Seo, Dong Woo

1. Product Consolidation to Achieve Scale, Product Quality and Food Safety Requirements and MarketingThe experience of small Korean Pear Producers Association Seo, Dong Woo

2. 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)

3. 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.

4. 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

5. 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

6. 선과장전경

7. Org’n Structure National Coop Private Coop Private Coop pear pear pear pear apple apple apple apple Commodity Unit

8. 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

9. Major Distribution route • From the emergence of franchised wholesale market • From the development of direct trade methods using internet, online market • Major distribution method %

10. Market condition • Product vs Consumption

11. Market condition • Export volume • Major export country 2008

12. 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)

13. 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)

14. 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

15. 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)

16. 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.

17. 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.

18. 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

19. Thank you