I Fiance Apicultural

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76 farm chemicals, seed, feed, farm machinery, tools and equipment, brceding livestock, and otier production inputs. The product marketing activities include general marketing of nmbers' agricultural products as well as operation oftie tuarketing ofgovernmcnt products purchased - and ,old for pice stabiliation purposes. It also handles sales and plroilo tiort of farm handiwork products such as straw mats, banl)oo products, an I other items. And finally, it also Illllsa Inutual insurance program for -Cc and fire insurance protection for policy-hoding iethers.2" Despite the nnuhiptmrpose nature of NACF, it had negative net margins in 2V967 and 1970, the .yearsfor which relevant (lata arc available (Table 33). Because this finding appears cont radictoy to the proposed hypothesis, it needs to be analyzed further in spite of Ihe limited data available. The following reasons for these losses seenl possible. " Perhaps NACF, as an open institution, undertook too inany activities, rather thatn ailing as a financial institution. • In doing so, it m11ay llax" (ccndtalized too little, not only in appraising and nmoniloring loans, but also in undertaking noncdit operations that could have beemi promoted by x.eClirig financial se.vie(.s to its cotstitiellmits at ow"r lveils, nalliely, coty cooperatives and ptrimay coi0)eralive's. " The preceding two sen to have led to higher average transaction costs. • Even unit financial costs scen high, and they were increasing. This resulted frioni higher interest rates on deposits (which were introduced under ie iinterest-rate relbrns of tte mid-1960s) without increasing collection of d e p osits (Table 3,4).98 * The increase in ave:age transaction costs was nuclh smaller than increases in average financial costs audi average revenle (Table 33). Moreover, unit financial costs increascd more (21 percent) than unit revenue (16 picenit). Although averagc reveute was fairly high and even increase, in 1970, it did not itcre;Ise enough to offset Ihe higl. and increasi,:g average transaction and financial costs I)-cauise NACF's mnionearnitig asscls, such as acconlits receivable, advance paymletnts, and it\vettoly accounted for as Inuch as 35 percent in total assets in both vars. Moreover, they also increased in absolute \al~tr in 1970 ('l'able 34). Clearly, net tnargins of a RFI suclh as NACF are dependent on a number of conmplex atd interrelated ilhtors, not just interest rates. The're is a need for reforims of' factoms rclated to nonprice and deposit rates. 261rak er(197 1) ecO m m endtd th a~tth e" f]in llC . and Cl el'l and insur aUce oper altions should ultinmately biecome+st-pamitt itmiltiils fiom tile NACF. 27Even in 1975 andt 197fi this institution mitely' v bioke even with unit net mIgills at barely 0.0003 and 0.000.1 pecient, respectiv'h., 1m)ittl- fi 0o the data given ill Korea, Republic of, NACF (various years). 28,This is onsis!entt witth the earlier ob el"va loll about iiteuest rate inelasticity of'deposits, which is discussed ill Cnlpirical terms fIo tile Repultic of Koei as well as some other developing countries it; Chaptcr 7.
77 Table 33-Transaction and financial costs and net margin of the National Agricultural Cooperative Federation, Republic of Korea, 1967 and 1970 Increase Variable in Real Terins' 1967 1970 in 1970 (percent) Unit tnaisactihn costs .. 89 6.68 13.4 Unit alcosts b Unit iventen U nit net malgin 2.10 7.73 -0.56 2.90 7.98 -0.60 20.8 16.2 -7.1 Source: rake 1971. 'Real ternts ai c tlecidcIyaplying the agiiculltital (.DI' dellator with a base year of 1975. 1Conipited as a Ir'tceiltage ol"all assets p is liabilities. County Cooperatives, Republic- of Korea "lhc county coolwtativcs it Koica arc major milllct points for farnlers (Brake 1971; Kortva, Rptlil)liw of, NACF variozs yeats). Over lime, their nmberC ic +wCessibility have iniproved. "hCir Sources of fitls include Iol)OowiIigs, deposits, aid Son ('l itVcpitl. lThese Cooper[aI ives scen to have StCtcdcd illItlloilizittg (eposits, achieving howe average transa tion costs, as well as viability. I lowc,.,r, the l)receling discutssioni ott high tiit fitttwial (osts .d the holding of large aitoltls o',lolicartling Table 3 4-Structure of assets and liabilities of the National Agricultural Cooperative Federation, Republic of Korea, 1967 and 1970 liabilities in Real "Terms t 1967 1970 Value Percent Value Percent Credit and Iranking (V million) (W million) )eposits fIoill collity coojlwratises Deposits orin public lbnriowiigs Misrc ll cots Sulbtotal Mutural insurance Business 60,927 23.300 198,423 2.1.382 307,032 8,887 18.3 7.0 59.6 7.3 92.2 2.7 -19,531 19,8.1 310,512 1.1,210 39-1.097 24,705 10.9 II 68.3 3.1 86.7 5.A Pavables and advance receipts L.iabilities on consignment Miscellaneous Subtotal Total assets 6,177 2,461 1,168 12,809 33.172 1.8 ... 3.0 3.0 98.3 17,.17 1,8.1( 9,311 28,732 .151,716 3.8 2.0 5.8 99.5 Source: riake 1971. Note: Columns iray not add to 100 due to rotunding. h'le nil ellipses (...) indicate a or negligible amount. 'Real tertns are derived by applying tle agricultural Gl)! deflator with a base of 1975.
