2. Wan-Seok Park enogs@hanmail.net enogs@hanmail.net Senior Manager Ag Finance Department NACF, South Korea 2007. 3. 15.

3. Contents Statistics on Farm Affairs in Korea 1 1 2 2 Ag-Coop System 3 3 Agricultural Finance 4 4 Agricultural Marketing

4. Statistics of Farm Population classification 19652006 Household Total (a)4,84415,887 Farm Household (b)2,5071,273 Proportion (b/a)51.5%8.0% Population Total (a)28,70548,294 Farm Population (b)15,8123,433 Proportion (b/a)55.1%7.1% (Unit:Thousand KRW) ※ Number of family members per farm household: 6.3  2.75

5. Age Groups of Farm Operators Age 19812006 Numbers (Thousand) % % Under 301045.120.2 30~4993646.121817.6 50~5955527.328623.1 Over 6043521.573459.1 Total2,0301001,240100

6. AGRICULTURE’S CONTRIBUTION TO GNP (%) Agriculture ’ s contribution to GNP Year 1980 10.7% Year 2006 3.1% Contribution of Agriculture to GNP

7. 1.Multi-purpose 2.Central Role in Cooperative Movement in Korea 3.Two-tier System 4.Implement Agricultural Policy for Government Characteristics of the Ag-Coop

8. Subsidiaries of the NACF 1.Agricultural Cooperative College 2.The Farmers Newspaper 3.The Namhae Chemical Corporation 4.Korea Agricultural Marketing, Inc. 5.Korea Agricultural Trading Co.,Ltd. 6.Nonghyup Tours 7.The NACF Futures Corporation 8.Korea Coop-Agro, Inc. 9. Korea Samhyup Co.,Ltd. 10. Nonghyup Korea Ginseng Co. 11. Nonghyup Feed Inc. 12. Nonghyup CA Asset management Co.,Ltd. 13. Agricultural Cooperative Asset Management Co.,Ltd. 14. NH Investment & Securities

9. Agricultural Finance System Policy LoanMutual Loan Commercial Loan Farm Operators NonghyupMAF Policy Fund Loan Payback Ag Credit Guarantee Fund Fund for Loss Compensation Farm Operators Customers Commercial Fund Mutual Fund

10. Systems to Facilitate Lending to Farm Operators Agricultural Credit Guaranty FundAgricultural Credit Guaranty Fund - Simple credit analysis for issuing Letter of Guarantee - Simple credit analysis for issuing Letter of Guarantee up to KRW 50 million per farm household up to KRW 50 million per farm household Credit Loan SystemCredit Loan System - Up to KRW 15 million per farm household - Up to KRW 15 million per farm household Fund for Loss CompensationFund for Loss Compensation Agricultural Mutual Fund/ Policy FundAgricultural Mutual Fund/ Policy Fund - Balance of AML in 2005 : KRW 127 trillion - Balance of AML in 2005 : KRW 127 trillion - Balance of PL in 2005 : KRW 27.7 trillion - Balance of PL in 2005 : KRW 27.7 trillion

11. Profile of Main Farm Loans Farm Facility Farm Operation Family Living Integrated Farm Loan (Policy Loan) - Mostly for large farm operators - For the use of farm purchase, facility installations, repairs, maintenance, operation, etc. - Balance in 2006: KRW 2,143 billion Farm and Livestock Management Loan (Policy Loan) - Mostly for small farmers - For the use of farm and livestock operations - Balance in 2005: KRW 3,800 billion Agricultural Mutual Fund - For all farmers - For the use of family living and farm production - A kind of commercial loans

12. Integrated Farm Loan (IFL) System Consultation Loan Appraisal & Lending Credit Analysis Loan Counsel Help farm operators to achieve their goals

13. Types of Consulting Services Book Keeping Risk Forecast Loan Payment Financial Plan Financial Diagnosis Price Info. Investment Analysis Loan Program NACF Consulting Services Before Investment After Investment - Feasibility of Investment - Facility-loan Programs - Future Price of FP Interests of FO - Profitability - Effective Management - Operational-loan Programs - Loan Payment Schedule (Financial aspect)

