Research Reports
Strategies of the domestic fruit industry after the FTA and DDA negotiations
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AuthorPark, Moonho
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Publication Date2006.11.01
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Original
This study aims to propose a practical approach regarding the basic principles of confrontation as well as action strategies for strengthening the competitiveness of the domestic fruit industry after the negotiation of WTO/DDA and FTA.
Utilizing Korea Rural Economic Institute-Agricultural Simulation Model(KREI-ASMO, 2005), under the assumption that simultaneously and multilaterally the FTAs completely remove tariffs for the next ten years and fruit imports begin from the 5th year of implementation under the current conditions, the results of the analysis indicates will that the amount of production in 10th year of implementation will fall by up to one trillion and 380billion won, which is a reduction of 43.4% compared with the basic year.
These results imply the inferiority of the domestic fruit industry. According to the analysis of international competitiveness among major trading partners, the competitiveness for domestic apples is superior to that of China and the U.S. in terms of quality, but inferior in terms of price. In particular, the price competitiveness of domestic apples is very low compared with China. In this sense, a measure for the promotion of competitiveness is urgently needed in order to maintain and develop the domestic fruit industry.
Based on this analysis, the following seven strategies are proposed to reinforce the competitiveness of the domestic fruit industry under open market conditions.
First, since it is inevitable to cope with the excessive supply of cheap foreign fruits under the open market, both maintaining appropriately-sized orchards with high productivity and reorganizing the basis of production places by closing inappropriate orchards are required. Also, more attention should be paid to productivity improvement through farm mechanization as well as reduction of labor in preparation of aging farms with less labor.
Second, standardized high-quality and safety for fruits might be necessary. We should constantly stay superior in quality aspects such as sweetness, safety and high ratio of top-grade products with labor and technology input intentive.
Third, government policy should be selective and focus on specialized leading farms that have possible competitiveness as major beneficiaries. A technology-disseminating system that helps early dissemination of advanced technology is also needed.
Fourth, production and distribution should be systemized led by the APC. For the sustainable operation of the domestic fruit markets, the APC should initiate that organizations in places in production of each items, voluntarily keeping the balance of demand and supply.
Fifth, production development and production distribution, being enable to keep main export markets, should be required. Also, a processing industry that creates higher value-added products and maintains the domestic balance of demand and supply should be fostered.
Sixth, various distribution channels to match consumer's various demands should be insured, and quality and safety control systems should be established systematically.
Lastly, we should constantly create demands for the domestic fruit and develop various programs that promote consumer's access through continuous PR activities and sales promotions for high quality and safe fruit.
Researchers: Park Moon-ho, Kim Kyung-phil , Han Hye-Sung
E-mail address:mhpark@krei.re.kr, kkphil@krei.re.kr, funny1978@krei. re.kr
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