SEOUL, KOREA - Founded in 1967 under the policy that promoted the balanced development of industry and agriculture, Korea Agro-Fisheries & Food Trade Corp. (aT) marks the 45th anniversary of its inception this year.
As new business projects such as cyber trade in agro-fishery products and the building of a national grain procurement system were added, this organization changed its name to Korea Agro-Fisheries & Food Trade Corp. in January of this year. In tandem with ongoing rapid changes in the agriculture and fisheries sectors, aT has expanded its business-side functions by encouraging exports and fostering the Korean food industry.
aT, a government-invested organization responsible for agricultural marketing services and international trade, is charging ahead to hit the USD 10 billion mark in agricultural exports. Despite the global economic recession, price hikes, and deteriorating weather conditions that have weighed heavily on Korea’s total exports, Korea’s agricultural exports jumped 31% to hit an all-time high of USD 7.7 billion. Against this backdrop, Korea IT Times sat down with Jae-soo Kim, CEO of aT which commemorates its 45th anniversary this year.
Korea IT Times (here after referred to as KIT): aT celebrates the 45th anniversary of its foundation.
Jae-soo Kim (CEO of aT): aT, which started off as Agriculture & Fishery Development Corporation (AFDC) back in 1967, has been thus far committed to improving the distribution channels of agricultural products, adjusting demand and supply, and stabilizing prices. The introduction of cyber trade in agricultural products and a national grain procurement system prompted this government-invested organization to change its name to aT in January of this year.
The reason why the new name has “Food” in it is because the food industry has emerged as one of the key factors that shape Korea’s agricultural policy. Accordingly, aT, which implements an array of policy projects related to the Korean food industry, has bolstered its food-related business. This rechristened, government-backed company is now poised to lay the foundations for shared growth between the agricultural industry and the food industry, as well as evolving into a global, trustworthy specialist in the promotion of agriculture and food products.
KIT: The role of aT in propelling Korea towards posting USD 10 billion in agricultural exports is growing in importance.
CEO Kim: aT has been at the forefront of providing a variety of export-related support. Specifically speaking, aT has helped Korean companies participate in renowned international food trade shows, has invited influential international buyers, and conducted numerous field studies.
Recently, the exports of agricultural products have more than doubled from USD 4.8 billion in 2009 to USD 7.7 billion in 2011. Therefore, Korea’s agriculture industry now feels more confident than ever before. Last year, despite unfavorable export conditions brought on by the global economic recession and deteriorating weather conditions, Korea’s agricultural exports climbed 31% year-on-year to hit an all-time high of USD 7.7 billion.
This year, Korea’s agricultural exports grew 7.8% to USD 6.7 billion, a notable achievement in lieu of a situation where Korea’ total exports contracted 1.2% year-on-year and heavy storms resulted in poor harvests. For the remainder of this year, aT will continuously press ahead with its marketing programs such as intensive export-oriented marketing campaigns and celebrity endorsements in a bid to attain the initial goal of posting USD 10 billion in agricultural exports.
KIT: Could you tell us about aT’s unique strategies and methods for export expansion
CEO Kim: It is important to develop export growth engines and reinforce overseas marketing while swiftly responding to environmental changes in the global export market.
aT is currently ramping up its marketing campaigns in emerging markets such as China and ASEAN, which are rapidly increasing their import of Korean agricultural products. By doing so, aT aims to develop these markets into the core destinations for Korean agricultural exports and take a step closer to achieving the goal of USD 10 billion in agricultural exports. In addition, aT will nurture the 25 strategic export items (including kimchi, ginseng, and seasoned laver) into best-selling global export items.
aT also has drawn up an export promotion action plan. Japan, Korea’s biggest export market, has seen public interest in food safety heighten in the wake of the Fukushima Daiichi nuclear disaster. Thus, aT will work hard to discover niche markets and Japanese food items that need to be replaced by imports to continuously export high-quality, safety-guaranteed Korean food to Japan. For China, the most promising export market, aT will try to export high-quality processed food products in large quantities to big cities on the east coast, the midwestern regions (which are deemed to have great potential for growth), and northeast China (the three provinces of Liaoning, Jilin and Heilongjiang). In addition, aT plans to proactively target high-income brackets in China.
