BIBLIOGRAPHY NOEME N. TIWAKEN, APRIL...
BIBLIOGRAPHY
NOEME N. TIWAKEN, APRIL 2009. Lepanto Consumers’ Cooperative: A
Documentation, Benguet State University, La Trinidad, Benguet.
Adviser: Prof. Evangeline B. Cungihan, Msc.
ABSTRACT
This study was conducted at Lepanto Consumers’ Cooperative (LCC), Lepanto,
Mankayan, Benguet. This study was done to determine the financial performance of the
Lepanto Consumers’ Cooperative for the past eight years, the problems of the Lepanto
Consumers’ Cooperative (LCC) and the perceptions of members on the current operation
and future status of the cooperative.
The Lepanto Consumers’ Cooperative is subsidized by the Lepanto Consolidated
Mining Company. Ninety percent (90%) of the members are employees of the company
and the 10% includes teachers from the Lepanto Elementary School and Lepanto
National High School and the employees of the Lepanto Hospital.
First hand information was gathered from the manager and some key informants
while the secondary data were taken from the financial reports and from the reports of
educational committee.
The findings show that the problems of the cooperative are caused by single
problem: the company’s non-remittance of accounts. Members who were not satisfied or
disappointed with the company’s way of paying to the cooperative had withdrawn their
membership. Another problem is that some of the members were not active anymore in
transacting with the Lepanto Consumers’ Cooperative (LCC). The operation of the
cooperative is not continuous. There are days in a week that the cooperative is close
because there are no stocks to display. The different perceptions of members on the
current operation and what the members picture on the future status of the LCC.
As to their financial performance, the LCC is not in good standing. The
cooperative had been generating a negative net savings/loss in 2005 and 2007. The
components of the financial statement such as sales, fund and members equity were
decreasing.
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TABLE OF CONTENTS
Page
Bibliography……………………………………………………………………..
i
Abstract ………………………………………………………………………….
i
Table of Contents ……………………………………………………………..… iii
INTRODUCTION ………………………………………………………………
1
Background of the study …………………………………………….…….
1
Statement of the Problem ……………………………………………….…
2
Objectives of the Study ……………………………………………….…...
3
Importance of the Study …………………………………………….……..
3
Scope and Delimitation ………………………………………….………...
3
REVIEW OF LITERATURE ……………………………………….…………..
4
Consumer’s Cooperative ……………………………………….………….
4
Membership ……………………………………………………………….
5
Functions of a Consumers’ Cooperative ………………………….……….
6
Services of a Consumers’ Cooperative …………………………….……...
6
Benefits in Joining a Consumers’ Cooperative …………………….……...
7
The Conditions of the Consumers ………………………………………...
7
Rights of the Consumers …………………………………………….…….
8
The Cooperation of Consumers …………………………………………...
9
METHODOLOGY ………………………………………………………….…..
11
Locale and Time of the Study ………………………………………….….
11
iii
Respondents of the Study ………………………………………………… 11
Data to be Gathered ………………………………………………………. 11
Data Collection …………………………………………………………… 11
RESULTS AND DISCUSSION …………………………………………….…..
12
Historical Background …………………………………………………….
12
Membership ……………………………………………………………….
14
Business Operation ………………………………………………………..
15
Financial Performance …………………………………………………….
15
Members’ Perception on the Current Operation
of the Cooperative …………………………………….………………..
28
Members’ Perception on the Future Status
of the Cooperative ………………………………….…………………..
29
LITERATURE CITED ………………………………………………………….
34
APPENDICES ………………………………………………….……………….
35
A. Communication Letter ………………………………………………...
35
B. Guide Questions ……………………………………………………….
36
iv
1
INTRODUCTION
Rationale of the Study
The cooperative is a voluntary organization formed from the initiatives of a group
motivated by the principle of self-help and mutual aid. Cooperation is not a new
principle. In fact, this principle was applied even during the Old Testament time when
they constructed the Tower of Babel.
Cooperative organization in the Philippines started during the Spanish regime but
it was only during the Marcos administration that support to the organization and
development of cooperative was given due recognition through Presidential Decree No.
175. Its main purpose is to support the Agrarian Reform Program of the government. The
Cooperative Administration Office (CAO) created to mobilize the organization of
cooperatives and unions as outlets of rice and other prime commodities. Regional
coordinators and provincial cooperative officers were directed to form action teams for
the establishment of cooperatives in communities were there are none, even among
employees of government and private officers. It was during this time that Lepanto
Consumers Cooperative (LCC) was organized to cater to the consumer needs of the
employees of Lepanto Consolidated Mining Company (LCMCO).
