The Korea Agro-Fisheries & Food Trade Corp. (aT) has been devoting itself to reinventing the decades-old distribution woes of the Korean agriculture and fisheries industries. aT’s efforts to innovate the complicated, opaque margin structure of the industries and nurture them into exporters have begun to bear fruit.
aT saw sales surge from 217.7 billion won in 2010 to 315 billion won in 2015. The agriculture and fisheries industries also saw exports jump from some $700 million to $6.1 billion during that period. That is the reason why aT was awarded the top grade, “A,” in an evaluation of public entities last year.
Behind the tremendous achievements, the corporation has transformed the complicated distribution structure into an efficient one. It is a three-stage process: transaction between farmers and wholesale dealers; the wholesale market; and the retail market — from agricultural produce and fisheries to reach from farmers to customers. aT has introduced a new evaluation method to enhance each stage’s efficiency. The corporation will conduct a comprehensive evaluation of the process between farmers and wholesale dealers with the goal of making transactions into organized, large-sized ones.
“Distribution can realize economies of scale,” an aT official said. “To this end, aT will nurture some 1,800 distribution experts at its distribution educational institute annually. The transaction process between farmers and wholesale dealers is a B2B business, while the retail market is a business with direct links to customers.”
aT is expanding local food outlets to cut down on distribution margins. The corporation opened 23 local food outlets across the nation in 2013. aT plans to expand the number of local food outlets to 104 this year. In order to overcome geological limits, aT plans to open more online and mobile local food outlets, aT officials said. Besides, aT is opening a cyber exchange in which SME and large-sized distribution firms can be engaged in transactions at one place like Korea Exchange.
The innovation of the distribution process has led to exploring of overseas markets. aT established an exclusive “Korean food corner” in cooperation with China’s largest online distribution market, Alibaba. The Korean corner has attracted 24 firms selling 872 Korean items. Thanks to these efforts, Korea saw its agriculture and fisheries exports to China increase 6.2 percent last year over 2014.
aT is now turning to the Middle East and Southeast Asia. The corporation has formed a Halal task force and opened a branch in Abu Dhabi. The Korean agriculture, livestock and fisheries industries are forecast to see their exports to the regions swell to 1.5 trillion won by 2019, aT officials said. The corporation aggressively promoted marketing activities for such items as organic juice to the Middle East and turned to Hallyu marketing activities to publicize Korean dietary culture, they said.
aT President Kim Jae-soo, who said that the corporation has achieved much last year, stresses that this year the company will concentrate on five core strategies. He expounded, “We’ll establish new exporting strategies, settle down a new logistics paradigm while striving to set up a long-term system to stabilize demand and supply, spearheading the so-called 6th Industrialization of Agriculture, the government’s policy of converting a combination of agriculture and convergence technologies into future growth engines, and concentrating on promoting co-prosperity with the local community.”
As this year marks the first year of the effectuation of the Korea-China Free Trade Agreement, Kim said his corporation plans to establish new export strategies. In the past few years, aT has been accelerating efforts to tap the Chinese food exporting market. For instance, the corporation set up the Chingtao export center and Chendu aT Center, and opened a Korean pavilion on Alibaba, China’s largest online company. The effectuation of the Korea-China FTA is expected to accelerate market-opening and global competition. Even though it could deal a blow to the Korean agricultural sector, it is more important for the long-term success of the Korean agricultural industry for it to adapt and become more competitive.
aT is redoubling efforts to explore new markets, including the Muslim Halal food market, and those in China and Southeast Asia. The corporation opened a branch in Abu Dhabi last year to begin exports to Halal markets.
The second core task that aT’s President Kim stresses in the new era of wide-open markets is the settlement of a new logistics paradigm. The daunting task that needs to be addressed urgently is addressing the high-cost, low-efficiency distribution structure of the Korean agricultural market.
aT has made some achievements by providing information on agricultural produce prices via the Internet and mobile channels, supporting the expanding of local agricultural produce outlets and direct transactions, and reducing food ingredient costs through cyber transactions. There are still many tasks remaining. aT is implementing the so-called Smart Studio, a pilot program to experiment with a new distribution system. It is designed to usher in a new era of distribution for producers and consumers.
Third, aT strives to set up a long-term system to stabilize supply and demand. Given the fact that the supply and demand of agricultural produce can be influenced by such numerous factors as climate change, crop harvest, the global economy, foreign currency fluctuations and crude prices, it’s not easy to predict a stable supply of such major agricultural produce as cabbage and onions, whose supply and demand disequilibrium have a great impact on the consumer price index. It is more important to work out responses in a flexible and pre-emptive fashion.
