At a time when the 4th industrial revolution is about to take place, a powerful wind of innovation is blowing through the agrifood industry. In other words, the 6th industrialization (based on the convergence of secondary and tertiary industries (e.g. production, processing, eateries, dining, tourism)), smart farms combining ICTs with farming and the creation of agrifood venture businesses based on creative ideas are accelerating.
Government support policies, which used to come in the form of unilateral support and loan provision, are also changing. Industrial funds for the 6th industrialization and smart farm funds have been raised to entice private investors. Recently, the government is trying to set up a new investment system for the agrifood sector that is linked to agrifood FOFs (fund of funds) and cloudfunding.
Against this backdrop, The Korea IT Times visited the Agricultural Policy Insurance and Finance Service, which serves as a control tower for the smooth implementation of the government agricultural financing policies in the field.
The Management of Agriculture Policy Fund (MOAF), established in 2004, changed its name to the Agricultural Policy Insurance and Finance Service (APFS) in 2015 as it was newly tasked with the job of managing crop insurance. To protect farmers against the loss of their crops due to natural disasters, the government offers crop insurance subsidies to bear half of the insurance premium.
“We’ve been carrying out a crop insurance project for one year. The APFS has been conducting researches and exploring ways to address problems in the field to enhance the convenience of farmers,” said Hong Seong-jae, Chief Director of the APFS.
“We frequently visit farming villages to listen to their voices.”
Hong said: “We frequently visit farming villages to listen to their problems. Issues raised by farmers became the subject of our studies. For instance, we changed the way the average-year crop yields are calculated in order to factor in only 50 percent of crop yields reduced actually by a disaster. In addition, we diversified cost sharing rates for the production of beans, peaches, onion, etc, to ease financial burdens on farmers and let them focus on improving products.”
This year, we kicked off a national damage appraiser licensing program for the first time. Damage appraisers will be dispatched swiftly to disaster-hit areas to assess the scale of the damage in a fair manner and to protect farmers’ assets. This year, the first batch of 430 damage appraisers was licensed. We plan to increase the number to roughly 2,000 by 2020.”
The APFS is also operating agrifood FOFs. Building on government loans, we attract investment from the private sector to fund research, development, marketing efforts and therefore turn the agrifood industry into a high value-added one.
As for agricultural facility platforms, the APFS is set to support efforts to attract investment to sale-and-leaseback projects, in which cutting-edge agricultural facilities are purchased and leased back to farmers to address concerns over hefty upfront facility investments.
“Agrifood crowdfunding will lead agricultural innovation.”
Hong mentioned, “Crowdfunding for agrifood, as well as smart farm funds that were introduced in March, is expected to spearhead agricultural innovation. They will lay the foundation for small- and medium-sized agrifood businesses to become large companies.”
Over the past decade the APFS has been keen on enhancing efficiency in assessing loans made from the agriculture policy fund. A limited number of personnel have been tasked with the job to raise transparency in the operation of the 21 trillion won agriculture policy fund, so we developed loan assessment programs and prevention systems by utilizing our knowhow on assessing loan applications. Those programs and prevention systems are put in place now and we are also making efforts to communicate well with lenders to jointly solve problems.
“In 2014, to reinforce lenders’ capabilities to manage policy funds, we introduced a ‘voluntary’ inspection program aimed at preventing default and delinquent loans. Under the program, we notified lenders of risky loans raising red flags and inspection methods and let lenders review their loans on their own. By doing so, we normalized 16 billion loans provided by 350 lenders in 2014- 2015.”
In 2016, to further enhance accuracy in loan assessments, we kicked off a computational support system for assessing policy funds that can extract loan accounts that require intensive management.
“More manpower is needed to raise transparency in operating the policy fund.”
“The National Assembly has been demanding an increase in personnel dedicated to managing and supervising the agriculture policy fund, but it’s not easy owing to budgetary limitations. Thus, we are continuously seeking to enhance work efficiency so as to provide financial support to those who need it most in a timely manner.”
Also, the APFS has been taking precautionary measures, training each lender’s personnel in charge of policy fund management and releasing data online and distributing casebooks.
The APFS’s continued efforts to strengthen communication with lenders and take precautionary measures paid off. The APFS received an ‘excellent’ rating in a customer satisfaction survey conducted last year by the Ministry of Agriculture, Food and Rural Affairs