Since its organization, the Lepanto Consumers Cooperative had been serving its
members with sincerity and dedication and had been steadily prospering. In 1971 it was
awarded as one of the top five most progressive Cooperative in the Philippines. It was
also one of the few cooperative in the entire country that was given the authority to buy
and sell RCA rice during the Marcos administration. (Educational Committee Report,
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
2
February 1972). Lepanto Consumers Cooperative is an institutional/occupational
cooperative and was supported by the mother Company in terms of collecting the
accounts of members and the use of the company’s vehicle in hauling its stocks of
merchandise. Because of the strong support of the company, the cooperative had continue
to steadily prosper until the late 1990’s that it started to incur problem on the late
remittances of collection of account receivable by the company. This was also the time
that the company was beset by financial problems.
This study was conducted to look into the financial performance of the LCC from
1999 to 2007 and find out the perceptions of some members regarding the present status
of the cooperative.
Statement of the Problem
This study tried to answer the following questions:
1. What was the financial performance of the cooperative since 1999-2007 in
terms of:
a. Total sales
b. Net surplus
c. Total asset
d. Total liabilities
e. Total reserve fund
f. Total equity
2. What is the most pressing problem that the cooperative is currently facing?
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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3. What are the perceptions of members regarding the current operation and
future status of the cooperative?
Objectives of the Study
The objectives of this study were:
1. To determine the financial performance of the cooperative for the past eight
years focusing on its total sale, total surplus, total asset, total liabilities, total fund and the
total member’s equity.
2. To find out the most pressing problem the cooperative is currently facing.
3. To find out the perceptions of some members regarding the current operation
and the future status of the cooperative.
Importance of the Study
This will serve as reference to other researchers who are doing similar studies
especially to the Agribusiness student major in cooperative management.
Scope and Delimitation of the Study
This study was focused on the financial performance of the cooperative for the
past eight years, the most pressing problem of the cooperative and the perceptions of
some members on its present and future operation.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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REVIEW OF LITERATURE
Consumer’s Cooperative
It is a voluntary association of a group of persons (at least 15 members) with a
common bond of interest, who agreed to pool their resources together to provide
themselves with quality goods and services at reasonable price. Abella and Fajardo.
Racho stated that it is also a way where the poor may actively enter the economy at large.
A consumers’ cooperative is a kind of organization that even the poor can join. In
fact, a consumers’ cooperative is organized primarily for the welfare of the poor
consumers who suffer most from abuses of capitalism. All over the world, there are many
successful consumers’ cooperatives organized by poor people. The best model is the
cooperative store of the Rochdale pioneers. They have shown to the world that group
cooperation could successfully defy the evils of capitalism. (Abella and Fajardo)
In the process of its business operations, the consumers’ cooperative may make
profits (or net savings as the more proper terms in cooperative parlance). These are
equitably distributed to the cooperative members in the form of patronage refund and
interest on share capital. The essential commodities that are sold in a consumer’s
cooperative have lower prices because these are bought in bulk.
Furthermore, cooperatives may be the best school for learning, practicing and
internalizing the democratic ideals. This holds the key in solving our basic economics,
political and social problems. (Racho, 2007)
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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Membership
Members of cooperative may be either natural or juridical persons depending on
the kind of cooperative. In a primary cooperative only a natural person who is a citizen of
the Philippine is eligible for membership, while in secondary or tertiary cooperatives,
members may be either cooperative or non-profit organization with juridical personality.
Members of a cooperative must individually contribute a certain amount known
as the share capital, as requirement for the organization of a cooperative. The law states
that at least (25%) of the authorized share capital should be subscribed at least twenty
five per centum (25%) of the subscription should be paid.
In addition, Anastacio (2004), stated that a cooperative is a dynamic form of
business enterprise that embodies the philosophy of cooperation. It state that through
voluntary asset of people to form themselves into a group for the promotion of their
common needs by mutual action, democratic control and sharing of economic benefits on
the basis of patronage by members.
Everybody is encouraged to participate actively in all affairs of the organization
from planning to Management. It is democratic in its government that the members are
treated respect and dignity. The officers and members are equally exposed to trainings
and education to improve their attitudes, values and skills, indeed, cooperatives provide a
fertile ground for members to pursue their own development and growth with their
capabilities and inclination. In a cooperative, members are treated equally. They are
willing to sacrifice for a common good and even give away part of their resources for a
common good. (Anastacio, 2004)
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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Functions of a Consumers’ Cooperative
There are five functions of a consumers’ cooperative that was stated by Abella
and Fajardo.
1. Provide quality goods, services, and other needs of the cooperative members
at reasonable prices.
2. Stabilize prices of commodities and services.
3. Provide a direct link between the producers and the consumers.
4. Mobilize savings for capital formation.
5. Undertake continuous cooperative education.
Services of a Consumers’ Cooperative
Abella and Fajardo stated the following services of a consumer’ cooperative.
1. Provides a centralized procurement system of quality goods and other needs
of the members.
2. Contacts suppliers and/or manufacturers for a direct and regular supply in
bulk of consumer goods.
