This study aims to investigate the problems of the current agricultural corporation system by conducting case studies and a questionnaire survey of agricultural corporation operators. It also seeks to come up with directions and practical ways for the institutional improvement of agricultural corporations with regard to various aspects such as law, institution, and policy by drawing implications from the agricultural corporation systems and policies in advanced countries.
The institutional and political problems faced by the agricultural corporations in Korea today are summarized as follows: First, any distinction between the Farming association corporation and the Agricultural corporation company is so ambiguous that it is difficult to gain much analytical benefits from their respective institutional features. Second, due to the broad dimensions of businesses covered by agricultural corporations, stretching from agricultural production to marketing and other customer-oriented services, it is difficult to set accurate political objectives for agricultural corporations. Third, agricultural corporations have competitive or conflicting relationships with regional agricultural cooperatives in carrying out their operations such as marketing. Fourth, there is no agency to oversee the agricultural corporations. Accordingly, agricultural corporations do not have their own systems to evaluate and monitor their management. Fifth, the tax benefit system for agricultural corporations is only effective during a certain period as it is based on time-limited provisions.
The directions for developing Korean agricultural corporations are suggested to achieve two distinct goals. One of them is to provide a basis for fostering large scale agricultural corporations as business enterprises. The other is to establish a new form of corporation with the scale of small family farms, thus rationalizing the family farm management currently prevailing.
The institutional reforms for developing agricultural corporations can be attained by taking the following three steps. The first step is to resolve the management and control related problems of today's agricultural corporation system. The second step is to introduce a limited responsibility enterprise with the scale of family farms, the so-called "limited agricultural corporation," as an alternative agricultural corporation. This system focuses on transforming family farms into a corporation type that pursues transparent management by separating the management from household economy and that minimizes the risks and debts through the limited responsibility for management and capital. In addition, it makes possible to bring up a model for farm successors, allowing family management by parents and their sons or daughters alike. The third step is to set up a new corporation system that classifies the current agricultural corporations into two classes according to corporate functions; i.e. agricultural production corporation and agricultural service corporation. The former is consisted of large agricultural production units and small family farms. The latter assumes the form of a unified agricultural enterprise, being completely free of investment and management in non-agricultural sectors.
Researchers: Soo-Suk Kim, Seok-Doo Park
E-mail address: soosuk@krei.re.kr, sdpark@krei.re.kr