
team to solve problems of their community. Both are concerned with the development of
human resources and consider man as the most important factor of development.
A previous study at Topdac Multi purpose Cooperative by Marquez (2004) found
that TMPC contributed an extensive service to the community in terms of health and
economic.
Thus, the researcher recommends that there is a need to expand the contributions
on economic aspect. Officers should find ways to increase their capital to cater more the
needs of the members. There should be better cooperation among community people in
helping their cooperative to succeed, encourage all members to patronize the cooperative
and expand the space in order to sell agricultural products.
Cooperative Growth
“Growth does not always lead a business to success. All too often it converts a
highly successful business into mediocre large business” (Richard Branson, 1950).
Growth is the process of expanding or developing, especially rapidly (Microsoft
Encarta, 2006).
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
6
Ordinary least squares results that both diversification and advertising strategies
are important determinants for Investor Owned Firms (IOF) growth, while the
cooperative growth depends on the capital structure and intensity (Karantininis et al.,
2002).
Lerman et al. (1993) also stated that cooperatives grow if they maintain their
competitive posture and continue providing services to their members and for it to remain
viable. In addition, it was stated that cooperatives need to grow to take advantage of a
continuum of new technologies, new opportunities for the economies of size and
increased efficiency.
Onagan et. al. (1973) also added that cooperation through cooperation of its
principles and doctrine is actively dynamic. One of its inherent characteristics is growth.
It develops and expands to all directions until the whole world is merged to the system.
As a unit a cooperative increases in size to a point where all people in its trading area are
absorbed. The cooperative system has its own remedies to accomplish this goal. Its
services grow both in quantity and in quality commensurate the needs of members. By
the operation of patronage refund and by their watchful guidance and encouragement
given by their cooperative to improve their economic status, members find themselves
actually and actively accumulating wealth as the years go by. This dynamic accumulation
of wealth is the characteristics of the cooperative system; therefore, growth is
characteristic of, and inherent to, cooperativism.
The Cooperative Management Manual by Cooperative Development Authority
(CDA) stated that one big factor for cooperatives growth is the ability to campaign for
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
7
membership and develop them as new members to conform to the norms of cooperative
organization.
Credit Cooperative Defined
Llanto (1994) stated that credit cooperatives are community based and grassroots
financial institutions, which operate in both rural and urban areas, providing those
communities with variety of financial services not otherwise available from the
traditional lending institutions.
Abella et. al. (1999) mentioned that credit had been derived from the Latin word
“creditum” which means trust. If there is trust, there is credit. Trust can be exchange with
money, goods or services. Thus, credit refers to the ability of an individual or institutions
to acquire goods, money or services now in return for promise to pay at a definite time.
Aims and Objectives of Credit Cooperatives
According to Onagan et. al (1973), the aims and objectives of credit cooperative
is to teach members to save regularly and continuously a portion of their income; to
extend credit to members at low rate of interest and on terms ideally favorable and
beneficial to members; to educate members in wise and productive use of money and to
fully enlighten members on the true nature and aim of cooperation and make them realize
that mutual action offers the most effective means of obtaining social and economic
benefits.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
8
Problems Encountered in Credit Affecting the Growth of Cooperatives
Patricio (2006) enumerated that the following factors affect the failure of Loo
Consumers Cooperative Inc. such as: a) Negative influence of competitors b) High cost
of maintaining assets c) Non- payment of loan/ credit d) lack of cooperative education e)
Lack of cooperation in the cooperative
In addition, she found out that loan delinquency on payment of loan or credit
mostly causes the cooperative failure.
Cawaon as cited by Todyog (2006) stated that the practice of requiring loan
collateral for loaning is the protection of the investors for losses due to the failure of the
business and bad faith of borrowers.
Credit cooperatives are faced with viability problem caused mainly by the
delinquency on loan receivables. Loan capacity is impaired by such delinquency so that
other possible beneficiaries lose opportunity to borrow and use loans as complements for
sustaining capital.
Success Factor of Credit Cooperatives
The success of cooperatives rests on two important factors: strength and support
of its members, and the efficiency and effectiveness of its management. (Saldo, 2005)
As cited by Abella et. al. (1999) based on the survey of successful credit
operation in the Philippines, the following factors have been responsible for their success:
1. Continuous training and education of officers, members and employees.
2. Appropriate and adequate organizational structures to cope with the varying
and increasing needs and problems of the cooperative members and the
community.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
9
3. Progressive and people- oriented policies on loans, savings, education,
management and community development.
4. Presence of effective, honest and dedicated cooperative and community
leaders.
5. Active involvement and participation of the officers and members in the affair
of their cooperatives and the community.
