MAKING IT MANDATORY FOR CORPORATIONS TO ALLOCATE AT LEAST TEN PERCENT OF THEIR PROCUREMENT TO COOPERATIVES

 MAKING IT MANDATORY FOR CORPORATIONS TO ALLOCATE AT LEAST TEN PERCENT OF THEIR PROCUREMENT TO COOPERATIVES

Mandating that corporations allocate at least 10% of their procurement to cooperatives is an idea that sounds radical at first hearing. But if we step back, it is really about one simple principle: how do we bridge the gap between large-scale capital and grassroots economic units?

There is an important clarification. No country today has a blanket law requiring all private corporations to give 10% of their procurement to cooperatives. That would be a dramatic shift from traditional free-market practice. However, several countries already implement “set-aside” or social procurement frameworks that move in that direction.

Let us start with our own backyard. The General Appropriations Act (GAA) has frequently required government agencies to source at least 10% of certain goods and services from cooperatives and SMEs. The Sagip Saka Act goes further by mandating direct government purchase of agricultural products from accredited farmers’ and fisherfolk cooperatives, cutting out middlemen. On paper, the Philippines is actually a global standout.

But here is my question: if we have been slow in fully implementing Government-to-Cooperative procurement, especially among GOCCs, why rush immediately to impose a 10% mandate on private corporations? We are very good at passing laws. We are less consistent in executing them.

Still, the concept has merit.

Proponents argue that a 10% allocation creates what I call a “forced multiplier.” When corporations buy from cooperatives, profits are distributed among members instead of concentrated in one large supplier. That increases household incomes. Higher incomes mean stronger buying power. And stronger buying power benefits business. In other words, cooperativism is not charity. It is an economic strategy. Globally, cooperatives serve more than one billion members and generate trillions of dollars in economic activity. That is not a small change at all.

Other countries offer useful models.

In the United Kingdom, the Public Services (Social Value) Act 2012 and the newer Procurement Act 2023 require companies bidding for government contracts to demonstrate “social value.” Large firms often subcontract to social enterprises and cooperatives to improve their bid scores. It is not a fixed 10%, but the pressure is real.

In South Africa, the Broad-Based Black Economic Empowerment Act (B-BBEE) uses a scorecard system. Companies earn points for procuring from small, black-owned enterprises and cooperatives. Without sufficient points, they risk losing access to government tenders. That is mandatory in effect, though structured through incentives and compliance ratings.

Italy, under Law 381/1991, promotes “social cooperatives” and gives incentives to firms partnering with them, particularly those employing marginalized groups. South Korea’s Framework Act on Cooperatives 2012 integrates cooperative targets into government master plans and CSR frameworks influencing large conglomerates.

So the global pattern is clear: governments use procurement power, incentives, or scoring systems—not blunt criminal penalties—to nudge corporations toward inclusive sourcing.

Of course, challenges are real. Many cooperatives struggle with scale, logistics, and quality consistency. Corporations worry about cost competitiveness. There is also the danger of “pseudo-cooperatives” created only to capture contracts.

If we ever consider a 10% corporate allocation, I would suggest a phased approach: start at 2–3%, scale gradually, and pair it with tax credits. Create a national accreditation portal for “procurement-ready cooperatives.” Require technical assistance and technology transfer, not just purchase orders.

But before we legislate new mandates, let us enforce what already exists. Let GOCCs lead by example. If the public sector cannot consistently meet its own 10% target, how can we expect the private sector to comply?

Cooperativism remains one of the most practical tools for poverty reduction. If cooperative members earn more, they spend more. When they spend more, businesses earn more. Perhaps the real question is not whether corporations should allocate 10%, but whether we are serious about building an economy where growth is shared, not hoarded.

RAMON IKE V. SENERES

www.facebook.com/ike.seneres iseneres@yahoo.com senseneres.blogspot.com 09088877282/04-16-2027