[Captivating the World with K-Food]⑤ Agricultural Wholesale Goes Online for 'Distribution Innovation'... Exports Also 'Profitable'

Transaction Volume Surpasses 300 Billion KRW
Reducing Distribution Costs and Increasing Farmers' Income
Contributing to Export Expansion

The 'Agricultural and Marine Products Online Wholesale Market,' which implements the trading of agricultural and marine products online instead of through traditional offline wholesale markets, reducing distribution costs and increasing farmers' profits, is steadily progressing toward this year's target transaction amount of 500 billion KRW. The transaction amount increased by 100 billion KRW in just over 50 days, recently surpassing 300 billion KRW.

According to the Ministry of Agriculture, Food and Rural Affairs on the 22nd, the transaction amount of the online wholesale market this year exceeded 300 billion KRW, recording 300.1 billion KRW as of the 15th. The transaction amount in the online wholesale market has been rapidly increasing this year. After surpassing a cumulative transaction amount of 100 billion KRW on June 17 and reaching 200 billion KRW on August 20, it exceeded 300 billion KRW on the 15th, shortening the time to achieve each 100 billion KRW increment from 168 days to 64 days and then 56 days. The government has set a target transaction amount of 500 billion KRW for the agricultural and marine products online wholesale market this year.

A view of the control room at the Agricultural and Marine Products Online Wholesale Market located in Yangjae, Seoul, visited on the 15th. Transaction status can be monitored in one-hour intervals.

The operator of the online wholesale market, Korea Agro-Fisheries & Food Trade Corporation (aT), expects that achieving the 500 billion KRW transaction amount within this year is possible. At the situation room of the agricultural and marine products online wholesale market located in Yangjae, Seoul, visited on the 15th, nationwide transaction status, major items, and the number of buyers and sellers were being monitored hourly. Lee Sang-gil, head of the aT Agricultural and Marine Products Online Wholesale Market Business Division, said, "The time to reach cumulative transaction amounts of 100 billion KRW, 200 billion KRW, and 300 billion KRW is shortening, and the growth rate of transaction amounts is steepening," adding, "Considering this trend, achieving the target is a positive outlook."

The online wholesale market officially launched on November 30 last year and has been producing substantial results since this year. This year, 93 items and 117,000 tons of agricultural and marine products were traded through the online wholesale market. The biggest advantage of the online wholesale market is that it can reduce distribution stages. Previously, agricultural and marine products were distributed from production sites through wholesale corporations, intermediate wholesalers, and retailers to consumers. However, by using the online wholesale market, products can be delivered directly from production sites to retailers or through only wholesale corporations or intermediate wholesalers before reaching retailers. The distribution stages are reduced from four to a maximum of two stages. In fact, the proportion of transaction types through the online wholesale market shows that the two-stage distribution 'production site-retailer' accounts for 53%, more than half. The traditional four-stage distribution route 'production site-wholesale corporation-intermediate wholesaler-retailer' accounts for only 22%. This demonstrates the success in shortening the distribution structure, which was the purpose of launching the online wholesale market.

Lee explained, "By reducing the existing four-stage distribution structure to two or three stages, costs at the shipping and wholesale stages decrease by 9.9%, and the farmgate price, which is the producer's profit, increases by 4.3%," adding, "The logistics travel distance is also reduced by 3,385 km (14.4%), with the online wholesale market covering 20,161 km and offline 23,546 km, resulting in a reduction of 704.4 kg of carbon emissions."

On the 15th, Lee Sang-gil, Director of the Online Wholesale Market Division at Korea Agro-Fisheries & Food Trade Corporation (aT), explained the current status of the online wholesale market.

The government has added seafood to the transaction items and lowered the direct seller registration requirement from 5 billion KRW to 2 billion KRW to revitalize the online wholesale market. Since lowering the seller registration requirements in June, the monthly transaction amount increased significantly to 43.1 billion KRW, compared to 32.7 billion KRW in May. Since starting seafood transactions in July, seafood worth 1 billion KRW has been traded.

In particular, aT selects major items by period as 'specialized products' to promote transactions through the online wholesale market. Starting with the first specialized product, 'open-field tangerines,' last year, the 11th specialized product, 'salted napa cabbage,' was recently launched. Lee said, "Specialized products provide information about the products to anticipate demand and receive pre-orders," adding, "Samples are provided free of charge by aT to demand sources, and sellers receive discounts or logistics cost support."

The online wholesale market also contributes to exports. The international trading company Lima Global participated as a buyer in the online wholesale market and exported winter radishes to the United States. From December last year to the end of January this year, a total of five shipments of 96 tons of winter radishes worth 53 million KRW were exported. There is also an indirect export promotion effect. A company exporting pork to Hong Kong increased its export volume through direct transactions after participating in the online wholesale market. Lee said, "By trading through the online wholesale market without going through intermediate collectors, the domestic distribution structure was reduced from four stages to three stages, reducing distribution costs," adding, "The cost reduction effect led to strengthened price competitiveness of exported agricultural and livestock products."

The online wholesale market operates under a regulatory sandbox 'demonstration exception.' This means there is concern that the unstable legal basis may weaken the momentum for project promotion. Lee emphasized, "The demonstration exception period is two years from the project start date, and the instability in the early stage without legal grounds may discourage participation by transaction entities, negatively affecting market settlement," adding, "It is urgent to establish legal grounds for the normal operation of the online wholesale market."