About half of consumer prices for farm products turned out to be distribution costs. For some items such as napa cabbage and radishes, distribution costs reach 60% to 70%. Although there have been steady calls to lower distribution costs, a distorted structure persists in which producers do not receive a fair price and consumers pay high prices.
According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 14th, the distribution cost rate for agricultural products in 2023 was 49.2%. If a consumer buys 10,000 won worth of farm products, distributors take 4,920 won. That is 4.2 percentage points higher than 10 years ago (45.0%).
Distribution cost rates varied by item. Food crops such as rice were relatively low at 35.9%, but fruits, fruit vegetables, and livestock products were around 50%. In particular, seasoning vegetables such as onions and scallions were 60.8%, and leafy and root vegetables such as napa cabbage and radishes reached 64.3%. By detailed item, winter radishes (78.1%), onions (72.4%), and sweet potatoes (70.4%) exceeded 70%.
The Korea Rural Economic Institute (KREI) analyzed that the more perishable an item is, the higher its distribution costs. It also noted that a higher share of farm products shipped by producers fails to be sold as merchandise, making it highly likely that the actual share producers take home is much smaller than the statistical figure.
A mix of factors appears to be driving up distribution costs, including higher labor costs and expanded margins for distributors. In 2023, profit excluding direct and indirect costs accounted for 14.6% of agricultural distribution costs, up 1.2 percentage points from 10 years earlier.
Amid this situation, attention is focusing on whether the government will craft measures to innovate the distribution structure. President Lee Jae-myung recently instructed at a Cabinet meeting, "Speed up the reform of the unreasonable distribution structure so that both consumers and producers can feel the change."
The Ministry of Agriculture, Food and Rural Affairs is pushing improvements that include expanding online wholesale markets, encouraging competition among wholesale corporations, and introducing fixed-price and negotiated sales. Minister Song Mi-ryeong of the Agriculture Ministry said, "We will shift to online wholesale markets as the center," adding, "We will also abolish the seller participation requirement that allows only those with annual transactions of 2 billion won or more."