6. Trust and confidence in cooperative officers.
7. Dependence on self- help process in achieving their programs and projects.
8. Wise selections of officers.
9. Spirit of cooperation and camaraderie prevails among the officers, members
and employees of the cooperatives.
10. Efficient service for the promotion of social and economic advancement of
the cooperative members.
11. Good public relations
12. Availability of competent and honest manager.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
10
METHODOLOGY
Locale and Time of Study
The study was conducted in Topdac, Atok, Benguet where the Topdac Multi-
purpose Cooperative is located. It was conducted from December to February 2009.
Respondents of the Study
The respondents of the study were the manager and credit committee of Topdac
Multi-purpose Cooperative.
Data Collection
Financial documents were taken as a primary data used in the analysis of the
study. The manager and some officers were also interviewed to validate some
information from the financial data.
Data Analysis
The collected data was analyzed, tabulated and summarized according to the
objectives of the study.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
11
N
BUGUIAS
W
E
KIBUNGAN
CATTUBO
S
PASDONG
PAOAY
K
K
I
NAGUEY
A
B
B
A
U
Y
N
A
G
N
A
ABIANG
N
POBLACION
TOPDAC
Topdac
MPC
BOKOD
TUBLAY
CALIKING
LEGEND Mun. Boundries
Brgy. Boundries
Area of Cooperative
Figure 1. Map of Atok showing the location of Topdac Multi-Purpose cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
12
RESULTS AND DISCUSSION
History of Topdac Multi-Purpose Cooperative
The organization of the Topdac-Multipurpose Cooperative was an offshoot of the
agricultural skills training project of Dr. Carlos T. Buasen implemented in the place on
September 1, 1978. The objective of this project was to train farmers to become
entrepreneurs and self-reliant. The skill taught during the training was on mushroom
production, poultry production and hog raising. In August 1979, ninety seven (97) farmer
trainees were graduated from the training program.
While the farmers were undergoing the skills training, they were also oriented
about cooperative by Mr. Robert A. Cayanos. In 1980, the cooperative was organized
with the 90 farmers who graduated from the training became the pioneering members.
The cooperative started with only P7, 290.00 as initial capital. Of this amount, P5, 000.00
came from the proceed of the animal demonstration project while the P2, 290.00 was the
initial share capital of the members. The cooperative started its initial operation on
October 25, 1980.
To ensure the viability and proper management of the cooperative, Mr. Cayanos
conducted continuous education on leadership and values formation, proper recording
and others. The operation started with cash trading for one year. Since it cannot hire a
store keeper, members volunteered and rotate as storekeepers for free. In the same
manner, the board of directors and the committee members also rendered free services.
In February 23, 1983, the cooperative was registered as Topdac Consumers
Cooperative, Inc.. It bought a parcel of land at Cadian and opened a new branch in the
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
13
same year. In that year also, Department of Trade and Industry (DTI) and Plan
International donated P455, 735.00 for building construction at Pual and Cadian.
In August 9, 1993 the cooperative was registered at the Cooperative Development
Authority and was renamed Topdac Multi-Purpose Cooperative which it carries until
present. It was also in 1993 that the cooperative was affiliated with Northern Luzon
Federation of Cooperative and Development Center (NORLU). Then in August 1999, the
cooperative opened a credit service at Km.32, Topdac, Atok, Benguet.
Total Loans Released by the Cooperative
The amount of loan released, number of borrowers, average loan released per
borrower, amount of loan receivable, interest income, service fee, and fines/surcharge are
presented in Table 1. It can be gleaned from the table that the amount of loan released
had been increasing yearly from 2003 to 2007 and so with the number of borrowers. In
fact, between 2006 and 2007 there was an increase in total loans released by 246%. The
amount of loan released per borrower increased in 2004 from P4,655 to P5,353. In 2005
there was an increase in the amount of total loans released but the average amount
released per borrower decreased by 7%. In 2006 average loan released increased by 15%
and in 2007 it increased by 166%. This finding implies that there is an increasing demand
for credit by the members.
The trend in the past due loan was decreasing except in 2005 when past due
increased to 15% of the total amount of loans released for that year. Fines or surcharge is
imposed on past due loan and it can be figured out from the decreased collection of fines
in 2005 that payment of past due loan was small thus it piled up in 2005.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
14
Interest income and service fee are based on the amount loan released. It can be
seen from the table that both are related to the amount of loan released. When the amount
of loan released increased, the interest and service fee also increased. However, this was
not true for 2005. There was an increase in the amount of loan released but there was a
decrease in both the interest income and the service fee. One possible explanation for the
interest income is that it is based on the actual interest paid by the borrowers. Notice that
past due loan increased in 2005 thus it could explain the smaller interest income for the
year. However, for the decrease in service fee collection, this could not be explained from
the data obtained.
