Korean farmers go online to boost rice sales

Cho Mee-young

SEOUL: Little has changed in the rice fields of Asia in the past few centuries. Farmers in straw hats still plough the land with water buffalo, plant seedlings by hand and harvest ripe stalks with sharp sickles. Mechanical ploughs may have replaced some water buffalo but the biggest agricultural revolution in Asia is not taking place in the rice fields. It is in the homes of a new generation of computer-savvy farmers, as comfortable with the sickle as they are with using the Internet to sell their produce.

Just four years ago, Lee Jong-woo was struggling to log onto the Internet. Today, the 48-year-old South Korean farmer and his wife are selling rice via their website (www.ssal.co.kr). Lee, shown on his website smiling in a wide-brimmed farmer’s hat, has come a long way with his computer skills, even winning an Agriculture Ministry prize for the best homepage in 2001. “I struggled for one week just to log onto the Internet when I prepared the e-business in 1998 because at that time I had no idea about how to use computer,” Lee said.

Since he launched the e-business in early 1999, his website has attracted 167,000 clicks and he claims about 5,000 regular clients, offering them top quality rice supplies at 55,000 won ($43.49) per 20-kg bag. A bag of similar size and quality would cost 60,000 won at a traditional wholesale outlet.

Reaping profits

Lee’s family farm, which he took over when his father fell ill, produces only 80 tonnes of rice per year. But profits have been healthy since he started marketing his crop more efficiently and transparently through the Web. His net profit in selling “ssal”, which means rice in Korean, through the e-market jumped 25 per cent to 125 million won ($98,850) in 1999 from a year earlier. It is usually cheaper to buy rice directly from farmers than via wholesalers, Lee said, because wholesalers’ margins are excluded, although Internet buyers need to pay credit card fees.

The Internet sales charge is 13-15 per cent more than the cost of production due to credit card fees, packing and delivery expenses, while the market sales charge is about 20 per cent more, Lee said. But only a few farmers in this country of 46 million people are making profits from e-business. Most of South Korea’s 4.3 million farmers are still selling in time-honoured fashion to traditional outlets, including the government, the National Agricultural Cooperative Federation (NACF) and individual rice processing centres and wholesalers.

E-market small

The NACF estimates that e-trading in rice through individual sites and Internet shopping malls will amount to less than 50 billion won in 2001 out of a local rice market worth about 8 trillion won. Most Korean farmers, working long hours on low incomes, are anxious to get the best price possible for their crops as the price outlook is grim due to pending oversupply.

South Korean rice production in 2001, at close to 5.52 million tonnes, was up 4.2 per cent from 2000 and was the largest output since 1990 when it exceeded 5.60 million tonnes. Rice stockpiles are forecast to top 1.42 million tonnes in 2001 from under one million in 2000, according to agriculture ministry data.

Meanwhile, per capita rice consumption is estimated to fall to 90.4 kg in 2001 versus 93.6 kg in 2000 and 104.9 kg in 1996, the data showed. Earnings per farmhouse were below 23.1 million wo in 2000 against almost 23.5 million won in 1997, while industry sources said the level of debt per farmhouse surged to around 20.2 million won in 2000 from 13.0 million won in 1997.

Farmers unhappy

The government froze its rice procurement price for 2002, thus supporting hard-pressed farmers and ignoring a suggestion by a government consultative committee to make domestic rice more competitive against imports by cutting prices. But farmers are still unhappy as rice prices fell over 8 per cent in 2001, although they are still on average six times more expensive than imports. The competition from imports will be even fiercer under a WTO pact that will gradually open up the country’s rice markets. (Reuters)