This study reviews supply and demand and relevant policies for by-product fertilizers, and suggests improvement measures after identifying issues of distribution and use of fertilizers. The scope of this study is limited to by-product fertilizers (fermented organic and organic fertilizers), and on-site surveys were conducted among by-product fertilizer manufacturers and farmers.

The total number of fertilizer manufacturers is 1,866 as of 2011. Among them, 678 companies, or 36%, manufactured regular fertilizers whereas 1,188 companies, or 64%, produced by-product fertilizers. Among the by-product fertilizer manufacturers, only 145 companies, or 12%, manufactured organic fertilizers whereas the rest 1,043 companies produced fermented organic fertilizers.

The fertilizer preservation account for chemical fertilizers is no longer in operation in Korea, but the government temporarily subsidizes the price gap in case the price of fertilizers has to go up due to soaring prices of raw materials. In the meantime, the government provides a certain level of support for by-product fertilizers necessary for environment-friendly agriculture. The price subsidy for by-product fertilizers has been adopted after the operation of a fixed amount grade system followed by a fixed rate system. According to the government plan, this year it is expected to supply approximately 2.9 million tons and KRW 145 billion worth of subsidy for the price gap. This kind of support is expected to continuously grow together with the expansion of eco-friendly agriculture.

As a result of the study, the following conclusions can be drawn. Firstiy, a cooperative purchase system should be stably secured and operated in the production sector. Since strict quality management and improvement of by-product fertilizers are urgent, the Korea Organic Fertilizer Industrial Cooperative Federation, Rural Development Administration, and IPET should establish measures for securing R&D investment, re-establishment of test criteria (water content, level of fermentation, etc.), and transparency and fairness for better quality of by-product fertilizers. Secondly, the complex distribution channels should be simplified in the fertilizer distribution sector. In addition price, differentiation of by-product fertilizers is needed accomplished so that the industry can be developed through fair competition. The relevant companies should establish a system that settles accounts payable at the time of confirmation of fertilizer supply to solve financial difficulty through prompt settlement. Lastly, the government should provide the farms with information about the policy and products related to by-product fertilizers in order to satisfy the needs of farms, the consumers. In the meantime, the government should furnish an environment for establishing a transparent distribution system and provide programs to help farmers in need of assistance for spraying fertilizers, such as utilizing an agricultural equipment bank or a lease program.


Researchers: Chang-Young Kang, Hye-Sung Han
Research period: 2013. 5. ~ 2013. 10.
E-mail address: cykang@krei.re.kr, funny1978@krei.re.kr