Table 1. Trend in loan releases by the cooperative from 2003 -2007
PARTICULAR
2003
2004
2005
2006
2007
Total loans released
237,393 278,375 303,070 360,781 1,247,599
Percent change
17
9
19
246
Number of borrowers
51 52 61 63
82
Average Loan released
4,655 5,353 4,968 5,727
15,215
Percent change
15
-7
15
166
Past Due Loan
41,600
20,249
44,601
32,880
63,987
Percent to Loan released
18
7
15
9
5
Interest income
61,321
59,706
54,374
61,136
160,899
Service fee
17,158
18,866
17,079
18,815
40,334
Fines/Surcharge
7,540
17,516
11,873
15,638
40,434
Source: Financial reports of the cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
15
Contribution of the Credit Service to Total Revenue
of the Cooperative
The revenue of the cooperative comes from two sources: the consumer service,
the main source, and the credit service which is the secondary source.
As presented in Table 2 and Figure 2, it was observed that there was a continuous
increase in total revenue from 2004 up to 2007 except in 2005 that total revenue
decreased. This is due to the temporary closure of Pual Branch during the year. In 2007,
the officers implemented a new management strategy like Capital Build-up, Savings
mobilization, conduct of seminars for the members and expansion of credit service that
lead to the cooperative’s increased revenue. The result of the analysis showed that the
contribution of the credit operation had gradually increased from its initial operation in
2003 to 2006. In 2007, its contribution to the total revenue of the cooperative
substantially increased. Its contribution increased from only 9.45% in 2003 to 22.14% in
2007 while the contribution of the consumer section is 89.60% in 2003 to 74.91% in
2007.
It was observed that the increase in credit operations income was the effect of the
increased in the number of borrowers and increase in amount of loan per borrower as
found earlier.
It was observed that in credit operation, it has a minimal contribution to the total
revenue compared to the consumer service but in latest years there was a significant
increase in credit operation and this could be attributed from the interest on loans released
and partly from the service fee and fines of past due loans.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
16
Table 2. Gross revenue of the cooperative from the credit and the consumer operations
from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Gross Revenue
Consumer
815,515 899,773 836,074 813,160 817,887
Percent change
10
-7
-3
0.6
Credit
86,019
96,088 83,327 95,589 241,667
Percent change
12
-13
15
153
Others
8,636
8,234 13,974 13,785 32,220
Percent change
-5
70
-1
134
Consolidated
910,169 1,004,094 933,375
922,534 1,091,775
Percent Contribution (%)
Consumer
89.60
89.61
89.58
88.14
74.91
Credit
9.45
9.57
8.93
10.36
22.14
Others
0.95
0.82
1.50
1.49
2.95
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
17
1,200,000.00
1,000,000.00
s
800,000.00
eso
n
p
others
u
e i
600,000.00
Credit
even
Consumer
R
400,000.00
T
o
t
al
200,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 2. Breakdown of total revenue according to source
Contribution of the Credit Service to Net Surplus
Table 3 and Figure 3 show the net surplus of Topdac Multi-Purpose from 2003 to
2007 including the percent contribution of the credit and the consumer sections. It is
observed that the total net surplus of the cooperative had been increasing every year
except in 2005 because of the decline in total revenue as presented earlier. However, in
2006 this picked up a little then increased by about 29% in 2007. It can be seen from the
table that the net surplus of the consumer section decreased a little in 2006 but was offset
by an increase in the net surplus of the credit section. The higher increment in 2007 was
due to an increase in the net surplus from both sections. Much of the increase however
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
18
was contributed by the credit section. Net surplus of the credit section in 2007 was 531%
while that of the consumer was 11%. The analysis further shows that the contribution of
the consumer section to net surplus of the cooperative decreased from 2003 to 2007 while
that of the credit increased.
This finding implies that the contribution of the credit service to the overall
performance of the cooperative is becoming more significant.
Table 3. Net surplus of the cooperative from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Net Surplus
Consumer
199,333 227,739 197,891 197,357 218,392
Percent change (%)
14
-13.11
-0.27
11
Credit
19,176 16,882 5,673 7,355 46,425
Percent change (%)
-12
-66
30
531
Consolidated
218,509 244,620 203,564 204,713 264,817
Percent change (%)
12
-17
0.56
29
Percent Contribution
Consumer
91.22
93.10
97.21
96.41
82.47
Credit
8.78
6.90
2.79
3.59
17.53
Consolidated
100 100 100 100 100
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
19
300,000.00
250,000.00
s
e
s
o
p
n 200,000.00
s
i
l
u
r
p
u
Credit
150,000.00
e
t
S
Consumer
f
N
t
o 100,000.00
n
u
o
m
A 50,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 3. Breakdown of net surplus according to source
Contribution of Credit to Paid-up Share Capital
Table 4 and Figure 4 present the trend in the total paid up share capital of
members from 2003 up to 2007 for the whole cooperative as well as the share capital in
the consumer and the credit sections. The total share capital had been increasing
continuously from 2003 to 2007. There was a decline in the growth rate in 2005 from
about 10% in 2004 to only about 5% in 2005. Although there was an increase in the
growth rate in the consumers section from about 11% to 15% this was negated by the
decline in growth rate of the credit section from 10% to only 3%. The opposite happened
in 2006. There was a slight decline in the growth rate in the consumers section but this
was more than offset by an increase in the credit section thus, the overall growth rate
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
20
increased a little. It is the rule in the cooperative that every time a member avail the
credit service, he/she must add to share capital in order for them to avail the said service.
