Compliance of agrarian reform cooperatives to a policy-based lending program: An organizational approach

• Main Author: Ponce, Ella Joy A.
• Format: text
• Language: English
• Published: Animo Repository 2020
• Subjects: Cooperative societies > Philippines; Land reform; Agricultural credit; Political Science
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/5939; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=12929&context=etd_masteral
• Institution: De La Salle University

Access to formal credit and agricultural technology continuously challenge most farmers in the Philippines. The Agrarian Production Credit Program (APCP) was initiated to address these problems by providing loan grants and promoting capacity-building. This study ventured the roles of social capital and formal governance within agrarian reform cooperatives in inducing member participation and loan repayment in the APCP. An empirical study among 16 cooperatives with a data set of 275 farmers in Nueva Ecija was conducted. Correlation and OLS regression analysis were used to determine relationships between the variables. Based on the study of Liang, et al. (2015a), social capital is to be determined by external, relational and cognitive dimensions while observations of decisionmaking, ownership and income served as identifiers for formal governance. The findings of this research show that certain indicators of the independent variables significantly influence member participation. This means that cooperatives that exhibit strength in social capital and formal governance would expect better member involvement in seminars and activities under the program. On the other hand, results for loan repayment showed no significant relationships except with share capital. A one percent increase in a member’s share capital would indicate a six percent increase in the probability that the loan will be paid. Institutional arrangements of the three cooperatives were also studied based on interviews with cooperative officials. Organizational formation were characterized by differences in economic, social, historical and geographical backgrounds. Manifestations of social capital and formal governance in relation to the officials’ experiences and perceptions supplement the quantitative results. As a recommendation, a better operationalization of the two independent variables could be introduced so as to validate and improve the empirical findings. Policies that support cooperative development would be vital if formal credit from the government is to be easily accessed by farmers.