[Square] How Korean Farms Meet the World

Ta-il Kwak, CEO of Palm Skin

[Asia Economy Reporter Lee Seon-ae] Many young people are challenging themselves to start startups. Startups inherently begin based on technologies or business models that fill gaps in existing industries. Recently, interest in rural areas has increased significantly. The number of startups providing various solutions in fields such as cultivation, growth, automation, and distribution is growing. Agriculture is an industry with low adaptability to change. However, as Agtech startups are being reevaluated, perceptions of agriculture are changing. Agtech is a portmanteau of agriculture and technology, expanding into biotechnology based on agriculture, precision farming, alternative foods, and food e-commerce. The fact that global IT companies such as Google, SoftBank, and Microsoft (MS) have been actively investing in Agtech for several years proves that our future depends on how we develop agriculture. Although more than one billion people worldwide are engaged in agriculture, farmland continues to decrease due to climate change and industrialization.

The amount invested in Agtech startups over the past five years has reached $12 billion. According to AgFunder, a market research firm, investment in Agtech startups was about $400 million in 2010, increasing to $4.6 billion in 2015, growing at an average annual rate of over 40%. Last year, it reached $20 billion, a nearly 50-fold increase over ten years. Global IT companies are focusing on combining big data, cloud, and artificial intelligence (AI) to increase unit production and improve quality. The development of natural plant-based and animal-based raw materials is an even more important area. However, Korea is still at a beginner level. Due to population growth and industrial advancement, Korea’s arable land area continues to shrink. A bigger problem is that the aging of agricultural production workers is progressing faster than the overall population aging. Issues such as oversupply in rice farming, which is supported by government purchase systems, and the severe shortage of agricultural labor are also major concerns.

The focus when founding a cosmetics company was also on this area. Instead of easily entering and securing stable profits with color cosmetics, the product line centered on basic products that provide nutrition and moisture beneficial to the skin was developed because the growth potential of Korea’s dairy farming sector was noted. FarmSkin is a cosmetics company, but its essence is a dairy farming startup. It is the only company in Korea conducting business based on colostrum (the small amount of milk produced immediately after a cow gives birth) processing technology.

When asked to name dairy farming powerhouses, people often imagine the vast meadows of Northern Europe. There is also a stereotype that Korea is a backward country in dairy farming. However, Korea manages dairy cows and produces milk more rigorously than any other country in the world. The main focus during business development was not just to promote the excellence of Korean cosmetics globally but to change perceptions about advanced dairy farming. Korea’s Grade 1 milk standards are as stringent as those of Denmark, France, the Netherlands, and New Zealand. Korean cows are all Holstein breed, making quality control standards clear and easily implemented. Furthermore, raw milk is immediately cooled after milking and undergoes testing for about 290 items before being delivered to milk factories, ensuring strict management.

FarmSkin has focused on promoting Korea’s advanced dairy farming technology by obtaining HACCP (Hazard Analysis and Critical Control Points) certification and certification for the quality of dairy cow colostrum. By persuading that the raw materials used in global brands’ basic cosmetics are comparable, even firmly closed doors have begun to open gradually. Thanks to this, products are now introduced in over 50 countries. Perceptions of Korean dairy farm colostrum and evaluations of the dairy farming system have changed.

Many young people are challenging startups. However, entry into the Agtech field remains insufficient. Agriculture must be recognized as an important industry, and the perspectives on young people entering this field need to improve. Support such as establishing funds investing in agricultural startups and related infrastructure is also necessary. Educational institutions must innovate curricula to integrate technologies like the Internet of Things (IoT), big data, and artificial intelligence (AI) with agriculture. FarmSkin’s goal is aligned with this. Beyond K-Beauty, it is time for systematic policy consideration and young people’s challenges to promote that colostrum produced by Korean farms is the highest quality worldwide and to reestablish K-Agriculture and K-Dairy brands.