A Study on the Transportation of an Incorporated Association to a Cooperative: Maprotas, Inc. to Maprotas Agriculture Cooperative (MAC) in Tayabas City, Quezon

Date

5-2024

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Atty. Cherry Lou Reyes-Nuñez

Committee Member

Melodee Marciana E. De Castro, Renen Szilardo C. De Guzman

Abstract

Cooperative had been introduced to be an answer to the traditional constraints and vulnerabilities that smallholder farmers experience in the Philippines as a means to improve the sustainability of producing agricultural products and enhancing profits and competitiveness. There are 21 categories of cooperatives that were listed in the Republic Act 9520, an act creating the Cooperatives Development Authority (CDA) and in Memorandum Circular 2015-05, the category of agricultural cooperative is added. It is defined as, a primary cooperative whose members, cultivate plants, animals, fungi, and other living organisms for economic purposes, and aims to empowers these individuals by organizing and benefiting from the current government and industry landscape, such as exemption from tax, reduction of fees, the benefits of bulk purchasing, and group farming between its members. Cooperatives are categorized not only by type but also by size or the value of their assets. Cooperatives are categorized not only by type but also by size or the value of their assets. The criteria for classification are as follows: micro cooperatives with assets up to Php 3 million, small cooperatives with assets between Php 3 million and 15 million, medium cooperatives with assets over Php 100 million. As of November 14, 2023, there are a total of 20,072 cooperatives in the Philippines, and in more recent times, with as many as 27 types of cooperatives listed, namely Advocacy, Agrarian Reform, Agriculture, Consumers, Cooperative Bank, Credit, Dair, Education, Electric, Federation-Secondary, Labor Service, Marketing, Multipurpose, Producers, Service, Small Scale Mining, Technology Service, Transport, Union-Secondary, Union-Tertiary, Water Service, and Workers.

This study entitled "A Study on the Transformation of an Incorporated Association to a Cooperative: Maprotas, Inc. To Maprotas Agriculture Cooperative (MAC) in Tayabas City, Quezon" was conducted to provide insights in the organization's decision to convert from a non-stock, non profit corporation association registered under the Securities Exchange Commission (SEC) into an agricultural cooperative under the CDA (Cooperative Development Authority). This specially aims to: (1) Present the profile of MAC as an non-stock, non profit cooperative. (2) Map the timeline of events that led to the organization's decision to convert the non-stock corporation to a cooperative structure. (3) Identify the factors and considerations that triggered and motivated the decision to convert the non-stock corporation to a cooperative structure. (4) Compare the effects and changes to the organization performance experienced as a non-stock corporation and as a cooperative. (5) Formulate recommendations based on findings and insights on the organization's decision to convert to a cooperative structure.

With the organizational profile of both structure of non-stock corporation and cooperative presented, it gives a perspective to identify any triggers or motivations for the decision to transform the organization to a cooperative which included the Five Capital Key Indicators of Adaptive (Social, Financial, Human, Natural, Physical), looking at the timeline of events and identifying notable points of interests that had affected the decision, the Key Elements of the McKinsey 7-S Model (Structure, Strategy, System, shared Values, Skill, Style, Staff), and lastly an analysis on both the environmental and internal elements of the organization as well as other barriers, difficulties, factors and considerations. Afterwards, a comparison of the effects and changes brought about by the decision that the organization experienced, such as its organizational performance and financial performance is analyzed and see if there are significant reason for it to have affected the decision and the organization. With the information gathered, it is put through a balanced scorecards that aims to analyze and measure performance of the organization in the four perspectives (Financial, Customers, Internal Business Process, Growth and Learning), which gives further insight into both financial and nonfinancial perspectives. After getting the given score based on the key performance measures and its respective values, further findings give more information on its strengths and weaknesses that it should address. Thus, giving recommendations actions to be taken and to be considered for the organization's strategic planning and for its development and growth.