3. Selects the manufacturers/suppliers that offer the best items in terms of prices
and quality.
4. Sees to it that members/consumers get the services/goods that are comparable
if not better than those available in other stores.
5. Serves as a training ground for group action, group responsibility, and
democratic leadership.
6. Informs its members and the community of the current prices of goods.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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7. Makes available basic consumers items and other requirements at the right
time and the right prices.
8. Undertakes cooperative education to enhance the welfare of its members,
officers, and employees.
9. Cooperates with other cooperatives for their mutual benefit.
Benefits in Joining a Consumers’ Cooperative
1. A member can regularly avail for himself and for his family goods and other
needs at the right quantity and at reasonable prices.
2. A portion of the net savings of the consumers’ cooperative is given to each
member as patronage refund in proportion to his purchases. Members also acquire
interests on their shares.
3. Marketing problems of members are minimized like haggling over prices and
too much going around looking for quality goods, which are both, time-consuming.
Likewise, impulse buying is avoided.
4. Members of the cooperative develop desirable habits and attitudes that are
necessary in improving their social and economic condition.
The Conditions of the Consumers
Consumers’ interest should be the concern of all consumers. In a free
enterprise economy, consumers’ interests should not be subordinated to producer’s
interests. A U.S. senator stated once the consumer was the final arbiter in a market place.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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But with the introduction of industrialization and specialization in our economy,
economic power has shifted gradually away from the consumer.
Consumers’ can no longer rely on the usefulness and safety of their purchases.
Even in a modern American society, producers can still afford to cheat consumers. There
has been an endless list of unsafe and unneeded products. Example of these are the unsafe
automobiles, tire with no durability, worthless drugs, adulterated food, worthless
warranties and many more. If these representations can take place in the United States
where the consumers are more educated and vigilant, then producers can fool more
people in less developed countries like the Philippines. In the rural areas, many fake
products are being sold. Their containers are of good quality but not their substance. In
other words, their contents are just poor imitations.
Because of the great desire for profits, the values of producers/sellers have
deteriorated. By the large, businesspersons have no more sincere concern for the welfare
of human beings. They have exploited the ignorant consumers. It can be said that all the
bed practices of producers/sellers have taken roots in our economic system because
consumers lack a strong and united organization to promote and protect their common
interests.
Rights of the Consumers
Modern marketing does not solely imply anymore the transfer of goods from the
producers to the consumers. Its goal is to the consumers. However, in more ways than
one, the consumers are not satisfied. Product pricing is usually not fair. Quality is not
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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good. Moreover, essential goods often disappear in the market then reappear with higher
prices.
The principal right of a consumer is to get his money’s worth. However, the
presence of exaggerated or incorrect information about the products and even deliberate
deceptions has clearly violated the fundamental rights of the consumers. Example of this
is the slightly used home appliances are repainted and then sold as brand new products.
Even lots that do not exist are being sold. Of course, consumers have the right to
complain but this is only in theory. The complaints of poor consumers are not given
attention. Legal actions can be taken against the producers/sellers. However, the high cost
of litigation is enough to discourage a poor consumer to pursue his case.
Evidently, individual consumers cannot effectively protect their interests against
the abuses of producers/sellers. It is only a large and efficient organization that can be
possibly minimize business malpractices. This is the government. It should be more
sincere and determined in promoting the welfare of the consumers. Businesspersons are
afraid to abuse the consumers if they know the government does not tolerate their
business malpractices. Another way of fighting business abuses is to form a large group
of consumers, which is determined to protect the legitimate interest of the members.
The Cooperation of Consumers
Consumers represent the demand in the market while the producers/sellers
constitute supply. The interaction between supply and demand forms the laws of the
market. When the demand is great than the supply, prices increase and when the supply
id greater than the demand, prices decrease. This takes place in a free market economy,
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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which means the government does not interfere in supply and demand of goods and
services.
Consumers are often exploited in the name of profits. Businesspersons take
advantage of the weaknesses of the consumers. Consumers have no strong defense
against the abuses of capitalists. They can only complain but they are often ignored.
Producers have usually good connection in the government and in the courts.
Consumers can only defend themselves through group cooperation. They organize
themselves and fight the evil practices of purchaser/seller. It is possible for them to
patronize the products which are adulterated. This is enough to ruin the business of the
producers.
A very effective way of protecting consumers’ interest is through the organization
of consumers’ cooperative. The consumers themselves form their own store. Therefore,
they can decide the quality, quantity, and price of their own goods for sale. Naturally,
they cheat or exploit themselves because they are the owners and at the same time the
buyers of their own products.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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METHODOLOGY
Locale and Time of the Study
The research was conducted at Lepanto Consumers’ Cooperative in Lepanto,
Mankayan, Benguet.
Respondents of the Study
The respondents of the study were the present manager, some members of the
Board of Directors and some members who served as key informants.
