Assessment of the capability of hog raisers' cooperatives as conduits of agricultural loans in Laguna

Date

6-2015

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Ma. Eden S. Piadozo

Abstract

In view of the importance of credit to agriculture and rural development, it is the objective of this study to provide an assessment of the capability of hog raisers‟ cooperatives as conduits of agricultural loans in Laguna. To attain this objective, the analytical methods namely, 1) Standard Performance Rating Approach, 2) Logistic Regression Analysis, and 3) Pearson and Spearman Correlation Analyses were employed. The primary data were generated from nine cooperatives and 31 hog raiser-members. Data from secondary sources were also obtained to further assess the capability of the subject cooperatives from Cooperative Development Authority Regional Office and hog raisers‟ cooperatives. The results of the analyses showed that one out of the nine cooperatives had a rating of Very Satisfactory, while three and four of them had attained Satisfactory and Fair Performance Rating, respectively. Only one cooperative had an adjectival rating of Needs Improvement. It is established that the capability of a cooperative as a conduit of credit is dependent on its member borrowers. Results of the logistic regression analysis revealed that increased profitability, farm size, and liquidity significantly and positively affected the capability of the member-borrowers in making timely payments. On the other extreme, the cooperatives financial capability indicators namely, assets, profitability, operational strength, solvency were positively correlated with capability of its member-borrowers to make timely payments. Only net institutional capital had negative association with the member-borrowers‟ capability in making timely payments. Thus, the cooperatives were still viable conduits of credit as long as the capability of the member borrowers was enhanced. This in effect led to higher profitability and financial sustainability among hog raisers‟ cooperative in Laguna. The study also revealed that the internal control is important in insuring the success or capability of cooperatives to be a conduit of agricultural loans to its farmer-members. The underperformance of the cooperatives reflects the internal control weaknesses surrounding both their financial and administrative functions resulting to their slow development that stem from 1) poor record-keeping, data processing and financial reporting 2) poor reliability of financial reports 3) absence of updated book of accounts 4) absence of financial records of individual hog raisers and other members 5) lack of qualified managers and audit committee 6) lack of accounting and accountability methods/analysis for financial and operational planning 7) weak monitoring mechanism to control the quality of receivable portfolio 8) weak capital build-up 9) presence of unfunded or poor statutory reserves 10) independence of cooperatives compliance officers & monopoly of leadership 11) absence of organizational and functional structure and 12) weak record preservation system. Thus, the study recommended that government should devise and implement a sound credit and technical assistance program that will benefit the hog raisers cooperatives. If possible, they should be given training and assistance to enhance their loan absorptive capacity as conduit of credit.

Language

English

Location

UPLB Main Library Special Collections Section (USCS)

Call Number

Thesis

Document Type

Thesis

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