As presented in Table 1, the loans released increased from 17% in 2003 to 246% in 2007
and so with the number of borrowers and this is the factor why the share capital
increased.
Table 4. Paid-up share capital of members from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Paid-up share capital
Consumer
802,120
879,921
906,386 960,575 1,074,673
Percent Change
11 15 12 25
Credit
195,831 216,754
250,071
279,213 349,223
Percent Change
10 3 6 12
Consolidated
997,952 1,096,675 1,156,457 1,239,788 1,423,896
Percent Change
10 5 7 15
Percent Contribution
Consumer
80.37
80.24
78.38
77.48
75.47
Credit
19.62
19.76
21.62
22.52
24.53
Consolidated
100
100
100
100
100
Source of data: Financial report of the cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
21
3,000,000.00
2,500,000.00
a
p
i
t
a
l
2,000,000.00
Consolidated
h
a
r
e
C
1,500,000.00
Credit
Consumer
a
i
d
-
u
p
S
1,000,000.00
T
o
t
a
l
P
500,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 4. Total paid-up share capital of the cooperative
Contribution of the Credit Service to Total Asset
Table 5 and Figure 5 show the growth of the cooperative’s total asset from 2003-
2007. The data shows that asset increased by 7% from 2003 to 2004 but a very slight
decrease was observed in 2005 due to the decreased in merchandise inventory of the
consumer section. These were the merchandise spoiled during the strong typhoon. The
total asset of the credit section, however, increased by 23% during that year. In 2006,
there was again a decrease in the total asset of the cooperative due to the decrease in the
value of the building. The store building in Pual that was destroyed during the typhoon in
2005 was declared condemned in 2006 but for the credit section its asset increased by
16%. In 2007, the asset of the credit section increased by 134% due to the loan acquired
from Land Bank of the Philippines. This money was given out as loans to members. This
also contributed to an increase in the total asset of the cooperative. As observed from the
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
22
table, total asset of the cooperative increased by 65% in 2007 due to the increase in asset
of the credit section and the increase in the common asset. The common asset refers to
the assets that are not classified as asset in credit or in consumer like the properties and
equipments of the cooperative.
Table 5. Total asset of the cooperative from 2003 – 2007
PARTICULAR
2003
2004
2005
2006
2007
Total asset
Consumer
359,038 412,945 378,499 387,611
323,895
Percent change
15
-8
2
-16
Credit
545,373
569,179 699,704 813,384 1,906,093
Percent change
4
23
16
134
Common Asset 1,298,571
1,376,464 1,278,177 1,077,513 1,538,217
Percent change
6
-7
-16
43
Consolidated 2,202,981 2,358,588 2,356,380 2,278,507 3,768,206
Percent change
7
-0.09
-3
65
Percent Contribution
Consumer
16.30
17.51
16.06
17.01
8.60
Credit
24.76
24.13
29.69
35.70
50.58
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
23
8,000,000.00
7,000,000.00
6,000,000.00
s 5,000,000.00
eso
Consolidated
i
n
p
Common Asset
4,000,000.00
sset
Credit
A
Consumer
3,000,000.00
T
o
t
al
2,000,000.00
1,000,000.00
0.00
2003
2004
2005
2006
2007
Year
Figure 5. Total asset of the cooperative
Total Liabilities of the Cooperative
Table 6 presents the liabilities of the cooperative. It is observed that liabilities of
the credit section had been increasing yearly. The highest increment occurred in 2007
because of the loan from Land Bank as stated earlier. This was also due to an increment
in the savings deposit of members. It was observed that credit has the highest liability in
2007. The increase in total liability of the credit also contributed to an increase in the
total receivables thus, it helps in the operation of credit service that caused the growth in
credit income and in total assets in 2007. While the total liability of the credit section had
been increase, total liability of the consumer section experienced a decreasing trend.