Data Gathered
The data gathered included the historical background of the Lepanto Consumers’
Cooperative, financial statements, and reports of the Educational Committee, the
perceptions of some members regarding the current and future status of the cooperative.
Data Collection
Data collection was done through personal interview with key informants. The
secondary data on the financial performance of the cooperative was taken from the
reports and the financial statements of the cooperative from 1999-2007.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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RESULTS AND DISCUSION
Historical Background
In late 1950’s, the Lepanto Consumers’ Cooperative (LCC) was first organized as
a Women’s Club. It was organized by the employees of Lepanto Mine Division with their
intention of providing their basic consumer goods at a lower price. Membership to the
cooperative was exclusive to the employees of Lepanto Mine but the role of the
cooperative was expanded to the whole community. Originally, there were 15
cooperators that started the cooperative. It was first registered with the Bureau of
Cooperatives in January 1964 with the name Lepanto Consumers’ Cooperative
Association Incorporated. It was first managed by Madam Adela O. Tandoc.
In early 1970s, the LCCAI was awarded by the Cooperative Administration
Office as the top 7 consumer cooperative in the country. Under the management of
Madam Vicky Ordinario in 1975, its name was changed to Lepanto Employees Kilusang
Bayan (LEKB) to emphasize that most of the members of the cooperative were
employees of the Lepanto Consolidated Mining Company (LCMCO). Besides, the
members also want to adopt the Filipino language, which was the language during the
“new society” under President Ferdinand Marcos.
In the late 1970s, the Board of Directors of LCCAI noticed that only few
members were patronizing of the cooperative. They then asked Professor Gloria R. Lee to
observe on the way the members procure their basic needs. On her observation, she
mentioned that during paydays, the members do not go to the Cooperative. Instead, they
are going to the other grocery stores in Mankayan. But during credit day, the LCCAI is
full of customers to purchase their needs on “UTANG” basis. As Calixto (CDA, 2009)
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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said, this is one of the natures of Filipinos wherein the consumers only approach their
respective consumer Cooperative when they do not have money anymore. He also
mentioned that this attitude could not be easily erased from the society. Another
observation from Prof. Lee was that the members were not prioritizing the basic
commodities such as canned goods that were supposed to be for the “BAON” of the
miners when they go to work. What the members were buying/purchasing at the
cooperative are the long-term goods like umbrella, clothing, shoes kitchen paraphernalia
and others. She also mentioned that most of the long-term goods were stock for a long
time before it would be disposed. The observations impressed the Board of Directors and
suggested her to be the next to manage the cooperative.
Under her management in the 1980s, she purchased in bulk at cheaper prices then
lowered the mark-up price so that the goods could be sold at lower prices. She disposed
the slow moving goods through sale. The LCCAI then acquired the slow moving goods
by consignment. The members came back and patronized again the Cooperative.
According to Northern Luzon Federation of Cooperatives and Development Center
(NORLUCDEC) when they audited the Financial Statements of the LCCAI in 1984, the
LCCAI is ideal because of its 18% turnover rate wherein the goods flow fast. The
operation was excellent and in 1984, the Lepanto Consumers’ Cooperative Association
Incorporated was awarded as the most outstanding Cooperative in Northern Luzon.
In 1990, it was reregistered with the Cooperative Development Authority (CDA)
and the name was changed to its current name.
The LCC has been performing well since the start of the operation. It boomed
before but in the late 1990s, the cooperative started to decline because the management
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
14
experienced the difficulty in collection of receivables from the Accounting Office of the
Lepanto Mine Division as mentioned by the key informants.
Membership
Membership of Lepanto Consumers’ Cooperative is open to consumers under any
of the following categories:
a. Any natural person who is a citizen of the Philippines, of legal age with
capacity to contract, or head of the family;
b. Any person who is at least 18 years of age, with visible means of income,
through his own independent work and effort.
The prospective members should:
1. Reside or work in the area of operation, be an employee of the Lepanto Mine
Division, or bona fide resident of the Lepanto Mine Community. Lepanto
Community includes the areas of Mill Site, San Roque, Orient, San Antonio,
La Guerta, Tubo, Upper Tram, Marivic, Palpaltogan, Pukitan, Paco and
Paalaban.
2. Pledge to undertake the responsibilities of membership.
3. Complete the prescribed pre-membership cooperative education program.
4. Use or anticipate to use the services of the LCC particularly the procurement
and sale of consumer goods and services needed by the members and the
community. School children who are minors may be admitted as associate
members, without voting right, thru their respective school consumers
associations.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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Business Operation
Although the cooperative was basically a consumer cooperative, it had five kinds
of services namely: the grocery store, the bakery, the refreshment canteen and the
shellane and rice.
Consumer Store. The main business of the cooperative is the procurement and
distribution of goods to the members and to the community. The goods that are sold in
the cooperative include groceries, laundry supplies, frozen goods and dry goods including
shoes and school supplies. Even non-members can avail in this service of the cooperative.
