St.

Paul University Philippines

Tuguegarao City Cagayan 3500

BUSINESS PLAN TOWARDS DEVELOPMENT OF MULTI-PURPOSE COOPERATIVE

OF PAGBANGKERUAN ALCALA, CAGAYAN

A Business Plan presented to the School of Accountancy and

Business

In partial fulfillment of the requirements for the degree of

Bachelor of Science in Accountancy

Business Plan

Adviser

Dr. Giged Battung, CPA

By:

Mark Noel L. Rivera

Danica Myn L. Capili

Maxine Steffanie T. Toledo

I. Introduction

Agriculture really plays a crucial role in the overall

objective and effort to achieve economic progress. Many of today's

developed economies first strove to strengthen their agricultural

sectors. They still provide financial support to their farmers,

even scientists and researchers who aim to enhance further their

agricultural production.

In every country in the world agriculture is a very important

industry it connotes self sufficiency and economic stability.

Philippines is one of the identified countries that had agriculture

as its main industry, but the irony behind it is the Philippines

is importing agricultural products from Vietnam, Malaysia,

Thailand and Laos just to sustain the demand of its population.

According to the PhilMech, the inability of the Philippines to be

self sufficient is because the Filipino farmers are not capable of

making their production at its expected level, rice production for

example is experiencing a loss of 16% of harvest because of lack

of machinery in the countrys farmland. The PhilMech added that if

only we can make the loss percentage to single digits Philippines

will not import rice anymore and export rice instead.

Moreover agricultural sector provide raw material for

industries like manufacturing entities and merchandising entities.

It also contribute to economic progress, earlier it is stated that

the Philippines is importing rice from other countries but if the

agricultural industry progresses, the country can export

agricultural product instead of importing them, thus, making it a

good source of revenue for the government. The agricultural sector

also provides millions of job it employs most of the people in the

rural areas of the country and lastly a progressive agricultural

sector can support other sectors of the economy like manufacturing,

trade and services by supplying the needed raw materials. This is

why when a country dream of industrialization, it needs to expand

and improve its agricultural production. But expanding production

alone is not enough to develop the agricultural sector. We have to

remember that it makes up the substantial part of the country's

population - people who are potential customers of other products

and services. Alongside efforts to expand production, it is

necessary to improve people's condition in order to strengthen

their capacity as consumers. Through this, a more vibrant exchange

between productive sectors will take place and progress in both

urban and rural areas is expected to follow.

But unfortunately, the lifeblood of the Philippine

agricultural sector the Filipino farmers are experiencing many

problems that cause its inefficiency. One of them is the high

interest rates of loans that are acquired through local investment

agents, according to our inquiry farmers in region are levied with

5-7% of interest monthly or 60-84% annually which is beyond the

normal interest rates of banks. They also experience low farm

output price and high cost of farm inputs. With all this problems

that the Filipino farmers are faced it results to poverty of

farmers and hinder the flourish of Philippine agricultural sector

With this, the proponents are proposing a multipurpose

cooperative specifically catering the needs of the farmers, the

cooperative will offer agricultural loans to its members that has

far lower interest than the prevailing rate, the cooperative will

also sell farm inputs to the members with minimal mark up. And

eventually the cooperative will buy the harvest of the members

with a fair price.

The cooperative will also look into product and services that

the people of the community can offer for additional and

alternative income. The proponents selected Pagbangkeruan, Alcala,

Cagayan as its pilot barangay because of the expressed approval of

the resident to put a multipurpose cooperative in the place. Almost

all the community population is involved in farming directly or

indirectly and portrays the identified problem that we ought to

target.

The proponents will establish the multipurpose cooperative

with the help of the local leaders we will conduct forums and
information drive in the community in the initial stages of the

organization and will train its residents on how to handle the

their cooperative. The proponents plan to supervise the

cooperative until the preparation of training and educating the

residents about how the cooperative is done.

The proponents are expecting a cooperative that will cater to

the needs of the people of the barangay and establish a sense of

cooperativism and unity among the resident of the said barangay

together with establishing a center of product development and

financial stability among the target individuals.

A cooperative is a voluntary organization of people who have

agreed to pool their resources together in order to undertake an

economic enterprise for the purpose of meeting their common needs,

and which they themselves democratically manage and control, and

share the economic benefits on the basis of participation and

patronage. Correspondingly, cooperatives are also business

enterprises which the members themselves own, manage and control

in accordance with accepted democratic principles. They are

neither organized primarily for profit nor to serve other people

but to serve the needs of their own members.

