0326-Farm produce marketing

Last autumn, local cabbage farmers plowed in their produce in protest at plunging prices, while at the same time, urban housewives couldn’t make kimchi due to the rocketing price of cabbage. Likewise, pig prices collapsed recently to half last year’s level, but pork prices remain mostly unchanged at supermarkets and restaurants.

A common culprit behind these contrasting scenes is the nation’s extremely distorted distribution system for farm produce. When the supply of certain products increases, their prices should go down. This will in turn push up demand, and consequently, prices too. If this simple market principle doesn’t work, both producers and consumers suffer, with middle merchants becoming the only winners in this vicious circle.

Most previous governments vowed to streamline the nation’s agricultural distribution system but to little avail. President Park Geun-hye made the same pledge when she visited a wholesale produce market in Seoul last week.

Whether the nation’s first female president can win over profiteering middlemen and rectify this absurd system depends on careful and farsighted planning _ and persistence, one of her main strengths.

According to a study by Yonsei University, distribution costs account for 43 percent of the consumer price of fruits, vegetables and meat products here on average because of five to seven distribution phases. A farmer, for instance, gets less than $1 per cabbage, but the same product fetches $5-$6 at urban supermarkets. Some middlemen buy these vegetables in bulk from fields and control their supply and price, in a notorious practice called “garden preemption.”

The merchants are necessary to an extent because of the high risks of agricultural marketing, given that these products take a long time to grow and are hard to store while maintaining their freshness. This notwithstanding, the time is long past to stop allowing the tail to wag the dog.

Park was right in this regard to call for reducing the excessive distribution stages by encouraging more “direct trading” between producers and consumers. For that to happen, the President should instruct her agriculture minister to build large freight stations at production sites and help individual farmers organize themselves into large, more powerful groups.

The government should also improve its ability to forecast supply and demand, in close consultation with producers, to control production and shipment, as are the cases in advanced agricultural countries in Europe, and in Australia.

Park needs to reconsider her plan to complete reform in just six months, and take a more fundamental and long-term approach by envisioning what the nation’s primary industry should be like in 10 to 15 years.

Haste makes waste in this area, too, as her predecessors have shown.

This is The Korea Times editorial for Tuesday, March, 19, 2013.