Credit service has a very high contribution to total liabilities but it help in
generating a high income and increase in asset in year 2007.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
24
Table 6. Total liabilities of the cooperative from 2003 - 2007
PARTICULAR
2003
2004
2005
2006
2007
Total liabilities
Consumer
730,570
232,585
239,718
219,130 407,536
Credit
97,569
129,248
115,371
173,072 1,354,627
Consolidated
828,140
361,833
355,089
392,201 1,762,162
Percent Contribution
Consumer
88 64 68 56
23
Credit
12 36 32 44
77
Percent Change in Liabilities
Consumer
-68.16
3.07
-8.59
85.98
Credit
32.47
-10.74
50.01
682.70
Consolidated
-56.31
-1.86
10.45
349.30
4,000,000
3,500,000
3,000,000
e
s
o
s
P 2,500,000
Consolidated
s
in
ie 2,000,000
Credit
b
ilit 1,500,000
Consumer
ia 1,000,000
T
o
t
a
l L
500,000
0
2003
2004
2005
2006
2007
Year
Figure 6. Total liabilities of the cooperative
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
25
Total Receivables of the Cooperative
Table 7 and Figure 6 present the trend in total receivables of the cooperative and
the proportion of the receivable that is past due. It is observed that total receivables
continuously increased in both the consumer section and the credit section. Furthermore,
it is presented that total loans receivable (credit) had increased tremendously between
2006 and 2007 (233%). This connotes that demand for loan by members had been
increasing through the years. The trend for account receivable in the consumer section
had been increasing through the years also. The implication is that sales on credit had
been increasing from 2003 to 2007. Relating this to the past due, it can be gleaned that
the total past due from the consumer section had been increasing yearly. This was the
same for the credit section. Credit service has a significant contribution in total
receivables, it was derived from the loans released and past dues.
Table 7. Total receivables and past due from 2003 to 2007
PARTICULAR
2003
2004
2005
2006
2007
Total receivables
Consumer
370,476
391,265
438,889
507,360
550,532
Percent change
6
12
16
9
Credit
278,993
298,624
347,671
393,661
1,311,586
Percent change
7
16
13
233
Consolidated
649,469
689,889
786,560
901,021
1,862,118
Percent change
6
14
15
107
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
26
Table 7. Continued…
PARTICULAR
2003
2004
2005
2006
2007
Past Due
Consumer
148,623 196,926 126,404 150,596
141,031
% to Receivable
40
50
29
30
26
Credit
41,600.00 20,249.10 44,600.96 32,879.96
63,986.86
% to Receivable
15
7
13
8
5
Consolidated
190,222.80 217,175.53 171,004.69 183,475.66
205,018.16
% to Receivable
41
46
28
26
13
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
27
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted at Topdac Multi-purpose Cooperative, Km.32, Topdac,
Atok, Benguet in order to determine the growth in the cooperative brought by the credit
operations to asset, income and revenue and to determine the level of patronage on credit
services as to no of borrowers and amount of loan released occurred within year 2003-
2007.
Financial documents were taken as a primary data used in the analysis of the
study. The manager and the officers were also interviewed to validate some information
from the financial data. The collected data was analyzed, tabulated and summarized
according to the objectives of the study.
It was found out that the growth in asset increased for 7% in 2003 to 2004 but it
decreased in 2005 to 2006 because of calamity that affects the one branch of the
cooperative and its operation was temporarily stopped. In 2007, the asset increased for
65%. For the growth in credit operation income, it was observed that there was a
continuous increase from 2003 up to 2007. From 2006-2007, the contribution of credit
was higher compared to the previous past 2 years. In 2007, 22.14% of the gross revenue
came from credit service while 74.91% came from the consumer service. Said growth
could be attributed to the new management strategies of the officers and employees like
capital build-up implementation, savings mobilization, conduct of seminars for members
and expansion of credit service. For the credit operation, the members’ paid up share
capital increased from 19.62% in 2003 to 24.53% in 2007. Share capital affects the
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
28
growth of credit income because every time the member avail the credit service they must
add first their share capital.
The amount of loan released had been increasing yearly from 2003 to 2007 and so
with the number of borrowers. In fact, between 2006 and 2007 there was an increase in
total loans released by 246%. The amount of loan released per borrower increased in
2004 from P4,655 to P5,353. In 2005 there was an increase in the amount of total loans
released but the average amount released per borrower decreased by 7%. In 2006 average
loan released increased by 15% and in 2007 it increased by 166%. This finding implies
that there is an increasing demand for credit by the members.
Conclusions
Based from the findings of the study the following conclusions were made
1. The increase of asset could be attributed to the increase in revenue of credit and
consumer service.
2. The increase in credit income was the effect of the increased in the number of
borrowers and increase in amount of loan per borrower.
3. As the number of borrowers increase, the amount of loan released also
increases, this implies there is an increasing demand for credit by the members.
