No Free Lunch

Co-ops are the way

/ 05:06 AM October 30, 2018

Nearly three decades ago, I was deeply impressed with how farm cooperatives in South Korea appeared to have truly uplifted their families’ lives. It was on my first visit to that country to speak at a conference on agricultural policy that I first learned about their strong farm cooperative system.

Participants were toured around facilities of the National Agricultural Cooperatives Federation (NACF), including their huge wholesale terminal market just outside the capital city of Seoul. We were briefed on how the NACF-owned National Agricultural Cooperative Bank was effectively providing for the credit needs of small Korean farmers through their co-ops. The bank has since evolved and expanded into the NongHyup (“farm co-op”) Financial Group, a huge conglomerate that offers the full range of financial services spanning savings, insurance, investment and securities, futures, capital and asset management services.


The NACF now has retail and wholesale outlets for its members’ products throughout South Korea. In 2012, it counted 260 small- and medium-size Hanaro (“we are one”) Marts, 270 meat and dairy marts, and 16 large Hanaro Clubs (with another 18 lined up), all selling only Korean fresh produce and processed products. The last were set up to compete with foreign-owned hypermarkets selling imported farm products.

The Goyang Hanaro Club just outside Seoul sprawls over 13.5 hectares, with a wholesale market, retail hypermarket, packing and distribution center, and a large flower market. The NACF’s distribution centers and Hanaro Clubs made an aggregate turnover of 1.555 trillion won (around P65 billion) in 2012, with about 30 percent of profits flowing back to local communities. By all indications, the NACF has been hugely successful in serving the financial, production, marketing and other needs of Korean farmers.


Little is it known that, 50 years ago, their people actually sought training from our own Agricultural Credit and Cooperatives Institute in UP Los Baños. They came to learn about our state-created Farmers’ Cooperative Marketing Associations (Facomas), which were prominent in our rural farm scene back then. Through Facomas, farmers obtained loans from the Agricultural Credit and Cooperative Financing Administration, set up by our government in the 1950s to counter the spread of the communist insurgency. Dr. Eulogio Castillo, a former administrator of the Cooperatives Development Authority and UPLB colleague, recalled how the task fell on him, as a junior officer then, to train those visiting Koreans. Those were the glory days of our Facomas, many of which he had helped train.

Many years later, he was told by an officer from the Indian Farmers Fertiliser Cooperative Ltd., now the largest fertilizer cooperative in the world, that our Facomas were their model and inspiration when they started in the 1960s. It embarrassed Dr. Castillo to inform the Indian that our Facomas had long been gone. Studies have attributed their demise to politics, corruption and mismanagement. At present, our own farm cooperative system is marked by a few islands of success amidst many failed or struggling ones.

Even so, cooperativism is alive and well in our country. As this year’s Cooperatives Month draws to a close, we have around 28,000 co-ops counting 14 million members around the country, ranging from micro co-ops to billionaire co-ops. More than half of them are multipurpose cooperatives, with the next largest groups being credit co-ops and consumer co-ops. In 2014, Filipino co-ops reported having generated business amounting to P314 billion, and providing nearly 300,000 direct jobs (i.e., as co-op employees), with just little over a third of co-ops reporting.

There are many Filipino co-op success stories to draw inspiration from. But what we could use much more of are farmer co-ops, of which data indicate that we have less than 2,000. In contrast, Vietnam has more than 10,000, comprising more than half of all existing co-ops in that country. Thailand had 6,712 farm co-ops as of 2006, and likely much more than that today. Perhaps our neighbors’ relatively far greater success in agriculture than us has a lot to do with that.

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TAGS: Cielito F. Habito, cooperatives, Facomas, Farmers’ Cooperative Marketing Associations, NACF, National Agricultural Coooperatives Federation, No Free Lunch
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