Bakery. The cooperative has a bakery and the shop is located at the basement of
the building. They bake quality breads for the community.
Refreshment Center. The refreshment center or the snack house of the cooperative
is seen just beside the main entrance of the store.
Shellane and Rice. This operation is the livelihood project of the cooperative. The
business is engaged in buying and selling of rice and shellane for the community
prioritizing the members.
Financial Performance
This shows the financial picture of the cooperative from 1999-2007. The increase
and decrease in total sales, net surplus, total asset, total liabilities, total reserve fund and
total members equity are presented in tables 1-6. The financial trend of the cooperative is
affected by the company’s operation. After each table is the graph of the financial trend
that shows the growth and the reduction of each component of the financial statement.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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Changes in Total Sales
In the past years before 1999, the cooperative had been enjoying the support of
the company where it is based. The company allows the deduction of account receivable
from the payroll of the members. This made the cooperative very progressive because
there were no delinquent accounts. Towards the later portion of the 1990s the company
experienced financial difficulties and this affected the operation of the cooperative.
Table 1 presents the changes in total sales of the cooperative from 1999 to 2007.
In 1999 total sales amounted to P39.68 million. This decreased by 9% to an amount of
P36.08 million the following year. It further decreased in 2001 by 1.17% to P35.66
million. In 2002, there was an increase of 8.69% but on the following year, total sales
tremendously fall by 34.81%. This was due to a one month strike by the Lepanto Mines
employees. During the strike, the cooperative did not allow the members to purchase on
credit beyond the amount of their share capital. They limited the amount of credit that can
be purchased by members up to 80% of their share capital because management had
difficulty in collecting the receivables from the company. The members were dismayed
with this situation and some of them started to withdraw their membership, including
their share capital. There was no available data in 2004. In 2005, the strike became worse
and a total sale during that year was only P14.62 million, a decline by 42% from 2003.
During this year the cooperative did not allow credit sales. They only sold on cash but
since the members were hard up in getting their salaries from the company this greatly
affected the operation of the cooperative. Some of the employee of the company, who
were members of the cooperative were terminated and they withdrew their share capital
from the cooperative. This added to the worsening situation of the cooperative. In 2006,
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
17
the cooperative again allowed members to buy on credit without limit, but still payroll
deduction. This led to the increase in total sales by 89% in 2006. However, in 2007, total
sales again decreased by 12.55% because the company cannot remit in full the collections
from the account receivables of members. The behavior of total sales from 1999 to 2007
is presented in Figure 1.
Table 1. Total sales
YEAR
TOTAL SALES
RATE OF INCREASE
(%)
1999
39,682,236.58
-
2000
36,085,070.33
-9.06
2001
35,662,672.60
-1.17
2002
38,764,356.65
8.69
2003
25,267,231.14
-34.81
2005
14,624,903.97
-42.11
2006
27,679,820.68
89.26
2007
24,205,742.48
-12.55
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
18
45,000,000.00
40,000,000.00
35,000,000.00
30,000,000.00
e
s
al 25,000,000.00
S
al 20,000,000.00
T
ot 15,000,000.00
10,000,000.00
5,000,000.00
0.00
1999
2000
2001
2002
2003
2005
2006
2007
Year
Figure 1. Graph of total sales.
Changes in Total Net Savings
Net savings refer to the difference between net sales and total operating expenses.
This is also termed as net surplus. It could be seen from Table 2 that net savings had been
increasing from 1999 to 2002. It could be observed that the cooperative realized the
highest net savings for the period in 2002 which was P1,267,929.46. During the strike in
2003, net savings decreased by about 54%. This was due to the decline in total sales. In
2005 the cooperative incurred a net loss of P616,396.39. In 2006 , the cooperative
recovered from its loss, it almost reaches the net saving in 2002. The increase in net
savings for the year was due to the fast turn over of inventories when the cooperative
allowed purchases on credit. The cooperative again incurred a net loss of P940,191.53 in
2007. This was due to the non-remittance of accounts receivable collected by the
company. The behavior of total net savings from 1999 to 2007 is depicted in Figure 2.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
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Table 2. Total net savings
YEAR
TOTAL NET
RATE OF INCREASE
SAVINGS
(%)
1999
434,387.99
-
2000
627,333.04
44.41
2001
813,519.21
29.67
2002
1,267,929.46
55.85
2003
585,291.73
-53.83
2005
-616,396.39
-205.31
2006
1,157,475.73
-287.78
2007
-940,191.53
-181.22
1,500,000.00
1,000,000.00
500,000.00
i
n
gs
0.00
e
t
S
av
N
1999
2000
2001
2002
2003
2005
2006
2007
al
-500,000.00
T
ot
-1,000,000.00
-1,500,000.00
Year
Figure 2. Graph of the total net savings.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
20
Changes in Total Asset
Table 3 shows the total assets of the cooperative. It had a total asset of P9.22
million in 1999, of which P2.84 million was in the form of merchandise inventory. At the
end of the following year, total asset decreased by 21%. During this year totals sales
declined and it affected the value of the total asset because there was also a decrease in
account receivable. Besides, there was also a decrease in merchandise inventory. For the
two succeeding years, 2001 and 2002, there was a continuous increase in total asset with
17.44% and 33.08%, respectively.
