Published : 2013-09-11 20:42
Updated : 2013-09-11 20:42
The nation’s agricultural sector is facing growing pressure to recreate itself as a high-value-added export industry. It is make-or-break time for the sector as Korea is promoting free trade deals with China and other countries that will open the nation’s economy even wider.
Agricultural reform requires not only a well-designed plan to support selected segments but also a different mindset among those in agro-fisheries businesses.
Last week, Korea and China wrapped up their first round of negotiations after reaching an agreement on the modality or the overall framework of the FTA.
In the products sector, they agreed on a relatively low level of liberalization. The agreement calls for removing import tariffs on 90 percent of all products, much lower compared with the 99.8 percent and 99.6 percent Korea reached in its FTAs with the United States and European Union, respectively.
China wanted to keep the liberalization level low as it sought to protect key manufacturing sectors, including the auto industry.
For Korea, the weak area that needs protection is the agricultural sector, which could be devastated if exposed to the onslaught of cheap products from China.
After concluding the first-stage negotiations with China, the government outlined a plan to protect the agricultural sector and farmers. Officials of the Agriculture Ministry said they would seek to upgrade the overall competitiveness of the farm sector and increase support for competitive products that can be exported to China.
Yet the plan was met with criticism from industry leaders, who said it lacked substance. In a meeting with leaders of the ruling Saenuri Party, they demanded that the agricultural sector be completely excluded from the FTA with China.
Noting that the incumbent government planned to cut agricultural expenditures by 5.2 trillion won over the coming five years from 2013, they also demanded that the government increase agricultural spending in keeping with the overall budget increase during the period.
Farmers’ demand for total exclusion of the agricultural sector from the China FTA is unrealistic. This shows they are preoccupied with protecting the small domestic market. They need to change their perspective.
In the first place, they need to acknowledge the need for Korea to open the agricultural market. Without opening it to foreign products, Korea cannot participate in such mega FTAs as the Trans-Pacific Partnership.
They also need to see China not as a threat but as a big potential export market. They need to have confidence that they can adapt and transform this threat into a golden opportunity.
As household income in China continues to rise, demand for fresh food and health products will rise steadily. This can provide a growth opportunity to Korean farmers and agricultural businesses, given that Chinese consumers, who are increasingly concerned about food safety, distrust local products.
If Korean farmers upgrade the quality of their vegetables, fruits and other products under a carefully crafted branding strategy, they will be able to penetrate the Chinese market.
The government needs to compensate farmers for the damage they could suffer due to the FTA. At the same time, it needs to instill confidence in farmers and focus support on businesses that are keen to tap into Chinese consumers’ demand for high-quality food. It should rush to help farmers change their mindset as there is not much time left before the storm hits.