15. Price Analysis System

16. Financial Planning (Budgeting)  Planning tool that contains estimates of production costs and returns based on the current or expected economic environment Enterprise 1 Budgeting Enterprise 2 Budgeting Enterprise 3 Budgeting Monthly Cash Flow Monthly Debt Payment Schedule F/S Financial Stress Test & Grouping Property Information Debt Information

17. Book Keeping Software

18. Rural economy (non-ag) (Customer driven) Bulky Face to face transaction Manual shipping Changes in Agricultural Marketing Collector, Traditional Market Big Retailer Sorted & Standardized products Brand names, POS, EDI Machine, palletizing

19. (Food system) Rural economy (non-ag) (Customer driven) Producer(farmer) Collector Shipper Wholesaler New Agricultural Marketing System Conventional System New System Producer(farmer) APC(201) AMC Consumer 6 steps 4 steps Retailer Consumer

20. Chemical Fertilizers,Chemical Fertilizers, Agro-chemicals, Agro-chemicals, Farm Machinery, Feedstuff, Farm Machinery, Feedstuff, Petroleum, Tax-free farm fuels Petroleum, Tax-free farm fuels Stable & timely supply at reasonable pricesStable & timely supply at reasonable prices Agro-chemical and fertilizer companiesAgro-chemical and fertilizer companies Seedling centerSeedling center Providing farm supplies

21. A modernized marketing facility conducting various post-harvest processesA modernized marketing facility conducting various post-harvest processes ex) Drying, storing, processing, and ex) Drying, storing, processing, and packaging of rice packaging of rice Value added processValue added process Number of RPCs run by Nonghyup : 181Number of RPCs run by Nonghyup : 181 Rice Processing Complexes(RPC) packaging drying

22. Agricultural Produce Complex (APC) : 201Agricultural Produce Complex (APC) : 201 - Pre-cooling, pre-drying, sorting, storing, - Pre-cooling, pre-drying, sorting, storing, packaging, cleaning packaging, cleaning Collection Points : 1,943Collection Points : 1,943 Development of Post-harvest Technology

23. Marketing centers in urban areas as an alternative distribution channelMarketing centers in urban areas as an alternative distribution channel Similar to large supermarket or discount storesSimilar to large supermarket or discount stores Transaction based on private contract with producers, not based on auctionTransaction based on private contract with producers, not based on auction Engaged in both retail and wholesaleEngaged in both retail and wholesale Agricultural Marketing Complexes (AMC)

24. First introduced in 1970First introduced in 1970 Hanaro Marts (retail outlets) : 2,183 storesHanaro Marts (retail outlets) : 2,183 stores - Unique cooperative stores Internet commerce : 1,395 itemsInternet commerce : 1,395 items Retail business (Hanaromarts) Hanaromart Distribution center

25. Cyber-marketingCyber-marketing - KRW 95.5 billion in 2005 - KRW 95.5 billion in 2005 POS (Point of sales) SystemPOS (Point of sales) System EDI (Electronic Data Interchange)EDI (Electronic Data Interchange) E-commerce

26. Analysis of pesticide residueAnalysis of pesticide residue - Food safety center Education on food safetyEducation on food safety issues & the use of pesticides issues & the use of pesticides Traceability : HACCP/GAPTraceability : HACCP/GAP * Beef History Tracking System Food safety & consumer protection

27. Transport farm products to the collecting points, eg. cooperative marketing centers or processorsTransport farm products to the collecting points, eg. cooperative marketing centers or processors Advance payments to farmers for consigned commodities - financial supportAdvance payments to farmers for consigned commodities - financial support Dissemination of agricultural marketing information to producersDissemination of agricultural marketing information to producers Role - Member Cooperatives

28. Planning and guidance services for cooperative marketingPlanning and guidance services for cooperative marketing Operation of cooperative marketing centersOperation of cooperative marketing centers Role – the NACF (Federation)

29. New Trends of Marketing and Extension  Promoting brands for farm products - 168 brands, 20 leading brands  Agricultural Coupons( ’ 05) : KRW 317 billion  Self-help Funds ( ’ 05) - Cow : KRW2.8 billion, Pig : KRW 5 billion, Dairy : KRW 5 billion  Special days for product-eating - White day, Duck day, Gu-Gu day, Apple day …  HACCP(Hazard Analysis Critical Control Point) - 71 butcheries and processing plants  Livestock Consulting System  Production Quota on each farm household

30. Thank you