In the ASEAN market, we are currently increasing market shares by mounting intensive, nation-specific marketing activities and advertising - mainly for fresh produce. In terms of the US market, we will take full advantage of the FTA between Korea and the US, the world’s largest importer of agricultural products.
KIT: There are conflicting views on how the Korea-US FTA will affect Korea’s agriculture industry.
CEO Kim: This year, the signing of the KORUS FTA was one of the hot-button issues in the Korean agriculture industry. I think striking FTAs with various nations is definitely a tough challenge to the Korean agriculture industry. A Korea-China FTA is likely to be struck in the near future. Market openings are now an unstoppable global trend. Before it is too late, we have to restructure our agriculture industry and sharpen our export competitiveness to take our industry to new heights.
Consumers will gradually put a higher premium on quality and safety rather than on price. Such a trend is serving as a non-tariff barrier. This can be addressed once the agriculture industry fully embraces IT and new technologies to upgrade its production, distribution, storage, processing, packing, and export processes. If the foundations for the mass production of high-quality, safe agricultural products are laid, export infrastructures (such as modernized agricultural facilities and cutting-edge, export-oriented agricultural complexes) are built, and large-scale export unions are set up, opportunities will present themselves to the Korean agriculture industry.
KIT: IT is expected to lead the Korean agriculture industry into the future.
CEO Kim: The convergence of agriculture and IT will lay the groundwork for nurturing Korean agricultural and food products into world-class export items. The key to agricultural competitiveness lies with consumer choices. Consumers’ willingness to pay a high price for a certain product will dictate the potential level of competitiveness. Korea’s IT power will help groom Korea to become an agricultural powerhouse throughout the world. The combination of agriculture and IT will enable the mass production of high-quality agricultural products at a lower cost. At the moment, the Korean agricultural industry’s embrace of IT is kicking into high gear in the export sector. Cases in point are online searches for international buyers and online trade brokerages. Such online activities are regarded as a positive development given that they help in opening up new export markets in an efficient, low-cost manner.
KIT: aT’s agriculture e-commerce system is the epitome of agriculture’s convergence with IT.
CEO Kim: The official name of aT’s e-commerce system is aT ago-fisheries cyber trade system, which is the only e-commerce system dedicated to trade in agricultural products. It has been in place since 2009.
Distribution costs account for nearly 41.8% of the prices of domestic agricultural products. The recent price hikes in agricultural products can be considered as the main culprit in the sharp increase in overall consumer prices. Cyber trade in agricultural products is an excellent solution to hefty distribution costs since it slashes the costs by directly connecting local producers to distributors via the Internet.
Having envisaged the aT ago-fisheries cyber trade system serving as a total e-marketplace rather than a mere online shopping mall peddling agricultural products, aT crafted its key trade models, scouted for high-quality products, and diversified markets. Above all, what merits attention is the Ministry of Public Administration and Security (MOPAS)’s school meal e-procurement system (an e-procurement system dedicated to food supplies for school lunches (http://school.eat.co.kr)), which has been matching 16 schools nationwide with fitting food product suppliers via the Internet.
This year, the aT ago-fisheries cyber trade system seems on track to reach KRW 1 trillion in sales. It further aims to take up 10% of Korea’s ago-fisheries output by the 2020. aT anticipates that brisk online transactions will make a great contribution to lowering distribution costs and stabilizing consumer prices.
KIT: The popularity of K-pop and Korean soap operas has rekindled an interest in Korean food.
CEO Kim: The popularity of K-pop has thrown Korean food back into the global spotlight. A nation’s unique food culture is an important economic commodity that creates high value addition. That’s why a lot of nations are keen on fostering their traditional foods into a strategic industry.
The globalization of Korean food will lead to growth in the exports of Korean agricultural products and Korean restaurant franchisers’ forays into the global market. Thus, the globalization of Korean food will not only reap economic benefits, but also enhance the international standing of Korea both culturally and diplomatically.
Through a Korean food globalization project designed to broaden Korean food’s global appeal, aT has continued to engage in varied projects for developing Korean food infrastructure, nurturing Korean food experts, and reinforcing the competitiveness of traditional Korean food restaurants. aT’s Korean food globalization project has so far been intent on providing foreigners with an opportunity to relish Korean food. In the future, much emphasis is likely to be placed on assisting promising Korean restaurant franchisers in making oversea market entry and putting down roots in overseas markets.
