Background of Research
Since the FTA between Korea and the USA came into effect in 2012 and FTA negotiations between Korea and China had started, the importance of domestic agricultural products' competitiveness in improvement of quality has been emphasized due to the expansion of an open market in the agricultural industry. Although it is important to improve quality of agricultural products for enhancing the competitiveness, the cost reduction is more important. Therefore, this study is to seek methods to improve competitiveness of domestic agricultural products and to contribute to more stable income for rural households by analyzing the current status of farm management for red chilli peppers, garlics, onions, apples, and pears, and by identifying possibilities for reducing production cost of each farm unit.

Method of Research
To analyze the production structure by product and the trend of their respective production costs, ‘statistics of production costs for agricultural products’ from the Statistics Korea, and ‘income data for agricultural and livestock products’ from the Rural Development Administration are utilized. To identify the status of farms by scale and their management structure, the data from the Statistics Korea was used whereas the mail surveys were conducted on 1,441 rural households for identifying management activities by item. The contents of the survey were discussed with an expert from the Agricultural Outlook Center several times, and underwent revisions. Analyzing the management status and its effectiveness for red chilli peppers, garlics and onions is based on the paid micro-data from the Statistics Korea whereas the raw data of ‘income data for agricultural and livestock products’ from the Rural Development Administration is used for apples and pears. For further interpretation on analysis of effectiveness by each region, we have undergone many discussions and debates with the experts from Agricultural Technology Centers, the National Agricultural Cooperative Federation, and Horticultural Cooperatives in the pertinent area. In order to draw in-depth methods to reduce production costs on the subject items, we commissioned a manuscript and parts of the result are utilized here. We discovered some excellent examples of advanced farms that have succeeded in cost reduction by visiting and interviewing them. To draw more realistic methods to reduce production costs, we have collected data and opinions from various experts from the Rural Development Administration, National Agricultural Cooperative Federation, Horticultural Cooperatives, Agricultural Technology Centers distribution groups, wholesalers, and commission merchants.

Research Results and Implications
The contribution ratio of condiment vegetables towards development of agroforestry is 9.9% and its CAGR is 5.4% for the last 10 years. The contribution ratios of red chilli peppers, garlics, onions, and apples towards development of agroforestry from 2005 to 2011 increased to 6.2%, 1.2%, 3.3%, and 2.9% respectively whereas that of pears declined 1.5%. The concentration ratios of main producing districts for red chilli peppers and onions have not been changed whereas those for garlics and pears have increased. That for apples has repeatedly increased and decreased in a narrow range.
The changes in production costs for red chilli peppers, garlics, and onions can be reviewed for the period as follows; ‘early 1990's ~ late 1990's’, and ‘late 1990's ~ present’. Those for apples and pears can be examined as follows; ‘early 1980's ~ late 1980's’, ‘late 1980's or early 1990 ~ late 1990's’, ‘late 1990's ~ present’.
The ‘early 1980's ~ late 1980's’ is the period when input elements such as fertilizers, pesticides, materials, and labors increased and production costs grew. The average output of pears in this period decreased 19.2% and the relevant management cost also slightly decreased. The ‘late 1980's or early 1990's ~ late 1990's’ is the period when the pressure for agricultural food market opening had been raised. The input elements on vegetables had slightly decreased due to the growing concern on the safety of agrifood in this period. The ‘late 1990's ~ present’ is the period when productivity has been improved by development and spread of new cultivation technologies, and rearing new varieties while the relevant production costs have continuously increased due to the increase in costs for input elements and labors.
The farms with low costs for red chilli peppers, onions, apples and pears realized great cost reduction in input labor whereas those for garlics realized reduction in seed and seedling in comparison with the farms with high costs. The major reasons for difference in costs structure between the farms with low and high costs are identified as reduction in material costs and input labor costs. The farms with low costs for red chilli peppers, garlics, and onions reduced 62.5%, 70.5%, and 57.0% in costs for major materials respectively whereas they reduced 86.5%, 89.9%, and 85.6% in input labor costs respectively in comparison with the farms with high costs. In addition, The farms with low costs for apples and pears reduced 25.9%, and 36.4% in costs for major materials respectively whereas they reduced 61.2%, and 76.1% in input labor costs respectively. Overall effectiveness of technologies, pure technologies and scale for pears and apples showed higher figures in comparison with those for red chilli peppers, garlics, and onions. Especially pears have indicated the highest figures in effectiveness of all 3, which shows that the management results for pear farms are relatively excellent compared to the other items.
A red chilli pepper is an item which has high labor ratio in the total production costs so mechanization is needed for reducing production costs. For garlics, it is core tasks to seek methods to reduce costs for seed and input labor which account for high portion in the total production costs. For better productivity of onions, research and development for operation equipments need to be conducted as technology innovation together with improvement of producer distribution structure. In order to accomplish the foregoing, modern distribution facilities are needed in the producing areas, and distribution organizations in the areas, which are responsible for management and marketing after harvest, need to expand contract cultivation. The production costs for apples can be reduced by expansion of management scale, elimination of a certain process in cultivation management, improvement of the operation system, and reduction in input elements from the perspective of production systematization. In order to reduce production costs for pears, the insufficient labor is the utmost urgent issue to be solved. Since most labor is needed during the fruit thinning and bag-covering, we need to actively seek for methods to reduce labor costs, for instance, developing and commercializing chemical fruit thinner, developing new varieties with strong resistance towards disease and insect pests, and so forth.


Researchers: Jae-Hwan Han, Seung-Yongk Gouk, Ji-Yeon Kim,
Ik-Su Chun, Sung-Hun Kim
Research Period: 2013. 1 〜 2013. 12
E-mail address: jhhan@krei.re.kr