The business or enterprise of the cooperatives may be

classified according to the involved activities. These may be: a

credit union cooperative which promotes thrift among its members

and creates funds in order to grant loans for productive; a

consumer cooperative wherein the primary purpose is to procure and

distribute commodities to members and non-members; a producer

cooperative which undertakes joint production whether agricultural

or industrial; a marketing cooperative which engages in the supply

of production inputs to members, and markets their products; a

service cooperative that is engage in medical and dental care,

hospitalization, transportation, insurance, housing, labor,

electric lights and power, communication and other services, and,

other services; or, a multi-purpose cooperative which is a

combination of two or more of the business activities of these

different types of cooperatives, e.g. credit lending and

production, production and provision of goods and services, etc.

The primary objective of every Cooperative is to provide goods

and services to its members and thus enable them to attain

increased income and savings, investments, productivity and

purchasing power and promote among them equitable distribution of

net surplus through maximum utilization of economies of scale,

cost-sharing and risk-sharing without however, conducting the

affairs of the cooperative for eleemosynary or charitable

purposes. Meaning, through cooperatives, you can look for other

sources of loans at low interest rates instead of borrowing from

informal lenders or usurers. The cooperative can also be a

mechanism of marketing your produce.

In our adapted communitythe barangay of Pagbangkeruan

Alcala, Cagayan, the primary occupation of the resident is in

agriculture. Their prime resources are corn and tobacco. They have

a huge portion of land for agriculture however the farmers do not

have sufficient capacity to support the financial and other need

of their cultivation. With this, we, the researchers, have come up

with the idea of proposing a Multi-purpose Cooperative for the

people of the said barangay.

II. Need and Resource Analysis

Pagbangkeruan is a barangay in Alcala, Cagayan with a

population of 236 family heads in which 30% is a farmer. Their

main source of living is farming. Hence, enormous region in the

place is a farmland with an area of 70 hectares. Their prime

produces are corn and tobacco which they harvest twice a year with

a capacity of 80%. The people of Pagbangkeruan lack financial

assistance, thus, farmers tend to borrow cash and inputs from

traders nearby the place with monthly interest ranging from 5-7%.

The common problems in the community are lack of capital for

farming, high cost of borrowing and low prices of farm outputs by

the local traders. As we have observed, the resident of

Pagbangkeruan has deficiency in financial aid, hence, we propose

a Multi-purpose Cooperative where people of Pagbangkeruan,

especially the farmers, can ask financial assistance with better

interest rate and wherein they can also get critical inputs in

farming. The said Cooperative also offers different services which

help the inhabitant of the place, especially the farmers, maximize

the use of their resources and become more productive.

III. Marketing Plan

The proponents will establish a Multipurpose cooperative for

the people of Pagbangkeruan, Alcala, Cagayan. The cooperative will

offer agricultural loans to the members, sell farm inputs with a

relatively low mark up as compared to its commercial counterpart,

buy farm outputs of the farmers and accept short term investment

from the members that will be given fair interest. The proponents

will uplift the quality of life of the farmers that tend to

stagnate and dwindle because of high interest rates and costly

farm inputs.

The proponents will directly compete with local farm input

suppliers, local lenders, and corn and rice traders in the

locality. The proponents' primary advantage to the expected

competitors are lower prices of farm inputs, lower interest rates

to loans granted, higher price will be offered to farm outputs,

and eventually the spirit of investing and helping build your

community by being a member and part of the cooperative.

Market Study

Target Market

Farmers need resources to grow crops. Farmers need natural

resources, such as land, air, nutrients, water and sunlight.

Farmers themselves need energy so they can work the land. Farmers

need human-made tools to work the land. Some resources can be

bought at the local market. So farmers also need money to buy

resources that are not available on their land. To acquire these

resources farmers need money. Thus, the proponents target market

is primarily farmers and persons who need financial aid and members

of the cooperative of Brgy. Pagbangkeruan, Alcala. Our target

individuals will eventually join the cooperative to reap the

benefits that they can derive form it like lower borrowing cost,

higher offered price to farm outputs and eventually members

dividend from the institution.

Market Area
 The researchers chose Barangay Pagbangkeruan, Alcala as their

adopted community in which they will develop and organize a

cooperative. The researchers decided to put up the business at

this area because of their need for financial aid, especially that

their prime source of living is farming.

Mode of the Distribution

For starters, the proponents plan is to have a pre-membership

seminar to encourage people of Pagbangkeruan to join the

cooperative. Encourage all the farmers of the barangay to be

members of the cooperative. Then later on, to market the

cooperative to other neighboring barangays to avail the services

offered by the cooperative by giving away flyers and brochures,

and also do seminars/talks. The products and services of the

cooperative will only be availed and processed from the main office

of the cooperative and only members of the cooperative can avail

of the products and services to ensure that the members are the

ones directly benefiting from the cooperative.

Study of Competition

4Ps of Marketing

Price
 The proponents will levy a 3%-4.5% monthly interest to the

loaned borrowed by the members, in case of the farm inputs we will

maintain a markup of 5% based on cost and farm outputs sold to the

cooperative will only be lower by 20 cents than the contracted

price to the national food authority.