Table 3. Total asset
YEAR
TOTAL ASSET
RATE OF INCREASE
(%)
1999
9,221,032.68
-
2000
7,254,871.69
-21.32
2001
8,520,697.00
17.44
2002
11,339,840.66
33.08
2003
9,506,793.66
-16.16
2005
5,929,679.15
-37.62
2006
9,908,893.00
67.10
2007
11,464,266.67
15.69
However, the cooperative again experienced a decline of 16.16% in 2003 and
37.62% in 2005. The decline in 2005 was due to the settlement of some liabilities. In
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
21
2006, it again increased by 67.10% as an effect of the remedy done by the cooperative.
They allowed members to buy on credit with no limitation as long as they have enough
salary where it can be deducted. There was again an increase of 15.69% in 2007. The
graph of the changes in total asset from 1999 to 2007 is presented in Figure 3.
14,000,000.00
12,000,000.00
t 10,000,000.00
sse 8,000,000.00
A
al 6,000,000.00
T
ot 4,000,000.00
2,000,000.00
0.00
1999 2000 2001 2002 2003 2005 2006 2007
Year
Figure 3. Trend in total asset.
Changes in Total Liabilities
The changes in total liabilities is shown in Table 4 and Figure 4. The total
liabilities in 1999 was P4,134,264.44. This consisted of accounts payable on trade,
unremitted CETF, unpaid patronage refund and interest on share capital and fringe
benefit payable. The amount decreased in 2000 by 55% but greatly increased in 2001 and
2002 by 51.59% and 125.57%, respectively. The increase in 2002 was due to the loan
availed by the cooperative. According to the manager, the loan was used to finance the
buying and selling of rice and shellane. Other items that contributed to increase in total
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
22
liabilities in 2002 were the Retirement Benefit Fund and the Mutual Benefit Fund which
was opened and implemented during this year. For the two succeeding years of 2003 and
2005, there was a continuous decline by 15.11% in 2003 and 37.76% in 2005. The
decline was due to the settlement of accounts payable, and unpaid patronage refund and
dividend for the previous years. This also caused the decrease in total asset during this
year, as found earlier. Total liabilities in 2006 amounted to P6,616,455.81 which was
almost double the amount of the previous year, 2005. The increase was due to the
increase in account payable on trade.
Table 4. Total liabilities
YEAR
TOTAL LIABILITIES
RATE OF INCREASE
(%)
1999
4,134,264.44
-
2000
1,841,053.28
-55.46
2001
2,790,857.10
51.59
2002
6,295,461.34
125.57
2003
5,343,880.53
-15.11
2005
3,325,853.15
-37.76
2006
6,616,455.81
98.94
2007
6,862,977.69
3.72
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
23
8,000,000.00
7,000,000.00
6,000,000.00
s
ie 5,000,000.00
iabilit 4,000,000.00
L
al 3,000,000.00
T
ot 2,000,000.00
1,000,000.00
0.00
1999
2000
2001
2002
2003
2005
2006
2007
Year
Figure 4. Graph of total liabilities.
Changes in the Total Statutory Fund
The statutory funds consisted of the General Reserve Fund, CETF-local, and
optional fund. The changes in this fund from 1999 to 2007 are presented in Table 5 and
Figure 5. It can be gleaned from the table that the total amount of this fund had been
increasing for the first three years. However, the reverse happened for the next three
years. The increases in the statutory fund for the first three years were due to the increase
in the net savings during these years. As to the decrease in the total fund in 2003, the
financial report during this reflects a high decrease in general reserve fund. This decline
could not be explained from the financial statement alone. The decrease in 2005 was due
to the loss in operation incurred by the cooperative. In 2006 and 2007, there was an
increase of 157.49% and 0.57%, respectively.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
24
Table 5. Total funds
YEAR
TOTAL FUNDS
RATE OF INCREASE
(%)
1999
1,054,546.61
-
2000
1,795,655.00
70.27
2001
1,961,886.32
9.25
2002
1,602,937.21
-18.29
2003
1,031,805.46
-35.63
2005
330,173.33
-68.00
2006
850,180.22
157.49
2007
855,055.51
0.57
2,500,000.00
2,000,000.00
1,500,000.00
unds
F
al 1,000,000.00
T
ot
500,000.00
0.00
1999
2000
2001
2002
2003
2005
2006
2007
Year
Figure 5. Trend in total funds.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
25
Changes in Total Member’s Equity
Members’ equity refers to the paid-up share capital of members in the
cooperative. Table 6 and Figure 6 presents that total member’s equity from 1999 to 2001
had been decreasing, in 1999 total members’ equity was P4.03 million but decreased to
P2.79 million in 2001. The decline was due to the withdrawal of members from the
cooperative. It was during this period that some employees of the company were
retrenched, thus they withdrew their membership from the cooperative as well as their
share capital because they went home to their respective places. In the succeeding years
from 2002 to 2007, the cooperative experienced ups and downs in the total amount of
members’ equity. The increment in 2007 was due to the infusion made by some members
in order to revive the operation.
