| Entry of Enterprises into the Agricultural Sector: Issues and Challenges | |||
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| Author | Kim, Byoungryul | ||
| Views | 129897 | Publication Date | 2017.04.30 |
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The purpose of this study centers on identifying issues relevant to basic directions of the agricultural policy and addressing problems by microscopically examining issues surrounding the entry of agricultural enterprises. Here, the enterprises' entry into the agriculture sector means that the capital of the non-agricultural sector invests in the agricultural sector or establishes a subsidiary of the agricultural sector in the form of vertical integration. The most representative type of agricultural enterprises’ entering into the agricultural sector is establishment and operation of an agricultural corporation rather than farming association. The number and investment scale of agricultural corporations have been increasing in recent 5 years. Particularly, the proportion of non-farmers’, investment in agricultural corporations with contributions of over 500 million won was larger than that of farmers’, and this trend is expanding. With the introduction of the agricultural corporation system in 1990, it has been allowed to establish an agricultural corporation either as an agricultural corporation based on farmers’ main contribution or an agricultural corporation via the participation of off-farm capital investment. Investments by the non-agricultural capital include not only the direct investment in agricultural corporations but the establishment of agricultural corporations as subsidiaries in the form of vertical integration (sequencing) of existing companies. It is to be noted, however, that above-mentioned investments have mainly taken place in the livestock sector. Under these circumstances, the government has implemented the Large-scale Farming and Fishery Company Project since 2008 to nurture agricultural enterprises in the agricultural production field, especially arable crop production. However, the Project has not made marked outcomes. Even though this stagnation is partly due to the fact that the reclamation area has not yet been completed, the main reason is the lack of aggressiveness of companies selected as beneficiaries of the Project. Also, momentum of the selected companies has been weakened by the dispute regarding Dongbu Farm Hannong's Glass Greenhouse Project which had caused severe conflicts between interested farmers and the new entrant. The issues that concern companies' entry into agriculture are two-folds. First, the concept of firms' entry into agriculture, issues that are pending in relation to this concept, and the logic underpinning the pros and cons of firms' entry into agriculture are at the center of debate. The second is the question of how to solve an individual agenda, which, again, has closely to do with mitigating and/or addressing conflicts between interested participants. Additionally, diagnosis of the effectiveness of the 'Guidelines for the Agricultural Participation of Enterprises' is of importance. This study suggests means and ways to improve some issues, amongst others, that require more detailed analysis and alternative proposals, including ① promotion of Large-scale Farming and Fishery Company Projects, ② introduction of a profit-oriented private investment business method as an alternative business model, ③ revising the guidelines for companies' participation in agriculture, and ④ management of practical conflicts and solutions. Researchers: Kim Byung-ryul, Kim Soosuk, Gouk Seung-yong, Rhew Chanhee, Kim jongin Research period: 2016. 10. ~ 2017. 1. E-mail address: brkim@krei.re.kr |
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