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,AFOOD POLICY EVIEWl Institutional
Page 3 and 4:
FOOD POLICY REVIEW 1 Institutional
Page 5 and 6:
Chapter One Chapter Two Chapter Thr
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15. Unit transaction costs, unit ir
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47. Relative importance of intcecst
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Foreword Thiis report introduces a
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1 Summary This study analyzes two a
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3 Six organizational principles for
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2 Introduction Finance and Economic
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An obvious problem innate to an act
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9 Selection of Theme and Issues for
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I1 TIhe issue of scale economies is
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13 There is also a problem of indiv
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15 Figure I-Share of borrowing of f
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17 Figure 2-Share of'agricultural l
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19 specific or economywile developm
Page 33 and 34:
Table 1- Continued 21 Region, Count
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Table 2-Continued Government Nation
Page 37 and 38: 25 regional without higher or lower
Page 39 and 40: 27 Caribbean, compared with Asia. T
Page 41 and 42: Table 3 -Continued Proportion of Pe
Page 43 and 44: 31 LICs (including Bangladesh, Indi
Page 45 and 46: 33 Functional Structure of RFIs and
Page 47 and 48: 35 approximated from available lite
Page 49 and 50: Figure 3-Stylized organizational fr
Page 51 and 52: 5 Transaction Costs, Profitability,
Page 53 and 54: 411 or fiom new borrowers. Moreover
Page 55 and 56: 43 Table 6-Unit transaction costs o
Page 57 and 58: 45 tiotis largely by borrowing fi'o
Page 59 and 60: 47 Table 9 -Transaction costs of br
Page 61 and 62: 49 'T7heSonali Bank's unit uct marg
Page 63 and 64: Table 14-Estimated parameters of th
Page 65 and 66: 53 PACS) was established ill March
Page 67 and 68: 55 Table 16-Deposit growth rates of
Page 69 and 70: 57 rIIIIal Output (28 p)Celt) and o
Page 71 and 72: 59 Although APS loans were dominant
Page 73 and 74: Table 2 0-Pattern of loans advanced
Page 75 and 76: 63 Table 2 1- Unit profit and unit
Page 77 and 78: 65 resources are mainly channeled t
Page 79 and 80: 67 Table 25-Various costs, gross ma
Page 81 and 82: 69 BAAC also en1joyced sc.;le ,~ol
Page 83 and 84: 71 iuzividual farmers at the distri
Page 85 and 86: 73 Agriculture and Cooperatives 197
Page 87: 75 like the county and plimaly coop
Page 91 and 92: 79 Table 3 6 -Structure of assets a
Page 93 and 94: Response of Rural Loan Demand to In
Page 95 and 96: 83 Table 3 9-Estimated multivariate
Page 97 and 98: 85 Table 40-Estimated multivariate
Page 99 and 100: 87 separate deteriminants of demand
Page 101 and 102: Table 4 1-Continued Type of Demand,
Page 103 and 104: Table 4 1-Confinued Type of Demand,
Page 105 and 106: Table 4 2 -Evidence on interest ela
Page 107 and 108: 7 Response of Supply of Rural Depos
Page 111 and 112: 99 Table 4 6-Relative importance of
Page 113 and 114: 101 I1e positivc respolse of supply
Page 115 and 116: Table 48- Continued 103 eBased on t
Page 117 and 118: Table 4 9 -Pattern of total rural s
Page 119 and 120: 107 is substantial saving even in d
Page 123 and 124: 111 nient), and lastly, the inverse
Page 125 and 126: 113 Table 54-Positive and negative
Page 127 and 128: 9 Flow of Funds of the Rural Financ
Page 129 and 130: 117 interest I'evellie and payment.
Page 131 and 132: Table 5 5 -Continued 119 cin scenar
Page 133 and 134: 10 Conclusions and Implications ase
Page 135 and 136: 123 differential increase in demand
Page 137 and 138: 125 can be attained. Multifunctiona
Page 139 and 140:
127 fully achieved. Had the institu
Page 141 and 142:
129 so doing, improvements in verti
Page 143 and 144:
The standard error of The standard
Page 145 and 146:
Appendix 2 Reasons for Delinquency
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Region/Country 135 Reaso.z Near Eas
Page 149 and 150:
References Abbott, J. C. 1 9 7 3a.
Page 151 and 152:
139 Aku, P. S. 1986. Lending to far
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141 Caibbean Country Department II,
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143 144. Princeton, N.J., U.S.A.: W
Page 157 and 158:
145 1975. Agriculturalcredit in Asi
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__ 147 Gurley, J. G., and E. S. Sha
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149 G. Hunter and A. F. Bottrall, 5
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151 Lee, T. Y., D. H. Kim, and D. W
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153 __ _. 1976. The new economics o
Page 167 and 168:
155 Olu, W. 1985. Formal credit and
Page 169 and 170:
__ 157 Rao, B. P. 1970. The economi
Page 171 and 172:
159 Singh, G., and S. R. Asokan. 19
Page 173 and 174:
-- 161 Verghese, S. K. 1983. tivfit
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