4. As number of borrowers increase, the share capital contributions of members in
the cooperative also increase.
5. New management strategies like capital build-up implementation, savings
mobilization, conduct of seminars for members and expansion of credit service improves
the performance of the cooperative and the members.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
29
6. Member’s participation was observed especially in year 2007 and it affects the
growth of the cooperative.
7. The past due loan was decreasing except in 2005 when past due increased to
15% of the total amount of loans released for that year. Fines or surcharge is imposed on
past due loan and it can be figured out from the decreased collection of fines in 2005 that
payment of past due loan was small thus it piled up in 2005.
Recommendations
The following are recommended:
1. Topdac Multi-purpose Cooperative should continue its operation and services;
expand more projects for the benefit of their members and the community which also
contributes to its growth and success.
2. Officers should encourage more members of the cooperative to patronize the
credit service.
3. The cooperative should continue the capital build- up scheme for the increase
in share capital contribution.
4. The cooperative should regularly conduct training on cooperative management
for more effective and efficient performance of management staffs.
5. The cooperative should buy a computer that helps in the efficiency and
effectively in credit operation like making the financial statements and so with the
consumer for inventory system.
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
30
LITERATURE CITED
ABELLA F., FAJARDO F., FELICIANO R. and FABIAN P.. 1999. Cooperatives.
Fourth edition. Rex Printing Company, Inc. Quezon City. Pp. 129-130, 237
BODA-MPC. 2008. Manual for Pre-membership Seminar for BODA-MPC Membership.
Pp.1
CDA-JICA Project Office. ND. Cooperative Management Manual. Pp. 24
COOPERATIVE DEVELOPMENT, 1985. USAID: Cooperative Development.
www.usaid.gov/policy/ads/200/coopdev/index.html. Accessed on February 29,
2009
HENRY, H. 2008. Cooperatives. http:// www.ilo.org/Global/about_the_ilo media_ and
_public information/ featured stories/ lang__en/ wems_095980/ index.htm.
Accessed on September 20, 2008
KARANTININIS K.,OUSTAPASSIDIS K. and VLACHVEI K.2002. Growth of
investor owned and Cooperative firms in Greek Diary Industry.
http://www3.interscience.wiley.com/journal/119137085/abstract. Accessed on
September 20, 2008
LERMAN, Z. and PARLIAMENT, C. 1993.Financing Growth in Agricultural
Cooperatives.http://www.cababstractsplus.org/abstracts/Abstract.aspx?AcNo=199
41803593. Accesed on September 20, 2008
LLANTO, G.1994. The Financial Structure and Performance of Philippine Credit
Operation. www3.pids.gov.ph/ris/dps/pidsdps 9404 pdf. Accessed on September
4, 2008
MARQUEZ, C.2004. Contribution of Topdac Multi-Purpose Cooperative to Community
Development.BS Thesis Easter College, Guisad, Baguio City.Pp.17
MICROSOFT ENCARTA. 2006. Definition of growth. Accessed on September 1,2008
ONAGAN, L.D., J.T.SIMANGAN and ESGUERRA M.S. 1973. Cooperative
Principles and Practices. L.D. Onagan and Sons Publishers Co. Quezon
City.Pp.314
PATRICIO, ML.2006. Lessons in Failure: A Case Study of Loo Consumers Cooperative
in Buguias, Benguet. BS Thesis. Benguet State University, La Trinidad, Benguet.
Pp.20-21
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
31
SALDO, A.C. 2005. Profile of Non- operating Cooperatives in Baguilin, La Union. BS
Thesis. Benguet State University, La Trinidad, Benguet. Pp.1
TODYOG, K.2006. Credit Operation of La Trinidad Vegetable Multi-purpose
Cooperative. BS Thesis. Benguet State University, La Trinidad, Benguet.Pp.6-7
ZUELI, K. 2002. The Role of Cooperatives to Community Development.