People

The proponents plan to establish the cooperative initially

for the people of Pagbangkeruan, Alcala, particularly for the

farmers. This is in response with the Barangay Captain's request

to form the cooperative exclusively for Pagbangkeruan resident.

Promotion

The proponents plan to advertise the cooperative by

conducting seminars about the necessary information about

cooperatives, its benefits and the services that the cooperative

will offer. We will also distribute leaflets and brochures to the

target individuals in the barangay to encourage the target

individuals to join the cooperative.

Place

The proponents plan is to establish the cooperative at

Pagbangkeruan, Alcala, Cagayan. Specifically near the commercial

buildings and market place as to take advantage of the proximity

of the barangay to the marketplace.

IV. Management Plan

Vision

Pagbangkeruan Mutipurpose cooperative will become a

nationally renowned cooperative, empowering people and boosting

community potential by producing financially capable individual in

a sustainable industry, creating quality jobs and products that

will be marketed nationally and internationally.

Mission

Pagbangkeruan Multipurpose cooperative is an organization

that stimulates economic stability, cooperativism and camaraderie

among its members. It Provides financial assistance, quality

sustainable products and creates a sustainable community for the

residents of Pagbangkeruan, Alcala Cagayan thus promoting equal

opportunity to contribute to nation building and national economic

development.

Type of Organization

The entity will be operating as a cooperative and will be

registered in the Cooperative development authority.

Below is the organizational chart of the business:

Cooperatives Organizational Structure

Board of
Trustees

Auditor

Manager Treasurer Secretary

Cashier Bookkeeper

The following are the steps in organizing a cooperative:

FIRST. Get organized. You must have at least 15 members to do that.

At once determine the common problems you would want solved and

the basic needs you would want provided for through a cooperative.

You may want to include increasing your production, marketing your

produce, credit assistance, power generation, banking or insurance

and other similar needs. Determining your problems and needs will

also help you classify the kind of cooperative you will be

organizing. Even before a cooperative is set up, a dedicated core

group people who will do all the organizational and paper works is

a must. From this core group, working communities may be formed to

set things moving. These committees may include membership,

finance, executive, secretariat to name a few.

SECOND. Prepare a general statement called an economic survey

This statement will help you measure your cooperatives chances of

success.

THIRD. Draft the cooperatives by-laws.

The by-laws contain the rules and regulations governing the

operation of the cooperative.

FOURTH. Draft the articles of cooperation.

Mandatory contents of the articles of cooperation are the

following: (a) the name of the cooperative, which must include the

word cooperative; (b) the purpose or purposes and scope of

business of the cooperative; (c) the term of existence of

cooperative;(d) the area of operation and the postal addresses of

the registrant-cooperators; (e) the common bond of

membership; (f) the names of the directors who shall manage the

cooperative; (g) the amount of share capital; (h) the names and

residences of its contributors, and (i)the type of cooperative,

whether it is primary, secondary or tertiary.

FIFTH. Secure bond for accountable officer(s).

The accountable officers normally are the Treasurer and the

Manager. The amount of the bond is to be decided upon by the Board

of Directors, based on the initial net worth of the cooperative

which includes the paid-up capital, membership fees and other

assets of the cooperative at the time of registration.

SIXTH. Register your cooperative with the Cooperative Development

Authority CDA.

Submit the following required documents:

Four (4) copies each of the Economic Survey, Articles of

Cooperation and By-Laws duly notarized;
Bonds of accountable officer(s) (any directors, officers and
employees) handling funds, securities, of properties in
behalf of the cooperative;
Sworn statement of the treasurer duly notarized showing that
at least 25% of the authorized share capital has been
subscribed, and at least 25% of the total subscription has
been paid. The paid-up capital must not be less than Php
2,000.00.

It must be noted that no member may own more than 20% of the

subscribed share capital and each share must not be less than Php

1.00.

After complying with all the requirements set by Cooperative

development authority the initial members of the cooperative will

elect the board of trustees and after the election of the board of

trustees the screening for the key officers will be conducted. The
following are the organizational chart of the cooperative and below

the latter is the qualifications of the officers.

Qualifications for membership

1. Should be a certified resident of Brgy. Pagbangkeruan,

Alcala Cagayan.

2. of legal age and without prior credit negligence or

misdemeanor.

3. Has a farm land or a tenant to farm land.

4. Payment of necessary membership fee.

Job Description and Qualifications

In the initial formation of the Cooperative the Members of

the Board of Directors and the Auditor will not be coming from the

residents of the community but from expert individuals that will

act as a transitional trustees but eventually after the formal

organization of the cooperative the members will elect board of

trustees coming from the members of the cooperative and they will

be trained for future take over.