In the form of tax exemptions and incentives, the organization benefited from the transformation. Tax exemptions are a notable benefit for cooperatives as they receive more than just being a corporation. This led to more financial freedom toward the organization's goals and purpose and funds for more projects and ventures to develop value-adding products and services to generate surplus profits. The pre-membership seminars enhanced the selection process in a way wherein it screens and gives a more thorough and selective approach to accepting members in the organization, providing more committed and engaged members in the long run and fostering a better sense of belonging in the cooperative. In terms of membership, the shift also introduced financial incentives for members, encouraging greater participation, investment, and motivation. The establishment of more committees with straightforward responsibilities, along with clearly defined goals and purposes in the by-laws and articles, suggests a more organized and structured approach to the cooperative's operations. This contributed to better decision-making and overall effectiveness. Better government support and promotion gave the organization a more favorable environment to grow, allowing the cooperative to gain a market reach larger than its previous position as a non-stock corporation. There is also increased coordination with the Cooperative Development Authority (CDA) compared to the last engagement with the Securities and Exchange Commission (SEC), indicating a shift towards aligning with entities specifically focused on supporting and regulating cooperatives. This change resulted in more appropriate assistance and guidance for the organization.

A balanced scorecard provided a framework to measure performance from four perspectives, covering both financial and nonfinancial perspectives namely: Financial, Customer, Internal business processes, and Growth and learning. These measurements calculated the achivement of strategic objectives, and was based on the 1) Understanding the visions and missions described in cooperative objectives, 2) Understanding the relationship between selected strategic objectives, and 3) Analyzing measurements employed in selected strategic objectives. The Insights dervied from the financial perspective was that Gross Margin and Total Asset Turnover Ratio would indicate that there is some success in managing costs and asset utilization but failed to pass In regards to a Return On Asset, Return on Equity, and Operating Margin. In the customer perspective, serving Its members, It had also not had gained a score, and needed reassess its strategies to enhance member benefits and satisfaction. For Internal Business Processes, active participation of members has shown positive results, indicating engagement and attendance from the organization's members. The membership process needs improvement in providing in-depth knowledge or at least having regular review sessions to keep members up-to-date or knowledgeable. Product development and infrastructure improvement have positive scores, showcasing successful initiatives being taken with the procurement of new assets as well as adding new value-added products. Lastly, In

Growth and Learning, positive scores in the frequency of participation in educational training and seminars, member development, and member satisfaction highlight the cooperative's commitment to continuous learning and member well-being. The cooperative has strengths in member engagement, certain product initiatives, and educational activities. However, challenges exist in financial performance, customer benefits, and certain aspects of internal processes. Addressing these challenges will be crucial for the cooperative's sustained success during the transformation. Based on these, some insights on how to address these are: (1) Implement strategies to improve financial metrics, focusing on ROA, ROE, and Operating Margin, (2) Reassess and enhance strategies to increase the distribution of net surplus to members, (3) Strengthen the membership process by providing more in-depth knowledge during pre-membership seminars, (4) Continue successful initiatives in product development and infrastructure improvement, (5) Maintain a proactive stance in educational training and seminars while addressing specific member suggestions for an increased net profit surplus.

The transformation of Mangosteen Producers of Tayabas Association, Inc. (MAPROTAS, Inc.) into Maprotas Agriculture Cooperative (MAC) represents a strategic shift aimed at enhancing the organization's sustainability and effectiveness. Leveraging the McKinsey 7S Model and the Balanced Scorecard framework, MAC should focus on enhancing its democratic structure through regular educational workshops to deepen members' understanding of cooperative governance principles and processes. Additionally, a targeted strategy is needed to improve MAC's financial performance, with a focus on increasing profitability metrics such as ROA, ROE, and Operating Margin through cost reduction measures and revenue enhancement strategies. Strengthening MAC's commitment to cooperation, solidarity, and social responsibility is crucial for equitable benefit distribution and member empowerment. Investing in continuous training and development programs will equip stakeholders with the necessary skills in cooperative governance, sustainable agriculture, and community engagement. Implementing transparent and participatory financial management systems and fostering a culture of participatory leadership and transparent decision-making processes are essential. Aligning staff roles and responsibilities with cooperative objectives and prioritizing initiatives aimed at improving financial metrics, enhancing member benefits, and optimizing internal processes will be crucial for MAC's success in its transformation.

Language

English

LC Subject

Agriculture, Cooperative

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2024 M17 E73

Notes

Award: ERDB Multipurpose Cooperative Best Thesis in Cooperative Studies

Not available to general public, consultation with author/SP Adviser and to those bound by confidentiality agreement.

Document Type

Thesis

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