[Outlook]Competition is not a curseIt is a pleasant surprise that we will export rice to Switzerland. The price of Korean rice is four or five times higher than other rice sold on the international market. Due to the high price of land and labor, the production cost for Korean rice is excessive.
We have been taught to believe that Korean rice farmers can only survive behind strong barriers to trade. But how should we interpret the news that our rice has started to be sold in the international market, despite its uncompetitive price?
In traditional economics, they say that the competitiveness of a product is decided by production costs, which are determined by the availability of resources. Because of this, for the past 10 or so years, policies to improve the farming industry have been focused on either improving productivity or reducing production costs.
There was a widespread belief that if imports of cheap farm products were permitted, Korea’s expensive farm products would never find markets and our farmers would go under. That’s why farmers poured into the streets to oppose the liberalization of trade.
Price competitiveness is an important factor that determines a given product’s position in the international market. But why do the sales of expensive foreign items such as cars, cosmetics and clothes keep increasing? That’s because factors other than price, such as quality or elegance, are becoming important standards for competitiveness.
Koreans believed that once the Uruguay Trade Round was signed, our farming industry would go under. However, in the 10 years since 1995, Korea’s agricultural industry saw great improvements in its relative prices. During this period, at auctions in Seoul’s Garak Market, the difference in price between the best quality product and the lowest widened from twofold to fivefold. As incomes increase, people’s preferences change and demand for certain items also changes. Prices were once the primary factor in the food market but now quality or safety are becoming more important.
The news that we will export our expensive rice proves that the competitiveness of our agricultural products in the international market is also decided by quality. Thanks to the distinctive differences in our seasons and advanced technology, Korean agricultural products are among the best in the world.
While foreign farm products are more competitive in terms of price, we can improve competitiveness through quality or service, in order to protect our domestic market and advance in the international sphere.
Imported rice doesn’t sell in Korea, and stocks of it are often piled up, although the price is nearly half that of local products. Meanwhile, paprika, roses and lilies produced in Korea have the biggest market share in Japan.
In the early period of industrialization, we depended on exporting products with low prices. But to export farm products, we should focus on high quality items so we can enter niche markets in rich countries where people want to consume healthy and organic food.
We should export farm items that represent Korean culture and tradition.
As we have the third-largest number of emigrants in the world, we should build networks with those Koreans who live abroad to develop our export markets.
The people with high incomes in Japan, the United States, the European Union and China are the first target. We should open export markets for our bean paste, which has lots of protein, to vegetarians around the world, including people in India. We should be able to export traditional Korean food items to Westerners, because their diet is heavy with meat, which is probably one of the causes of their health problems such as obesity.
We must remove barriers to trade and, in their place, we should enhance support for exports of farm products. We should work hard to build a foundation for the export of agricultural items and enter the international market. It is a long and hard journey to revive our farm industry through exports. However, where there is a will, there is a way.
Koreans used to flatten oil drums to make cars. Starting with that technique, we have become one of the major car-exporting countries. We certainly have potential.
*The writer is the chief director of the Korea Agricultural Management Forum and professor emeritus at Chungbuk National University.
by Sung Jin-keun