[Special Stock] Aseatech, Yoon Government's 5 Trillion Investment in Food Security... Korea's First Multipurpose Agricultural Machinery

[Asia Economy Reporter Hyungsoo Park] Aseatech is showing strong performance. News that Russia is disrupting Ukraine's agricultural base appears to be affecting the stock price. Even after the war ends, it is expected to take a considerable amount of time for Ukraine's wheat farming to normalize, and the government is stepping up support to increase wheat self-sufficiency.

As of 11:21 a.m. on the 2nd, Aseatech is trading at 3,565 KRW, up 8.43% from the previous trading day. Kiwoom Securities and JP Morgan are among the top buying brokers.

Founded in September 1978, Aseatech is a specialized agricultural machinery company. It has grown as a comprehensive agricultural machinery company producing high-quality agricultural machines for food self-sufficiency and agricultural modernization. It was the first agricultural machinery company to acquire the KS mark and has been leading scientific farming through continuous research and technological accumulation.

In 1986, Aseatech developed and supplied the first domestic cultivator. Based on its unrivaled technology in the cultivator field, it developed products such as multipurpose cultivators, small cultivators, and riding cultivators. In addition, it holds core technologies for speed sprayers (SS machines), livestock work machines, tractors, rice transplanters, combines, and pesticide sprayers. Furthermore, a multipurpose small cultivator applying four patented technologies?including a narrow-width steering clutch system, quick hitch system, automatic support settling system, overload prevention, and plow-type uncultivated land removal system?was designated as a new technology agricultural machine by the Rural Development Administration in April 2019. Having developed the multipurpose cultivator for the first time domestically in 1986 and supplied 657,000 units as of the end of 2019, it has become the most widely used essential machine on farms for over 20 years as a single type of agricultural machinery.

Going forward, it is securing competitiveness in export markets that can overcome stagnation and saturation in the domestic market. The agricultural machinery industry is forming domestic demand under government policy support as a means to replace rural labor. It has introduced electric autonomous pesticide sprayers and agricultural drones equipped with first-person view cameras. In February, Kim Hyun-soo, Minister of Agriculture, Food and Rural Affairs, visited Aseatech Co., Ltd., which is leading the development and distribution of electric agricultural machinery for carbon neutrality in agriculture, touring the production site of electric autonomous pesticide sprayers and listening to field voices.

Russia, which invaded Ukraine, is shaking the agricultural base of Ukraine's grain belt, known as the "breadbasket of Europe." The Russian military is not only stealing grain, construction materials, and agricultural machinery owned by Ukraine but also continuing acts such as planting large-scale landmines in farmland. With the wheat sowing season missed, grain prices have surged, raising concerns that normalization will be difficult in the short term.

Domestically, voices calling for increased food self-sufficiency are growing louder. The Yoon Suk-yeol administration has adopted strengthening food security as an initial national agenda. The policy direction is broadly summarized as improving food self-sufficiency based on wheat and soybeans and a public-private cooperation model utilizing private resources. The strategy is to ultimately expand the self-sufficiency base by encouraging planting wheat and soybeans in rice paddies, where rice consumption is declining. Wheat self-sufficiency was particularly low at 0.8% as of 2020. The government has been working to foster the domestic wheat industry since last year, aiming to raise wheat self-sufficiency to 5% by 2025 and 10% by 2030.

The Ministry of Agriculture, Food and Rural Affairs has allocated a total budget of 4.9811 trillion KRW to expand the self-sufficiency base focusing on crops with high overseas dependence such as wheat and soybeans, and to expand related agricultural infrastructure. The largest budget of 2.0297 trillion KRW is invested in agricultural social overhead capital (SOC) expansion projects, followed by 1.4289 trillion KRW allocated for government grain purchase costs.

The Ministry supports the development of the wheat industry by increasing the scale of wheat production complexes and strengthening quality control. Since expanding drying and storage facilities to handle the increasing production volume is urgent, drying and storage facilities will be built in four locations nationwide, and equipment such as agricultural machinery will be supported at 14 sites.