Research Reports
A Study on Supporting Policy of the Agricultural Marine Transportation Cost in the Island Region
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AuthorJeon, Changgon
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Publication Date2010.12.01
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Original
The purpose of this study is to further analyze the state of shipping farm products in the localities of Korean islands where there are many farm products of high quality to be transported and the state of carriage of goods by sea to examine feasibility of supporting the transportation cost by sea for farm products from the islands, and then to present the direction of promoting the project. Exemplary key items to be studied include the farm products produced in islands and transported to the land to be sold. The islands to be studied include all islands in Korea where farm products are produced and transported to the land, excluding the islands connected to the land by bridges.
The scope of study is the distribution and transportation system in the localities of farm products produced in the islands related to distribution in the relevant locality of production and shipping logistics, the market structure, marketing by people participating in distribution in the locality of production, marketability, the subject of transportation of farm products by sea, decision of the transportation cost by sea and the structure of paying the cost, etc.
The characteristics of the distribution and shipping system for farm products produced in islands are similar to those of the land in terms of the entire distribution system. However, when the farm products are shipped to the land markets, the logistics of transportation by sea and transportation companies by sea are intervened to complicate the situation as compared to the land counterpart.
It is estimated that the area for growing farm products in islands in Korea as of late 2008 was approximately 85,000 ha to occupy 5.3% of the nationwide farmland, and the volume of produced farm products was 1,658,000 tons to occupy 9.5% of the nationwide volume. The majority shares are 84.4% for Jejoodo and 13.5% for the Jeonnam region. The volume of shipped farm products produced in islands to be transported to the land for sale is 1,401,000 tons which are 84.5% of the volume of produced farm products.
As of late 2009, the cost of transportation by sea for agro-livestock products is estimated to be approximately 83.8 billion won among which the cost for farm products is 82.5 billion won which is 98.4%. The shares by regions for the cost of transportation of farm products by sea are 92.4% for Jejoodo, followed by 3.9% for Jeonnam, 3.5% for Incheon, 0.6% for Jeonbook, 0.1% for Gyeongbook, 0.0% for Gyeongnam, respectively, respect to the whole cost of transportation by sea. In Jeonnam, the share of Shinangoon is 70.5% for the whole cost of transportation by sea.
The legal ground for supporting the cost of transportation by sea for farm products from islands is explicitly specified in the 'Special Program on Improving Farmers' and Fishermen's Living and Development of Rural, Mountain and Fishing Districts'. Other similar regulations are the Direct Payment for Less-favored Areas, WTO Agricultural Agreement, 'Regulation on Farming/Fishing, Farming/Fishing Villages and Food Industry', etc. In particular, examination of the WTO Regulations on Subsidy showed that the transportation cost by sea can be supported and it is considered that it is the subsidy which should be reduced in a long term (AMS), but which is currently classified as de-minimis.
Support of transportation of farm products produced in islands by sea is based on some explicit legal grounds for continuously keeping production bases for supply and demand and price stabilization in the Korean market, enhancing market competitiveness for the farm products produced in islands, improving the distribution system, efficient management of land and improvement of the quality of people's living, support of transportation cost by sea, etc. However, there is concurrently shown some irrationale, e.g., fairness and equity issues with the land, distortion of the existing perfectly competitive market structure, double support, mismatching to the government related policies, etc. Accordingly, since direct support for the transportation cost by sea for the products produced in islands is a different type of direct payment, it would be desirable to provide support in connection with the existing systems rather than support of only the transportation cost by sea, due to the limit in finance supply, equity with the land, localities of benefited areas, etc.
If the support program for transportation cost by sea is executed as a subsidy program, it is desired to select some preferred items and target areas to be covered by a model project, to measure the effect, and to gradually increase the number of items and areas benefited in order to minimize trials and errors in the process of applying the program, rather than full-scale enforcement thereof. For enforcing the subsidy program, it is preferred to select Jejoodo and Jeonnam as the first benefited areas. The items selected for the subsidy include potatoes, spring onions, onions, green onions, scallions, garlics, radishes, Chinese cabbages in Jejoodo, onions, garlics, green onions and spinaches in Shinangoon, Jeonnam.
Researchers: Jeon, Chang-Gon and Cho, So-Hyun
Research period: 2010. 4. - 2010. 10.
E-mail address: cgjeon@krei.re.kr
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