Research Reports
Successful Development of a Paprika Growers Association
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AuthorJeong, Eunmee
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Publication Date2011.04.01
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Original
This study was carried out to examine what roles a producer organization representing paprika growers in Korea can and should play to develop the paprika industry and secure a stable access to export markets. Some management ideas for a paprika growers association were suggested after examining the market situation and trend of the paprika industry in regard to production, distribution, and export of paprika and the market situation in Japan.
In 2009, the total cultivation area of paprika was 410ha and the total output reached 36,023 tons. Since 2005, the demand as well as the price rose in the domestic market. As a result, the number of farm households growing paprikas for domestic shipment increased. However, the share of farm households growing the crop on less than 1.6ha of farmland accounted for 83%, averaging at 1.1ha. Of these, farm households growing the crop on a farmland with a size between 0.6 and 1.2ha accounted for 48% and those growing on less than 0.6ha of farmland accounted for 35%. Glass greenhouses (average cultivation field of 1.56ha) were the most-widely used facility type to grow paprika, followed by automated greenhouses 0.77ha and vinyl greenhouses 0.42ha.
It is estimated that out of total amount of paprika produced in Korea, 40% is consumed domestically and the rest is exported. The amount of paprikas shipped into the Garak wholesale market in Seoul has increased significantly since 2005. In 2010, the shipment increased by five times and turnover grew by nine times with the average unit price increasing by about twice. Average unit price increased faster than shipment amount due to rise in domestic demand. During the periods from January to March and from September to October, when average monthly price is the highest, shipment rose by about three times. But since domestic demand competes with exports when monthly average price is higher than annual average price, there is much dissatisfaction by Japanese buyers. What this implies is that the periods of higher shipment act as a factor lowering the market price of paprikas in the Japanese market.
Paprika exports to Japan amount to about 17,000 tons a year with a yearly revenue of about 58,000 dollars. Although attempts have been made to export paprikas to the United States, China, Taiwan, and others, no lasting success was achieved due to uncompetitive price and logistics. But, even if attempts are made to diversify export markets, Japan holds the most advantageous position in terms of logistics. Therefore, the best option is to focus on increasing the current market share of Korean paprika in the Japanese market from 70% to 90%.
In the 1990s, Korea's fruit and vegetable exports to Japan increased as a result of strong yen, but plunged since 2001. In the case of paprika, too, the share of domestic shipment rather than exports increased as domestic price rose. Therefore, it is necessary to pay close attention not to repeat the past mistake made in exporting fruits and vegetables.
A survey has found that 86% of paprika growers recognize Korea Paprika Growers Association(KPGA) as their representative organization. They are positive about the role the association has played so far and have high expectations about what it can do for them in the future too.
The domestic paprika market grew and the number of farm households growing the crop for the purpose of selling them to the domestic market only increased too. As a result, domestic price fell sharply and its effect on the export price, too, increased accordingly. Therefore, it is necessary to act jointly to cope with the problem. The way to meet the demand in both the domestic and export markets and stabilize the price is to control the shipment through a single organization representing the producers.
In order for KPGA to exert influence as a true organization representing paprika growers, it is necessary to introduce a mandatory relief fund and use it to stabilize domestic prices and expand exports. This is because firmly maintaining the bargaining power in the Japanese market by expanding exports and preventing price fluctuations by securing a certain amount of supplies is the only way to stabilize the income of paprika farmers.
Researchers: Jeong, Eun-Mee and Kim, Su-Rim
Research period: 2010. 10. - 2011. 4.
E-mail address: jeongem@krei.re.kr
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