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A Study on the Reshape of Local Wholesale Market Functions for Local Food System Setup
Author Choi, Byungok
Views 79388 Publication Date 2021.03.29
Original
Background and Purpose
○ Local wholesale markets lose competitiveness because of the population decline and large conglomerates’ influx into wholesale and retail markets. Consequently, they cannot function well for collecting, pricing, and distributing products. Against this background, this research explores the state of local food distribution and the possibility of combining local wholesale markets and food plans. It suggests a linkage plan by analyzing some areas that have set up local food plans to overcome their financial problems.

Research Methodology
○ We selected areas where food plans are well in place, although their local wholesale markets perform poorly, such as Chuncheon, Iksan, and Jinju. We reviewed previous studies on the state of the selected cities (producing areas, wholesale, retailing, and consumption) and statistical data as the first step of the research. To analyze the local food system‘s expandability or acceptability, we surveyed various stakeholders, including wholesale companies, intermediaries, restaurant owners, retailers, and consumers. We also interviewed local administrative agencies and food plan governance entities. Besides, we requested experts to write on overseas local food systems for reference.

Key Findings
○This research reviewed the concept and necessity of the local food system linking local produce’s production, distribution, and consumption. It also examined the possibility of combining local wholesale markets with food plans. We identified measures for establishing a local food system and set up policy goals and tasks based on the research.

○First, according to our research on other countries’ local food systems concerning their background and characteristics, they emerged in major countries worldwide before the 1990s, when wholesale markets’ functions declined and mega distributors were in harsh competition. As mega distributors controlled farm products’ distribution, issues emerged, such as small local producers‘ lack of competitiveness and concerns for food safety. Therefore, it is necessary to consider linking governance systems and wholesale markets to revitalize local distribution. The COVID-19 situation has increased online sales for small orders on various items. Also, as the distribution through the local food system has grown, it is likely to become a vital channel for distribution. Therefore, the government should build public-private governance platforms for local food plans to expand the local food system. It also needs to carry out policy support to improve their expertise.

○Second, restaurants and retailers took about 60% of the total distribution routes in the areas selected for this research and wanted the supplies of fresh and cheap local agricultural products. Accordingly, local public wholesale markets should set up measures to expand regional produce distribution to increase their business size. On the other hand, wholesale market corporations that supply agricultural produce in the target areas focused on providing products nationwide rather than those locally produced.

○Third, our analysis of the regional distributors shows that wholesale companies, intermediaries, restaurant owners, and retailers responded that it was necessary to expand the treatment of local agricultural products. If non-profit corporation-type distributors and food plan-related facilities are upgraded and linked to wholesale markets, they will be able to handle more local agricultural products in a short period.

○Fourth, the overseas cases in Japan and Italy show that their local wholesale markets create values by distributing local produce and working hard for collaboration, branding, and consumption increase. Besides, local wholesale markets encourage the use of local agricultural products through various administrative support to schools, public meals, and restaurants. They work as key logistics facilities for the local distribution system. Local wholesale markets also need a policy for market revitalization in conjunction with the support system to expand the handling of local agricultural products.

○Overseas wholesale markets also form supply systems delivering produce to schools, restaurants, and food ingredient providers as pivotal distribution facilities. Following their examples, Korean wholesale markets need to set up supply chains to recover their competitiveness. The policy goal of reshaping local wholesale markets’ functions is to utilize local wholesale markets as a core facility of the local food system. To fulfill the goal, we have set up primary directions, such as institutional innovation, distribution expansion, logistics reform, space utilization, and customized production/ consumption systems. Following the directions, we present policy tasks: I) expanding the range of local food; II) strategic alliance with other regions; III) enhancing distribution/ logistics functions and utilizing market space for other purposes; IV) connecting local agricultural production and consumption organizations; Ⅴ) promoting reproduction through local agricultural produce circulation; Ⅵ) improving regulations; and Ⅶ) improving supply/ demand management and sales systems.

Researchers: Choi Byungok, Jeong Eunmee, Lee Douyoung, Kim Taehwan
Research period: 2020. 1. ~ 2020. 10.
E-mail address: bochoi@krei.re.kr

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