Government unveils plan to revolutionize agricultural and marine product distribution

Publish a plan to improve the distribution structure of agricultural and marine products

A target of KRW 5 trillion in the online wholesale market by 2027. Reduce distribution costs by 10% by lowering the market threshold and incentivize competition between corporations for fees and services.

Behind the succession of agricultural products with the prefix ‘gold’, including ‘gold apples’, is an old-fashioned distribution structure. To correct this, the government decided to expel underperforming wholesale corporations from the market and promote fair competition among wholesale corporations to reduce distribution costs, which are close to half of consumer prices, by more than 10%.

On the 1st, the Ministry of Agriculture, Food and Rural Affairs jointly published the ‘Measure to Improve the Distribution Structure of Agricultural Products and Fisheries’ with the following content.

The key to the strategy presented by the government is to ▲ improve the publicity and efficiency of the public wholesale market ▲ revive the online wholesale market ▲ increase the scale and efficiency of distribution in production sites ▲ improve the distribution environment in consumption locations. The goal is to reduce distribution costs, which currently account for 49.7% of the price of agricultural and marine products, by more than 10% and expand the transaction volume of the online wholesale market to 5 trillion won by 2027.

The government decided to expand competition among wholesale corporations in public wholesale markets such as Garak Market. Most agricultural and marine products transported from production areas are sold to consumers in retail markets through middlemen and wholesalers through auctions conducted by wholesale corporations in public wholesale markets. About half of all fruit and vegetables go through public wholesale markets, but a few wholesale corporations take over the entire sale and make exorbitant profits.

The government decided to evaluate the performance of existing wholesale corporations when the designation period of 5 to 10 years ends and decide whether they should be re-designated, and to select new corporations through a public offer. The ‘Agricultural and Fisheries Products Distribution and Price Stabilization Act’ (Farm Security Act) will be amended to require underperforming corporations to cancel their designation even during the designation period. Even now, a corporation’s designation can be canceled arbitrarily, but only six corporations have been canceled since the law was enacted in 1976.

It was decided to encourage competition in fees and services by removing restrictions on transaction items for some corporations in Garak Market. Currently, in the Garak market, newcomers trade only 4% (8 items) of the total 193 items traded, so the existing companies are very territorial and the barriers from high entry. The situation in other public wholesale markets is not much different.

The government also plans to review the auction commission system for wholesale corporations, which is currently around 4-7%. If competition between wholesale corporations is promoted, farmers and consumers can benefit as they increase investment in shipping regions and lower commissions to attract contracts. The online wholesale market, which was launched in November last year, will expand the number of agricultural products traded from 121 this year to 193 by 2027, and will also start trading seafood in the second half of the year. The government announced that it will expand the number of smart agricultural product distribution centers (APCs) to 100 by 2026 and increase the proportion of APCs that handle fruit and vegetables from 30% to 50% of production.

Reporter Sejong Kwak So-young

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