www.wisc.edu/uwcc. Accessed on September 13, 2008
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
32
APPENDIX A
GUIDE QUESTIONS-OFFICERS
1. What is the growth in credit operation from 2003-2007 as to
· Asset
· Income
· Share capital
2. What is the level of patronage on credit services from 2003-2007 as to
· Number of borrowers
· Amount of loan releases
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
33
APPENDIX B
Comparative Financial Condition
December 31, 2003-2007
2003
2004
2005
2006
2007
Current asset
Cash on Hand
292,445.17
286,083.81
284,121.46
150,768.10
223,322.11
Cash on Bank
168,145.45
138,809.78
134,143.82
244,924.21
467,165.23
Petty cash Fund
1,000.00
1,000.00
1,000.00
1,000.00
2,500.00
Accounts/Loans
Receivable
Current
459,246.49
472,713.45
615,554.96
717,545.07 1,657,100.35
Past Due
190,222.80
217,175.53
171,004.69
183,475.66
205,018.16
Allowance for
probable Losses on
Receivables
(48,413.47)
(54,928.73)
(48,624.52)
(48,624.52)
(45,822.79)
Cash advances to
officers & employees
25,590.90
25,590.90
Unused office/store
supplies
32,164.53
35,123.27
30,431.21
42,767.23
1,740.10
Prepaid expenses
2,134.40
1,363.78
1,852.10
1,740.10
41,661.76
Merchandise
Inventory
326,873.62
377,821.83
348,068.25
344,843.33
282,233.60
Total Current Asset
1,449,409.89
1,500,753.62
1,537,551.97 1,638,439.18 2,834,918.52
Investment
30,686.87
40,686.87
44,000.00
56,000.00
64,000.00
Properties &
Equipment
Land
110,725.25
110,725.25
110,725.25
110,725.25
157,395.75
Building
707,427.00
620,627.61
620,627.61
432,817.63
619,481.43
Accumulated
Depreciation
(155,794.83)
(38,481.09)
(59,313.57)
(49,405.65)
(59,052.84)
Building
Improvement
9,434.50
9,684.50
9,684.50
9,684.50
9,684.50
Office/Store
Equipment
4,460.88
57,970.53
60,562.53
64,405.53
64,524.79
Accumulated
Depreciation
(3,902.09)
(717.95)
(21,347.63)
(41,961.47)
(62,575.31)
Furniture and Fixture
26,770.00
24,272.24
24,272.24
24,272.24
38,534.91
Accumulated
Depreciation
(8,566.56)
(17,133.12)
(25,699.68)
Total Properties &
Equipment
699,120.71
784,081.09
736,644.37
533,404.91
742,293.55
Other Assets
Deposits on
Returnable
Containers
20650.43
26071.93
31,189.43
34,769.43
34,927.43
Kitchenware’s
3113.46
5644.46
5,644.46
5,793.46
8,297.46
Due from Branches
74,600.00
Miscellaneous
1,350.00
1,350.00
10,100.00
9,805.47
Other funds and
Depreciation
73,963.10
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
34
Total Other Assets
23,763.89
33,066.39
38,183.89
50,662.89
126,993.46
Total Assets
Liabilities
Loans Payable
712,990.00
Due to Apex
13,501.33
12,231.01
10,579.66
10,235.65
13,240.85
Due to Main
13,240.85
Savings Deposit
70,312.45
103,063.23
96,226.68
154,237.11
585,161.98
Unearned Income
10,890.20
13,524.00
14,889.60
13,318.00
21,656.00
Dividend &
Patronage Refund
Payable
152,956.44
171,234.13
142,494.53
143,299.04
185,371.88
Total Current
Liabilities
247,660.42
300,052.37
264,190.47
321,089.80 1,518,420.71
Loan Term
Retirement Fund
Payable
17,995.46
5,143.20
4,506.17
4,506.17
Total Long Term
Payable
17,995.46
5,143.20
4,506.17
4,506.17
Mutual Benefit Fund
Payable
34,479.43
43,785.50
85,755.50
66,605.50
239,235.38
Deposit for Share
Capital Subscription
Total Other
Liabilities
34,479.43
43,785.50
85,755.50
66,605.50
239,235.38
Total Liabilities
282,139.85
361,833.33
355,089.17
392,201.47 1,762,162.26
Equity
Common Share-
Authorized Share
Capital 92085 @ 100
Par Value
Paid-Up Share
Capital
997,951.75
1,096,674.87
1,156,456.68 1,239,788.12 1,423,895.91
Total Members
Equity
997,951.75
1,096,674.87
1,156,456.68 1,239,788.12 1,423,895.91
Donation & Grants
570,942.65
569.237.12
507,830.26
290,416.85
242,180.75
Statutory Funds
General Reserved
Fund
178,815.77
157515.86
145,967.01
166,209.95
192,897.12
Education and
Training Fund
(Local)
13,843.30
18,284.25
22,675.86
20,409.69
26,482.39
Optional Fund
(building)
159,288.04
155,042.55
168,361.25
169,480.91
120,587.11
Total Statutory
Funds
351,947.11
330,842.66
337,004.12
356,100.55
339,966.62
Total Liabilities &
Members Equity
2,202,981.36
2,358,587.97
2,356,380.23 2,278,506.98 3,768,205.53
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
35
APPENDIX C
Comparative Financial Operation
December 31, 2003-2007
Revenue
2003
2004
2005
2006
2007
Gross Profit from
sales
815,514.83
899,772.88
836,073.89 813,160.21
817,887.01
Interest Income from
Loans
61,320.61
59,706.20
54,373.90 61,136.10
160,899.49
Service Fee
17,158.47
18,866.00
17,079.00 18,814.50
40,333.62
Fines/Surcharges
7,539.78
17,515.50
11,873.70 15,637.90
40,434.27
Membership Fee
1,300.00
1,600.00
1,400.00
1,400.00
3,500.00
Income/Interest from
Investment
874.37
912.11
7,201.64
4,553.64
7,186.49
Miscellaneous
6,461.30
5,721.50
5,372.50
7,831.75
21,533.76
Total revenue
910,169.36
1,004,094.19
933,374.63 922,534.10
1,091,774.64
Expenses
Financial Cost
Interest on Savings
5,080.14
7,937.71
4,137.80
5,038.88
12,079.50
Interest Expense on
Borrowings
32,932.72
Total Financial Cost 5,080.14
7,937.71
4,137.80
5,038.88
45,012.22
Administrative Cost
Salaries & wages
255,137.40
333,633.16
297,945.60 332,126.30
329,836.60
Employee Benefits
26,978.80
31,278.00
26,957.00 35,097.63
44,844.59
SSS,ECC, Phil.
