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Product Consolidation to Achieve Scale, Product Quality and Food Safety Requirements and Marketing The experience of small Korean Pear Producers Association. Seo, Dong Woo. Speaker Introduction. Personal history

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Seo, Dong Woo

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Product Consolidation to Achieve Scale, Product Quality and Food Safety Requirements and MarketingThe experience of small Korean Pear Producers Association

Seo, Dong Woo


Speaker Introduction

Personal history

  • Founder(President) and board member of Guri City National Cooperative Commodity Association(‘87~2000)

  • President of Guri city Mukgeol(brand) Pear Commodity Association(‘94~’96)

  • Best Farmer’s Association Technology University Pear Coursework (‘94~’96)

  • Attend Seoul National University, Dept. of Agriculture, CEO MBA (‘99. Feb)

  • Board member of Geongki-Do BFA (current)

  • Board member of Farmer Leaders in Guri-city (current)

  • Board member of Research Council on Pear in Guri (current)

  • Board member of Seoul National Cooperative (current)

  • Consultant for pear in Gyeongki farm crop(current)


What is pear association?

  • Commodity association, commodity unit?

    • Based on the same commodity, farmers organize commodity unit and association for co-production, co-sale to make bargaining power in trading and buying the supplies(farming machine, fertilizer)

    • National Cooperative promote commodity unit in each village and association based on one crop since 1985 by providing financial support and giving several awards.


What is pear association?

  • Purpose and development of organization

    • Need to get bargaining power with company of farming supplies and buyer.

    • Increase the quality of agri-production

    • Increase and maximize sales volume

    • Government’s support and various incentive from national organization such as technical education, field visit in advanced countries for learning, information sharing, sharing of farming machine


Org’n Introduction

  • Current situation of Pear association in Guri city

    - Year of establishment: 2002, area of field: 40ha, No. of member: 36, Volume of production: 1,040ton, investment: 230,000$ for establishment of selection and store building ave. crop: 2,000box/15kg(30ton)

  • Annual Export volume : 500ton

    - Major exporting country: Taiwan, Indonesia, Singapore, Malaysia, Hong Kong

  • Training: 2 technical education/year, 2 censorship/year GAP, education on food security

  • Management revenue: 5% of profit, subsidy for exporting from NC

  • Supporting org’n: local government, agri-technic center, dept. of agriculture, NC


선과장전경


Org’n Structure

National Coop

Private Coop

Private Coop

pear

pear

pear

pear

apple

apple

apple

apple

Commodity Unit


Distribution processes

  • distribution steps

C

U

S

T

O

M

E

R

National Coop

Wholesaler

Franchise

Wholesale market

Producer

Middle man

Retailer

Online,

street vandor


Major Distribution route

  • From the emergence of franchised wholesale market

  • From the development of direct trade methods using internet, online market

  • Major distribution method

%


Market condition

  • Product vs Consumption


Market condition

  • Export volume

  • Major export country

2008


Marketing Strategy

  • Organize commodity unit and association and based on that, extend the market

  • Use ICT for online trade and using delivery system

  • Tour for farm, weekend farm as a marketing tool and direct trade with customer

  • Make brand on each commodity unit or association

  • Develop various packaging method based on the customer’s need

  • Explore new market based on the quality and grade (for gift, individual household, juice)


Distribution strategy

  • In Korea, the farming size is not big enough(ave. less than 1ha) to get economy of scale and there are several steps of distribution. The income of farmer was not big before(50~60% of retail price).

  • Change of market and customer

    - traditional small market⇨ whole saler ⇨ franchised wholesale market ⇨trade via internet

    - In conclusion, the income of farmer increased

  • Development of storage techniques- Selection (330~660m2) and storage(200~330m2) place based on commodity unit and NC(5~10 times of commodity unit)


Production Strategy

  • Information sharing (policy, support from the government, technical) from regular meeting of the member

  • Quality Control

  • - Adopt Certificate of agricultural crop such as GAP(Dept. of Agriculture), invent machine and supply for croping environmentally friend, make regulation and managing for chemical fertilizer and herbicide

  • - During the selection process, the farmer cannot attend. Develop storage method, the expire date can be extended. Bad crop will be 가공


Benefit sharing

  • Based on the investment : 5~7% of investment

  • Based on the percentage of using for association : 2% of selling amount

  • Average income of individual household(per 1ha): around 23,000 USD)


Strength and weakness

  • Strength

    - Purchase of farming machine as cooperative unit

    - Improvement of the product quality

    - Possibility of lobbying power to the government, Possible to explore the support from the national and local government

  • Weakness

    - Member who have good sales condition will resign

    - Not flexible for the environmental and market change(difficulty to adapt and to meet the requirements of franchised wholesale market)

    - Easy to become a member or resign. When member violate the regulation, penalty cannot be apply easily.


Suggestion(제언)

  • Decision of the product price depend on the situation of crop volume of the year and buyer, farmer cannot protect themselves and the differences of price each year is big.

  • Therefore try to organize bigger commodity association and having bargaining power.


Suggestion(제언)

  • Importance of leader’s sacrificing

  • Importance of financial incentive

  • In case of Korea,

    after the Free

    Trade Agreement,

    government support

    farmers in various

    way

  • Search for the

    common goal

    and interest


Thank you


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