Figure 6. Total members’ equity
YEAR
TOTAL MEMBERS’ EQUITY RATE OF INCREASE
(%)
1999
4,032,221.63
-
2000
3,618,163.41
-10.26
2001
2,790,857.10
-22.86
2002
3,441,406.12
23.310
2003
3,131,107.67
-9.01
2005
2,273,652.67
-27.38
2006
2,442,256.97
7.41
2007
3,746,233.47
53.39
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
26
4,500,000.00
4,000,000.00
3,500,000.00
q
u
i
t
y
3,000,000.00
'
E
2,500,000.00
b
ers
2,000,000.00
1,500,000.00
Mem
al 1,000,000.00
T
ot
500,000.00
0.00
1999
2000
2001
2002
2003
2005
2006
2007
Year
Table 6. Graph of total members’ equity.
Problems of the Cooperative as Perceived by
some Members
Since its organization, the cooperative was performing well until the time when
the cooperative started to incur problems on the late remittances of collection of accounts
receivables by the company. The most pressing problem of the cooperative today
according to the informants is the delay and partial remittance of the collection on
receivables by the company. This caused the cooperative to close on some days of the
week and only open if there is payment by the company.
Since the cooperative is just waiting for the company’s remittance of its collection
and the company is not paying on time, the cooperative stops its operation when there are
no more stocks to sell and would only open when the LCMCO gives its payment. The
money is not enough to purchase all the needs of the cooperative because the company is
not paying in full. Therefore, the cooperative would just buy the basic needs of the
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
27
members especially the groceries and the management limits the amount of goods that
the members wants to purchase so that all of them can avail from the service. This single
problem branched out to different problems such as the withdrawal of membership, and
non-patronage of some members.
Membership withdrawals. Withdrawal of membership from the cooperative
started in late 1990’s. Most of the members who had withdrawn their membership in the
cooperative were the contractual employees of the Lepanto Consolidated Mining
Company. The withdrawal of members was due to the retrenchment/termination of the
company of some employees especially the contractual workers. Lately, not only the
contractual employees who were removed from their works who withdrew their
membership but also other members who are with the company but were not satisfied
with the service of the cooperative.
Non-patronage of members. Another problem of the cooperative is that some of
the members do not patronize anymore the cooperative when they have cash. They only
go to the cooperative when they don’t have cash to buy in other stores. They prefer to buy
their needs in other stores because the price is cheaper than at the cooperative. Some even
said that from the time the company is giving their salaries in partial payment, they never
buy from the cooperative.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
28
Members’ Perception on the Current Operation
of the Cooperative
The members joined the cooperative to acquire of its service mainly on the
payroll system. This system allows the members to purchase goods on account for two
consecutive days in a week. Another reason is the salary deduction wherein the account
of the members was deducted from their salaries on the next payday. In addition, the
members joined the cooperative because of its economic benefits which includes the high
dividend and patronage refund since they are loyal to their cooperative. As to the
employees of the cooperative, economic benefit included the hospitalization and
mortuary aid.
Before, the members were very satisfied with the service of the cooperative. They
value their cooperative because of the mutual relationship with its mother company. All
the needs of the members were taken from the cooperative because of its low and
affordable price. The cooperative was important to them because it is where they could
get their needs in times of emergency. Even some big stores in Mankayan used to buy
their stocks at the Lepanto cooperative.
Now, the cooperative is beset with financial difficulties due to the company’s late
and partial remittances of their accounts payables to the cooperative. This caused the
members to get disappointed with the cooperative. All of the interviewed members were
complaining on the high price of goods at the cooperative than the price in other stores.
Example of this is the price of one of pack cracker sold in the cooperative at a price of
P42 but they could buy the item at P35-38 in other stores. They even mentioned the
incomplete stock at the cooperative. This discouraged them to go there. With regards to
the importance of the Lepanto Consumers’ Cooperative to the members, most of them
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
29
said that the cooperative is not important anymore because there are times that the
cooperative is out of stock. Some of the members interviewed had a different opinion.
They still value the cooperative because at times they could still buy the goods they need
from the cooperative on credit which they could not do from other stores.