Health
20,950.70
25,768.75
25,371.50 21,935.80
28,235.40
Honorarium
155,508.26
108,695.00
Retirement Benefit
15,765.00
17,995.46
3,880.24
Light,Power & Water 7,231.69
11,763.92
44,607.22 31,281.39
32,235.66
Travel and
Transportation
31,499.80
27,907.00
120,227.67 116,804.52
177,283.43
Bank Charges
1,483.00
Rental
2,300.00
2,400.00
1,800.00
Repair and
Maintenance
1,869.75
4,261.30
1,147.00
35.50
Office and store
supplies
45,765.30
64,664.62
51,220.13
44,414.39
55,614.50
Taxes and Licenses
6,185.75
7,067.52
6,552.00
8,535.00
8,592.00
Depreciation and
Amortization
21,487.76
14,442.01
Meeting and
Conference
10,789.49
16,583.67
51,782.43 35,173.85
37,541.90
Representation
2,271.95
408.08
2,509.66
736.40
442.95
Communication
6,545.25
10,401.30
14,410.80 11,514.50
18,228.60
Insurance
3,658.90
3,108.50
2,289.78
2,722.10
2,610.10
Spoilage and
Breakage
2,434.57
2,408.08
2,442.89
2,923.19
3,956.88
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
36
General Assembly
Expense
33,753.91
45,975.00
29,000.00 25,100.00
24,040.75
Members Benefit
32,000.00 27,389.00
Collection
3,183.25
322.00
398.00
Affiliation Fees
2,600.00
600.00
400.00
650.25
500.00
Education and
Training
9,236.83
2,494.92
600.00
4,031.74
1,200.00
Provision for
probable Losses
7,463.63
6,515.26
Miscellaneous
Expense
5,195.12
8,484.75
3,964.55
4,684.75
6,201.01
Social Service
Expense
11,946.16
4,680.00
3,381.50
7,304.00
7,825.00
Total
Administrative Cost 686,576.02
751,536.30
725,673.22 712,782.31
781,945.45
Total Expenses
691,660.16
759,474.01
729,811.02 717,821.19
826,957.67
Net Surplus
218,509.20
244,620.18
203,563.61 204,712.91
264,816.97
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
37
APPENDIX D
Picture showing the Topdac Multi-Purpose Cooperative
Km.32 Branch
Consumer Section
Cooperative Growth through the Credit Operation of Topdac
Multi-Purpose Cooperative / Gladys P. Atinyao. 2009
Document Outline
- Cooperative Growth through the CreditOperation of Topdac Multi-Purpose Cooperative
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- Rationale of the Study
- Statement of the Problem
- Objectives of the Study
- Importance of the Study
- Scope and Limitation of the Study
- REVIEW OF LITERATURE
- Contribution of Cooperative to Community Development
- Cooperative Growth
- Credit Cooperative Defined
- Aims and Objectives of Credit Cooperatives
- Problems Encountered in Credit Affecting the Growth of Cooperatives
- Success Factor of Credit Cooperatives
- METHODOLOGY
- RESULTS AND DISCUSSION
- History of Topdac Multi-Purpose Cooperative
- Total Loans Released by the Cooperative
- Contribution of the Credit Service to Total Revenueof the Cooperative
- Contribution of the Credit Service to Net Surplus
- Contribution of Credit to Paid-up Share Capital
- Contribution of the Credit Service to Total Asset
- Total Liabilities of the Cooperative
- Total Receivables of the Cooperative
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- Summary
- Conclusions
- Recommendations
- LITERATURE CITED
- APPENDIX