S. Korea aims for economy of scale in agriculture sector

By Lee Joon-seung
SEOUL, April 5 (Yonhap) -- South Korea will strive for an economy of scale in the
agriculture sector to enhance quality, price competitiveness and fuel exports,
the government said Sunday.
The Ministry for Food, Agriculture, Forestry and Fisheries said its decision to
pick seven relatively large companies as primary negotiation partners to develop
farmland at the Saemangeum tidal flats and the Yeongsan River region is a move to
overhaul farming in the country.
On average individual farms are family-run and small, managing about a hectare of
land, making it effectively impossible to increase productivity, important for
lowering prices.
"The decision not to parcel out land to small-time farmers which was done in the
past, signifies a move by the government to create dedicated agriculture
businesses that can compete with overseas rivals," said Lee Chun-il, head of the
ministry's farm policy division.
The area of reclaimed land to be leased to the seven companies totals 1,413
hectares so each could get more than 200 hectares, although the size of farmland
to be divided will depend on each company's financial situation, outside
investments and business objectives.
He said the plan will serve as a testbed to see if large farming companies can
succeed and help fuel exports. Higher productivity and competitiveness will be
reached by making extensive use of hightech greenhouses and use of farm
machinery.
Companies selected include a consortium led by Dongbu Fine Chemical Co., an
affiliate of Dongbu Group, Nongsan Trading Co., Jangsuchae and a regional company
with ties with Daesang Group, a leading processed food manufacturer.
"The final decision on developers will be made around August, but if there are no
changes the companies will be charged with developing 700 hectares of land in
Saemangeum and 713 hectares in Yeongsang regions," the official said.
The companies said they plan to raise vegetables, grain, animal feed as well as
premium beef cattle and pigs.
He said the government plans to lease the land for 30 years, with developers
given the option to extend their management rights.
"Most products that are to be produced will be sold abroad as agreed upon by the
companies before they made their bids, although some goods like feed may be sold
domestically," Lee said.
He stressed that while Seoul will help build roads, reservoirs and other basic
farming infrastructure, any support will be reflected in the lease and not be
above what the government provides to other farmers.
"All support will be in the form of business transactions with no preferential
treatment being given that could cause trade friction," the policy director said.
Without going into details, he said if this first project is successful,
remaining land in Saemangeum and the Yeongsang River region may be given to
companies.
The Saemangeum reclamation project located on the western coat of South Korea
lies 280 kilometers south of Seoul and cost the government 2.4 trillion won
(US$1.8 billion) to build so far. The Yeongsang program is smaller and involves
absorbing low lying water along the banks of the river that flows into the Yellow
Sea near the port of Mokpo 410 kilometers south of the capital city.
South Korean policymakers have been taking steps to enhance the competitiveness
of local farmers in the face of an influx of cheap imports from abroad.
They have also sought to transform agriculture into an export industry. The
ministry said that it is aiming to push up outbound shipments of farm goods to
US$5.3 billion in 2009 from $4.4 last year, with the target to be raised to $10
billion by 2012.
yonngong@yna.co.kr
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