They Said Returning to Farming Would Earn 80 Million Won... Wild Lettuce Auction Prices from 10,000 to 90,000 Won Leave Only 900,000 Won a Month in Hand [The Weather Is Not to Blame] ①

Agricultural Distribution Cartel: The False Blame of Agflation
A Sixth-Year Young Farmer's Outcry
Opaque Distribution Structure Leaves Farmers Unable to Recover Production Costs
Auction Price Distrust?A Problem Beyond Abnormal Weather and P

Editor's NoteWe now live in an era where 'agflation,' driven by climate change, has become a constant factor pushing up agricultural product prices. Every time abnormal weather events such as droughts, monsoons, and heatwaves occur, food prices fluctuate wildly. Unpredictable weather, which leads to poor harvests, is often cited as the cause of soaring agricultural prices. This is only half true. The opaque distribution structure of agricultural products manipulates prices, using the weather as a shield. Farmers are frustrated as their painstakingly grown produce fails to fetch fair prices in the market, while consumers are caught in a vicious cycle of paying significantly more than the farm-gate price. The Asia Business Daily has investigated the cartel-like structure hidden within the agricultural distribution system, masked by external factors like the weather, and sought alternatives to the auction system that has been entrenched for 40 years.

#On July 17 last year, during the height of the monsoon season, at the Garak-dong Agricultural and Marine Products Wholesale Market in Songpa-gu, Seoul. Lee Kyungmin (43, pseudonym), a lettuce farmer from South Chungcheong Province, sold boxes of green lettuce (4 kg each) for 88,300 won per box at the fruit and vegetable auction. This was the highest auction price for lettuce shipped between May and December of that year. The auction price per box, which had been 9,800 won just one auction prior, soared ninefold in a single day.

Lettuce House. Photo by Kyungmin Lee

At that time, intense rainfall and sweltering heat alternated, leading to a drop in lettuce yield (the ratio of marketable produce) and a shortage in supply, fueling expectations of a price surge. However, for the next two weeks, the winning bids hovered around 20,000 won per box, falling to less than a third or a quarter of the peak price. Lee pointed out, "The fundamental reason agricultural prices fluctuate so wildly every year lies more in the irrational distribution system than in abnormal weather."

The Illusion of Returning to Farming: Not Even Breaking Even on Production Costs

This year marks Lee's sixth year as a young returning farmer. After working as an office worker in Seoul for over a decade, he switched to farming in 2020. Drawn by the romance of rural life and the appeal of cultivating his own land and earning income from crops he harvested with his own hands, he decided to take on a new challenge in his late 30s. He gained confidence after completing 100 hours of training to receive support for young returnees to farming.

Through a lecture by a senior farmer who grows strawberries, Lee learned that operating three greenhouses, each about 661 square meters (approximately 200 pyeong), could generate an annual income of 70 to 80 million won, with more than 50% profit even after deducting all costs. He judged that, while not abundant, this income would be sufficient to live in the countryside.

Lettuces gathered from all over the country are displayed for auction at the vegetable building of the Garak-dong Agricultural and Marine Products Wholesale Market in Songpa-gu, Seoul. Photo by Kim Heungsun

Lettuce displayed for auction at the Vegetable Building of the Garak-dong Agricultural and Marine Products Wholesale Market in Songpa-gu, Seoul. Photo by Kim Heungsun

Lee overcame the COVID-19 pandemic and established three lettuce greenhouses totaling 200 pyeong, but recently, his doubts about farming have grown. Despite leveraging his youth and enterprising spirit to introduce smart farm systems and working with enthusiasm, the lettuce he carefully cultivated rarely fetches a fair price, and the price fluctuations are so extreme that his income is unstable. He said, "People often talk about vegetable prices skyrocketing due to poor harvests caused by abnormal weather, but in reality, it is rare for farmers to receive high prices for their produce. When I see the price tags set at the wholesale market, which is practically the only sales channel for small farmers, I am filled with anger."

Indeed, a review of Lee's shipping records over the past year, obtained by The Asia Business Daily, reveals the harsh reality faced by young farmers: auction prices swinging wildly and actual income falling short of even the government-set minimum living expenses.

Lettuce harvested by Lee Kyungmin, a returning farmer. Provided by Mr. Lee.

"Lettuce Harvested Around the Same Time" ... Auction Prices All Over the Place

On July 10 last year, Lee's lettuce was auctioned off at 12,500 won per box (4 kg, premium grade). That day, he sold seven boxes at auction, earning 87,500 won. The next day, the price per box rose to 15,500 won, but with only five boxes (20 kg) harvested, his daily income was 77,500 won.

The bigger problem is the volatility of auction prices. On July 12, the price of Lee's lettuce soared to 35,900 won per box. But the very next day, it plummeted to 9,800 won. Lee remarked, "There can't be much difference in quality for lettuce harvested around the same time," and added, "As in the examples above, it is all too common for auction prices to be cut in half or drop even further within a day or two." He continued, "If I raise an objection with the wholesale corporation, they nitpick, saying things like 'the lettuce is too moist' or 'the leaves are too thin,' and take a high-handed attitude, asking, 'Do you want to declare 'bulrak' (a term meaning refusal to accept the auction result)?' It is infuriating."

