Success Story Featuring F2F Volunteer Annette Acosta and Household Multi-Purpose Cooperative

Posted on 05/27/2021

Managing Through a Risk Framework

Cooperative forms its first ever Risk Management Committee after 19 years in operation

For over 18 months in 2015 and 2016, farmer-members of Household Multi-purpose Cooperative endured El Niño. Drought and unusually hot conditions damaged almost half of their cacao plantation.

Six years later, the farmers and the cooperative are still reeling from the effects of that calamity. The cooperative borrowed almost PHP 12 million (about $248,000 USD) from banks to help over 164 of their members to finance the recovery of their crops and the cacao plantation. The plantation needed years to recover from El Niño and even now, crop yield remains low, and the farmers were unable to pay on schedule. Thus, at the end of the four-year payment period, HMPC and its farmer-members were only able to pay less than one percent of the loan. HMPC renegotiated the loan terms with its creditor banks, which granted the request on the condition that HMPC draw up a recovery plan. Failure to do so would mean the farmers will be unable to sustain the recovery of their cacao crops, spelling financial devastation for both the members and the cooperative. HMPC needed help with both funding and assistance on improving both its financial and cacao production management.

Not losing hope, HMPC continued to improve its other business, which included efforts to finance programs, provide salary loans, and offer various consumer goods and services while looking for possible solutions to their recovery plan for their cacao business. It extended its operation to adjacent municipalities. HMPC’s determination led its CEO, Reynold Alejo, better known as Sir Noy, to an opportune meeting with Grameen Foundation’s Farmer-to-Farmer Senior Training and Field Operations Specialist, Ronald Lim at a local Cacao Trade Fair. After learning about the F2F program, HMPC requested volunteer assistance in conducting a risk assessment to learn from its experience of high rates of past-due and non-performing loans.

All the way from California, Annette Acosta stepped forward to help HMPC from October 2020 to January 2021. Annette brought with her years of experience in sustainable development, social impact, valuations, microfinance, and financial modeling. Even with the international travel restrictions due to COVID-19, Annette worked remotely to help HMPC analyze and evaluate its financial risks. In her own words, “through various virtual meetings, I tried to understand the cooperative’s situation and created a risk matrix to identify, assess, and prioritize the risks. We discussed different issues and eventually built a risk management framework, a tool for HMPC to manage risk on an ongoing basis.”

Annette developed a workshop on the risk management framework, which she delivered virtually to about 35 HMPC staff, including its risk management committee. She trained the participants on the nuances of the framework and taught them to use it to better understand loan risks and their effects on members as well as to effectively manage and mitigate them.

"The highlight of this assignment was the opportunity to provide a workshop on how to develop a risk management framework,” Annette said. “I was very pleased to hear that the participants found the workshop very insightful and eye-opening. After the workshop, I received comments on Facebook from some of the participants—it was amazing they took the time to reach out and connect!”

Besides the use of the risk management framework, Annette also provided additional references and suggestions that HMPC could use to improve its general loan policy. She worked closely with HMPC leadership and selected staff to develop stronger internal controls for its existing loan portfolio and future loans. This included an intentional data collection and management system. Annette strongly encouraged HMPC to start a risk management process to set up their metrics and prioritize their most important risks.

According to HMPC Chairperson Neil Porras, creating a Risk Management Committee was a requirement of the bank that was not immediately implemented. “It took the F2F engagement with Annette to fully grasp its importance. We were enlightened on the importance of risk management and decided to immediately set up the committee.” Soon after the F2F assignment, the Risk Management Committee had its first independent workshop to put to work the matrix Anette recommended.

With the right risk management, HMPC is expected to develop stronger internal controls and it can have a better understanding of financial risk. With the help of the Farmer-to-Farmer Program, the cooperative can improve its capacity to mitigate and identify its loan risks which means it will be more effective in its services for farmer members.

Bernardo Perez, Chief Operations Officer, who was among the participants during Annette’s training sessions shared, “Our engagement with Annette allowed us to be aware of our failures and shortcomings. We can avoid an eventual downfall as cooperative. As a focal person from management, I hope that our Risk Management Committee will work not only in determining and assessing the risks but will implement the risk management measures. I will commit my boundless and transparent support to the cooperative, especially in setting up the process of identification, assessment, implementation and monitoring of our risk management measures.”


Household Multi-Purpose Cooperative is based in Antipas, North Cotabato in the island of Mindanao with 3,452 of members mainly smallholder farmers.

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