As to the other Positions the proponents will be training the

residents of the community to hold the positions.

The following is the Positions and Job description that the members

will be occupying.

1. Manager- he/ she must be well versed on farm inputs, has basic

knowledge of inventory system and credit management and should be

a bona fide resident of the barangay.

2. Treasurer- he/ she will be the responsible for the procurement

of farm inputs to the dealers, loan releases, collection and

disbursement of the necessary expenses of the cooperative.

3. Secretary- he/ she will be responsible for keeping records,

minutes of the meeting of B.O.D., Minutes of Members Assembly and

accumulating facts about the operations for the purpose of future

presentation to the members.

4. Cashier- he/she will be the money custodian; he/ she will

also be responsible for depositing the collections to the bank.

5. Bookkeeper- the bookkeeper will be the one keeping records

about sales, inventory and other operational datas in the field

and will eventually report it the secretary.

Pre-operating activities

The proponents plan to conduct an economic survey first in the

area to study the existing market and their potential resources.

After the economic survey the proponents will conduct

information drives and seminars in the community for the

information dissemination purposes and to know the perception of

the residents to the project. After orienting them of the

necessary information the proponents will start to formally

organize the organization doing the 6 steps given by the

Cooperative Development Authority. After formally organizing and

registering the cooperative the proponents will start to talk to

product suppliers, banks and other pertinent organization that

will help the cooperative before starting operation. And after

all this steps the proponents will have the cooperative start

operation.

Pre-Operating Time Table

Estimated
Activity Week
Cost

1 2 3 4 5 6 7 8 9 10 11 12

Preparation of
5,000
Business Plan

Series of Seminars
10,000
and Consultations
Phase 1-Training of

Staffs and Election

20,000
of Board of

Trustees

Phase 2-Final

Public Consultation

and Operational

Assessment,

Presentation and

training on 10,000

marketing,

operation, and

financial

management of the

adopted community

Formal Organization
10,000
and Registration

Formalizing the

Suppliers and
6,000
Creditors

Agreement

Accumulation of
12,000
Initial funds and
Supplier Contract

Preparation

Operation
5,000
Simulations

Start of Operation 78,000

 Appendices

Appendix 1

Interview

We made an interview with the Brgy. Captain of

Pagbangkeruan Alcala--our adapted community, and we obtained the
following data:

Population of Brgy. Pagbangkeruan Alcala, Cagayan

o 236 family heads
Area of farmland in the place
o 70 hectares
Numbers of farmers
o 30% of family heads
Prime produce
o Corn during wet and dry season
o Tobacco during dry season
Number of harvest in a year
o Twice a year
Capacity of harvest
o 80%
Source of farmers financial needs and inputs
o There are traders nearby the place and here is where
the farmers of Pagbangkeruan ask for financial
assistance, they are making a loan with monthly
interest ranging from 5-7%. Furthermore, the inputs of
the farmers of Pagbangkeruan are also taken as credit
from the said traders.

The Brgy. Captain is willing to establish the proposed Multi-

purpose Cooperative as long as it is only intended for the
people of Pagbangkeruan.

Questionnaire
 St. Paul University Philippines
Tuguegarao City, Cagayan 3500

Name (optional) ____________________________ Gender___________

Occupation ________________________________ Age _____________

Status ____________________________________

Directions: please read the question carefully. Check the

answers that correspond to your best answer for the following
queries.

Cooperative is..

1.) If a farmer cooperative will be organized in your

barangay, will you be willing to be a member of a
cooperative?
Very much
Much
Not so much
Not at all

What are the products and services you would like to have
in the proposed cooperative to have?
Check as many as you want
a. Financial Assistance/Short Term Loans
b. Selling Farm Inputs
c. Buying Your Farm Yield
d. Product Development/Livelihood Programs
e. Selling General Merchandise
Others, please specify ________________
2.) Would you like to avail a short-term loan in the
proposed cooperative?
a. very much
much
not so much
not at all

If yes, what is the highest rate of interest per month that

you can handle as compared to local loan usurers?

3%
4%
5%
3.) Would you like to buy farm inputs from cooperative?
a. Yes
b. No
If yes, how often will you buy?
c. Everytime its needed
d. When we cannot go to the city
e. When no place else has the product
4.) Will you sell your farm outputs to the cooperative?
a. Yes
b. No
5.) Where do you want the cooperative building be
situated?
a. Near the barangay hall
b. Near the residential area
c. Exclusive lot
Others, please specify _________________________
6.) Are you willing to attend seminars and consultations
regarding the cooperative?
a. Yes
 b. No

7.) What kind of promotional strategy do you want for the

cooperative?
Check as many as you want.
a. Leaflets
b. Brochures
c. radio ad
8.) how much can be your maximum contribution to the
cooperative?
1,000
500
300
250