Development of Agribusiness Enterprises - Asian Productivity ...

elated processing firms, leading to high-quality processing enterprises. The target of the
government plan is to support 2,000 food-processing enterprises until 2004.
4. Support Plans and Systems by Program
The government has prepared support plans including assistance to processing
facilities, packaging improvement and raw material purchases. However, most of the plans
have so far focused on assisting processing facilities. In 1998, the specific activities under
the plan were:
(a) the provision of W= 250 million per enterprise to cooperation groups or producer groups
using domestic agricultural raw products or traditional food products in their
processing. Other processing enterprises could receive up to W= 1 billion per unit;
(b) the provision of a subsidy amounting to 40 percent of the financing and 20 percent of
production costs, up to a maximum of W= 20 million per enterprise; and
(c) the provision of a subsidy for purchasing raw materials up to 70 percent of the costs,
with a maximum of W= 1 billion per enterprise.
To carry out the program efficiently, the Ministry of Agriculture and Forests is
responsible for policy design, enterprise selection, and funding. The Agricultural and Fishery
Marketing Corporation evaluates the economic feasibility of new businesses and their
operational conditions, while the Korea Food Research Institute develops new products and
solves technical problems.
Rural Food-processing Enterprises: Support and Operations
1. Support by Enterprises
Between 1989 and 1996, the government provided support to 1,395 enterprises
amounting to W= 311.6 billion (Table 1). A total of 1,086 traditional food-processing
enterprises and 309 general rural food-processing enterprises benefitted. Table 1 also shows
support by type of operation. In the case of traditional food development businesses, 489
enterprises received support for rural and fishing village cooperation. In addition, 120 and
477 enterprises received support as producer groups and special food complexes,
respectively.
Table 1. Current Situation of the Support Program on Food-processing Enterprises
(cumulative, 1989 and 1998)
Classification
Number of
Enterprises*
Support (W= million)
Subsidies Loans Total
Traditional food development business 1,086 51,000 74,700 125,700
Rural and fishing village cooperation 489 41,200 32,800 74,000
Producer groups 120 9,800 7,900 17,700
Special food complex 477 0 34,000 34,000
General rural food-processing business 309 70,700 115,100 185,800
Producer groups 153 70,700 57,000 127,700
Other enterprises 156 0 58,100 58,100
Total 1,395 121,700 189,800 311,500
Source: Ministry of Agriculture and Forests.
Note: * Based on cumulative records for January 1989 to December 1998. The exchange
rate was different for each year. The average exchange rate between 1989 and
1997 was W= 781 per US$1. The exchange rate for 1998 has not been applied due
to the abnormal financial conditions that resulted from the economic crisis in Asia.
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