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Seo, Dong Woo

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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  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

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