Contract Farming Expands Win-Win Cooperation Between Farmers and Companies
홍보담당관
2024.02.15
572
Contract Farming Expands Win-Win Cooperation
Between Farmers and Companies
Contract farming allows companies to secure a stable supply of agricultural raw materials
and matches farmers with an assured buyer to purchase their produce with little volatility
and uncertainty for a longer term. Smart farming will be more widely used for contract farming.
Sejong, 15 February 2024 — On 6 February, KWON Jaehan, Deputy Minister of the Agricultural
Innovation Policy Office, the Ministry of Agriculture, Food and Rural Affairs, on his visit to
Keundolchan Co., Ltd., a farming corporation and a partner of CJ Freshway Corp., discussed the ways
to strengthen farmer-company cooperation for wider adoption of contract farming practices
and listened to voices in the industry.
In June 2023, Keundolchan received investment from CJ Freshway and adopted smart farming.
The farming corporation has since been delivering all of its produce grown through smart farming
(worth KRW 840 million in 2023) to the food catering company.
Deputy Minister Kwon said: “Contract farming is a form of transaction with many advantages,
because it allows companies to secure a system for a stable supply of agricultural raw materials
and provides farmers with an assured buyer to purchase their produce with little volatility
and uncertainty for a longer term. Importantly, given that smart farming makes it possible
to secure stable supply and quality assurance, smart farming will be more widely
used for contract farming.”
The ministry will set up a platform for contract farming information sharing this year to help
companies and farmers find out their business partners more easily. The ministry will also provide
support for various activities to expand farmer-company cooperation such as pilot-scale cultivation
being carried out prior to contract farming, as well as develop and distribute a standard contract
form for contract farming.
In addition, the ministry will amend its contract farming support programme1). Under the amended
progamme, the existing 3-year support period will be extended for another three years in the case
that a type of farming is replaced by smart farming during the period of contract farming.
The ministry will also improve the operation of the progamme. For instance, loans will be provided
to farmers through the “Comprehensive Smart Farm Fund” (worth KRW 100 billion in 2024)
on the condition of building smart farming facilities, and the loan approval period will be
shortened as well.
1)Contract farming support programme (worth KRW 4.2 billion won in 2024):
(1) Support for farmers (worth a maximum of KRW 40 million per farm): training, consulting, crop quality control, and rents for facilities, equipment, etc.
(2) Support for companies (worth a maximum of KRW 40 million per company): R&D for new products, promotion expenses, etc.