This study aims to propose an analysis for each aspect of the influence on the floricultural industry from outside factors such as oil price, exchange rate, and FTAs and suggest directions for the development of floricultural industry in Korea.
Most floricultural farms are dedicated only to floricultural farming due to labor and technology intensive characteristics of the floricultural industry. The ratio of facility farms, in particular, has increased after the government built a modernization policy in 1990. Accordingly, the uncertainty of management from the fluctuations of exchange rate and oil price is much higher than other farm products. Also, floriculturists export only a limited number of flowers and plants to a limited number of countries. This creates a weak foundation for the rapid adaptation to outside changes and raises exportation risks.
Floricultural plants of Korea are less imposed with customs in general, with duties of close to 8% for most plants and 25% for cut flowers. China levies duties of about 10% or less while Japan is mostly free of customs. As for the U.S., tropical orchids are exempt from duties. So, the conclusion of an FTA is expected to have no influence on the export market.
The results of the analysis indicate that, under the assumption that all the customs and duties are removed completely, carnation and rose productions will be decreased by 0.7% and 0.5% compared with the average values of 2003～2005, whereas the consumptions will grow by 0.53% and 0.33% respectively. Under the same conditions, the amount of tropical orchid production will be decreased by 0.16%, and the consumption by 0.22%. However, the effects of opening the market will be more influential to Korean floricultural farms if the probability of a farming transformation from vegetables to floricultural items is considered.
Therefore, it is imperative, for the future development of the industry, that floriculturists should maintain a high quality producing system and a structure advanced marketing system. At the same time, they should foster dedicated products for export and constantly create the demand for domestic floricultural plants.
Researchers: Park Hyeon-Tae, Park Ki-Hwan, Han Hye-Sung
E-mail address: htpark@krei.re.kr
E-mail address: kihwan@krei.re.kr
E-mail address: funny1978@krei.re.kr