Members’ Perception on the Future Status
of the Cooperative
Some members perceived that when the company would close because of the
global economic crisis, the cooperative would also stop its operation. Members also
desired the management bring back the past operation of the cooperative wherein all are
benefited from the service of the cooperative. Some suggested of branching out in other
places especially in Baguio because the branch will be an independent business from the
company. So that in case the company would close, the cooperative would still be alive.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
30
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
The study used the available financial reports obtained from the cooperative to
analyze its financial performance for the past years (1999 to 2007). Key informants were
interviewed to get their perceptions on the current status of the cooperative as well as
their suggestions on how management could improve the operation.
The findings revealed that the total sales for the past eight years had been
fluctuating because of the situation of the company. Purchases of grocery items for sale
was affected by the delayed remittances of the company on its collections of the
accounts receivable from the members. As to the total net savings, there were years, 2005
and 2007, that the cooperative incurred so many losses. This situation led to the decrease
in the total asset and total statutory fund of the cooperative. Total liabilities had been
increasing also due to increased in account payable on trade. Total members’ equity had
been decreasing because of the withdrawal of members who were retrenched from the
company.
Conclusions
The financial condition of the cooperative was greatly affected by the financial
crisis being experienced by the mother company. The uncollected receivables from the
company could lead to fear and distrust to members. Because of fear that they would not
be able to get back their investments in the cooperative, they would prefer to withdraw
their share capital before the cooperative will go completely bankrupt.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
31
Based on the financial performance of the cooperative, it was able to continue its
operation despite the withdrawals of some members and the financial crisis it is facing.
There is still hope that the cooperative could be saved and regain its good financial status
if the members would continue to patronize it.
Recommendations
1. The cooperative could regain back the trust of its members by re-educating
them and ask their cooperation. It would be better for the cooperative to become
independent from the company. It should devise a strategy to directly collect receivables
from the members. They should also encourage members to infuse capital so that they
could purchase their groceries in bulk thus allowing them to buy at lower prices. In this
way they could also charge lower price to the members so that they would be encouraged
to patronize it.
2. The cooperative could open its membership to non-employees of the
company. In this way members would increase and new capital would come in.
3. The idea of branching out to other places like Baguio City could also be an
alternative of increasing membership and volume of sales.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
32
LITERATURE CITED
ABELLA, F. and FAJARDO, F. 1999. Cooperatives. Fourth Edition. Rex Printing
Company, Inc. Quezon City. pp. 186-189
ANASTACIO, L.K.2004.Profile of Primary Cooperatives’ in Itogon, Benguet. BS
Thesis. Benguet State University.
RACHO, K.R. 2007. Profile and performance of functions of members of the education
and training committee of selected cooperatives in Tuba, Benguet. BS Thesis.
Benguet State University, La Trinidad, Benguet.
REPORT OF THE EDUCATIONAL COMMITTEE. 1972. Volume 26. Lepanto
Consumers’ Cooperative, Lepanto, Mankayan, Benguet.
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
33
APPENDIX A.
Communication letter
DEPARTMENT OF AGRICULTURAL ECONOMICS
AND AGRIBUSINESS MANAGEMENT (DAEAM)
Benguet State University
La Trinidad, Benguet
November 2008
Lourdes Bawalan
Manager
Lepanto Consumers’ Cooperative
Lepanto, Mankayan, Benguet
Madam:
Warm Greetings!
I, Noeme N. Tiwaken, a student of Benguet State University taking up Bachelor
of Science in Agribusiness Major in Cooperative Management. I am presently conducting
a research titled “LEPANTO CONSUMERS’ COOPERATIVE: A
DOCUMENTATION” as a requirement for the degree.
In connection, may I request your documents on the History of Lepanto
Consumers’ Cooperative, the Articles of Cooperation, and the By-Laws, Policies and
Programs and the Annual Financial Statements of the Cooperative from the start of
operation.
Thank you very much for your favorable action regarding this request. Your
favorable action will be highly appreciated.
Sincerely Yours,
Noted:
Evangeline B. Cungihan
Noeme N. Tiwaken
Adviser
(Researcher)
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
34
APPENDIX B
GUIDE QUESTIONS
1. Why did you join the cooperative?
2. How important the cooperative to you?
3. Are you satisfied with the services of the cooperative?
4. What are your perceptions on the current operation of the cooperative?
5. What are your perceptions on the future status of the cooperative?
6. What are your comments to the cooperative?
7. What do you want the cooperative to do?
Lepanto Consumers’ Cooperative: A Documentation / Noeme N. Tiwaken. 2009
Document Outline
- Lepanto Consumers� Cooperative: ADocumentation
- BIBLIOGRAPHY
- TABLE OF CONTENTS
- INTRODUCTION
- REVIEW OF LITERATURE
- METHODOLOGY
- RESULTS AND DISCUSION
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- LITERATURE CITED
- APPENDIX