In contrast, during the same period, the retail price of lettuce for consumers did not fluctuate much. According to KAMIS, the agricultural and fishery distribution information system operated by the Korea Agro-Fisheries & Food Trade Corporation, the retail price of green lettuce (premium grade) during the two weeks in mid-July last year ranged from a minimum of 2,035 won to a maximum of 2,540 won per 100 grams. Converted to the wholesale auction weight of 4 kg, this amounts to 81,400 won to 101,600 won, a difference of just over 20,000 won.

Wholesale prices of agricultural products, once set, typically take about a week to ten days to be reflected in retail prices. During the same period, the prices set by intermediate wholesalers, who purchase products at auction and sell them to small business owners, ranged from a minimum of 42,940 won to a maximum of 58,200 won per box, with a price difference of only 15,000 won, resulting in a relatively stable price graph. Furthermore, even as the selling price of intermediate wholesalers gradually decreased toward the end of July, retail prices remained at the same level as two weeks prior.

If we assume that the distribution costs incurred as products pass through the wholesale market to consumers remain the same, it means that lettuce is being bought cheaply from producers and sold expensively to consumers. From the farmer's perspective, it is only natural to question why only auction prices fluctuate dramatically while retail prices remain high for an extended period, and where the difference is going. Lee said, "When auction prices are high for a day or two, I suspect that prices are intentionally set lower in the following days to 'average out' the unit price."

This Year's Auction Settlement: 12.8 Million Won ... Monthly Income of 900,000 Won Falls Short of Minimum Living Expenses

From January to August this year, Lee's total settlement from auctioning his produce was about 12.8 million won. This is a 16.9% decrease from the 15.4 million won settled over eight months from May to December last year. After deducting the 4-5% commission paid to the wholesale corporation managing the auction, as well as transportation and handling costs to deliver the produce to the market, the actual amount Lee received was 10.8 million won, or an average of 900,000 won per month. This is less than the minimum monthly living expense for a single-person household this year (1.43 million won). This amount also includes income from cultivating and selling cauliflower, which has a relatively higher unit price. Focusing solely on lettuce, Lee received a total of 9.59 million won from auctions over eight months this year.

During the same period, the cumulative number of lettuce boxes Lee shipped was 1,004. This means the average price per box was 9,552 won. He said, "Even the amount settled after auction is not my actual income, as I still have to deduct production costs and wages for workers hired to help with shipping," and added, "Considering all these costs, I need to receive at least 15,000 won per box just to break even, but in reality, the more I sell, the more I lose."

President Lee Jaemyung promised at a field meeting with young farmers in September, "We will support young farmers so that they can overcome difficulties and grow into key players in K-agriculture."

However, the reality for returning farmers is far from easy. According to the 2024 Survey on Returning to Farming and Rural Migration, released by the Ministry of Agriculture, Food and Rural Affairs in March, the average income in the first year of returning to farming is 27.96 million won, and in the fifth year, it rises to 36.21 million won, an increase of 31.1%. This figure includes not only agricultural income but also non-agricultural income, government subsidies, and temporary irregular income. The annual income earned solely from farming is 16 million won, or about 1.33 million won per month. This alone is not enough to cover the average monthly living expenses of 1.94 million won for returning farmers.

Young Farmers Rely on Side Jobs and Cost-Cutting ... Sighs Instead of Hope

Lee supplements his income not only by farming lettuce but also by acquiring various certifications, including drone operation, forklift, excavator, and electrical technician licenses, and taking on side jobs. He also works part-time sorting agricultural products at the local agricultural cooperative. Because it is difficult to cover production costs through farming alone, he minimizes expenses by seeking help from acquaintances during lettuce harvest and hiring as few foreign workers as possible, whose wages are relatively lower.

He said, "Young farmers are relatively better off because they are familiar with obtaining information online, regularly monitor government and local support programs, and can expect additional income from agricultural projects funded by subsidies." Nevertheless, he continues to struggle with debt. The immediate burden is repaying about 300 million won in support funds borrowed for purchasing farmland and setting up greenhouses and other infrastructure. With a 1.5% interest rate, a five-year grace period, and a ten-year repayment term, he will have to start repaying about 2.7 million won per month from next year as the principal repayment begins.

Lee said, "Before returning to farming, I saw news reports about farmers angry over not receiving fair prices for their produce, but facing the reality myself, the situation is far more serious than I thought." He added, "I have tried online sales and even considered exporting to Japan to find a breakthrough, but the barriers are too high for an individual to overcome." He continued, "Since auctions are practically the only sales channel, if the current structure continues, I am uncertain whether I can continue to make a living as a returning farmer in the future," and concluded, "I am seriously considering whether I should continue farming at all."

<To be continued in Part 2: The Weather Is Not to Blame>