The Importance of ICT Technology Development and Smart Agriculture in the Participation of Korean Small-Scale Farmers in the Value Chain

The Importance of ICT Technology Development and Smart Agriculture in the Participation of Korean Small-Scale Farmers in the Value Chain

Published: 2021.05.12
Accepted: 2021.05.04
23
Department of Agricultural Resource EconomicsCollege of Agricultural and Life SciencesKangwon National University, Korea

ABSTRACT

Korea's agriculture has rapidly developed into smart agriculture incorporating advanced digital technology. Recently, with the emphasis on the consumption sector, it is important for agricultural product producers to develop and produce varieties with superior quality and safety in order to meet the consumer's pursuit of diversity and demand for excellent agricultural products. However, Korean small-scale farmers have long been involved only in the production phase. Smart agriculture can replace scarce labor in rural areas and enable risk management in the production and distribution process. In addition, smart agriculture can enable production and distribution in response to demand. Compared to traditional agriculture, where time and place are limited, smart farming can be monitored and controlled at any time, and through data and systems, it is possible to overcome the limitations of traditional farming that depended heavily on individual experiences. The Ministry of Agriculture, Food and Rural Affairs proposed 'Smart Farm Innovation Valley' as a base for creating synergy between farmers, companies, and research institutes by integrating the functions of youth start-up, technology innovation (R&D), and market development. It will be operated in a manner that widely disseminates technologies and new products developed by small and medium-sized enterprises (SMEs) to rural areas in the future. In the smart farm innovation valley, a complex that can perform various demonstrations on greenhouses and drones for agriculture, as well as educational centers and training farms, is planned to be built in order to equip production, distribution and technology innovation functions related to the agricultural field. The development of such a complex and the participation of small-scale farmers has an advantage in that it allows small-scale farmers to enjoy the opportunity to participate in the value chain provided by technological innovation while reducing the burden on farmers. In order for small-scale farmers to participate in the value chain, the government needs to first establish an intelligent agricultural big data platform. It is necessary to establish private and public big data governance in accordance with the purpose of smart agriculture for the purpose of commercializing front and rear industries. Through this, it should be supported so that numerous agricultural actors can easily access, analyze, and utilize big data related to agriculture. Then, in the future, more and more small-scale farmers will be able to increase their sustainability by participating in the value chain.

Keywords: small-scale farmers, value chain, smart agriculture

HISTORY OF KOREAN AGRICULTURE

Korea's agriculture, which only relied on land and labor 50 years ago, has rapidly developed into smart agriculture incorporating advanced digital technology (Table 1). Immediately after liberation in 1945, Korea's agriculture was largely dependent only on labor productivity, and thus the output per unit area was very low. In terms of productivity and equity, the tenant is a social issue in Korea. With the implementation of the Farmland Reform Act of 1950, Korean agricultural sector was established from a tenant structure to a self-owned structure. However, most of them were small farms that rely on their own labor force, and productivity has not improved significantly.

After that, through the 7-Year Food Production Plan (1965-1971), various fertilizers, pesticides, and agricultural machineries were actively introduced, and productivity began to gradually improve. In the 1970s, along with economic growth and Saemaul-Movement, the scale and modernization of agriculture accelerated (KPMG 2019). In response to the market opening in the 1990s, Korean agriculture pursued improvement of agricultural quality and diversification of products, and automation of agriculture and precision farming could be developed (Table 1).

In the 2000s, the core technologies of the Fourth Industrial Revolution were applied to achieve automation and intelligent agricultural work, and data began to replace the indispensable elements of agriculture such as labor, knowledge, and experience (Table 1). As data-based cultivation was carried out, it became possible to calculate the annual yield, and it became possible to diagnose pests and diseases, measure the moisture content of the land, measure the surface condition, diagnose the harvest time, and monitor the crop condition. This further developed and smart agriculture appeared, and advanced industrialization of agriculture is progressing by combining data and sensors with various smart facilities and equipment.

ALIENATION OF SMALL-SCALE FARMERS IN THE VALUE CHAIN

Until now, Korea's agricultural administration has made the most important goal of strengthening competitiveness through scale-up, specialization, and efficiency. As a result, it has been able to maintain a certain level of domestic agricultural strength even in the midst of market opening by increasing productivity and improving quality (Heo et al. 2018). However, in the process of emphasizing competition and efficiency-centered agriculture, social problems such as a decline in rural population, cavitation in rural areas, polarization of farm household income, and weakening of rural communities have also arisen (Heo et al. 2018). In particular, small-scale farmers have weakened their position in the value chain.

In the value chain, it is important to link all the main activities that produce added value and support activities. When the stages from production factors, production, packaging, and processing to distribution and consumption are well connected, the value chain of agriculture can be completed. Recently, with the emphasis on the consumption sector, it is important for agricultural product producers to develop and produce varieties with superior quality and safety in order to meet the consumer's pursuit of diversity and demand for excellent agricultural products. However, Korean small-scale farmers have long been involved only in the production phase.

Looking at the current state of advanced agricultural countries, agricultural technology is developing in the direction of reducing the influence of nature, and accordingly, the value chain of agriculture is changing. In addition, as the agricultural dominance of large farmers and companies increases, the organization of small-scale farmers, vertical and horizontal integration by companies or cooperatives, contract cultivation with distribution and processing companies are active, and the value chain structure is also being advanced.

In particular, with the reinforcement of consumer sovereignty, well-being culture, information and knowledge economy, ICT, increasing interest in environment and ecology, and the spread of global networking, the agricultural value chain is changing consumer-centered, especially with the turn of the century. The perception that agriculture is not just food production, but an industry that has life, culture, landscape, and healing value has emerged, and the value chain is transforming in various ways as the cultural movements in local communities such as local food, community business, and social agriculture are spreading.

In contrast, the value chain of Korean agriculture has several problems. First, the value chain of agriculture is simple and short, because we focused on the production of fresh products and did not put much effort into processing to increase added value. In addition, productivity decreases due to low adhesion between the main activities of the value chain and support activities. Both producers and consumers lack reliable production information which hinders the efficient operation of the value chain. In addition, cooperation and coordination activities are very weak in linkages between each stage of the value chain (Song 2018).

SMART AGRICULTURE AND VALUE CHAIN

In this reality, there are various background factors behind the recent development of ICT technology and smart agriculture in Korea (Seo 2016, Song 2018). First, as the fluctuations in supply and demand for agricultural products intensify due to climate change and increase in imports, prices change significantly, which increases the risk to farm household income. Another factor is the rapid aging of rural areas which causes great decrease of labor force that can be engaged in agriculture.

In addition, as consumer expectations increase, there is a need for a system that can prepare for food safety and livestock diseases. Lastly, as a number of FTAs and imports of agricultural products have increased significantly, it is urgent to enhance the competitiveness of domestic agriculture through differentiation in the production and distribution of domestic agricultural products. Smart agriculture can replace scarce labor in rural areas and enable risk management in the production and distribution process. In addition, smart agriculture can enable production and distribution in response to demand.

Often, the value chain of agriculture was regarded as starting at the stage of production in which crops were grown. The value chain of agriculture, which has been generally discussed, has been largely divided into three stages: production - distribution and sales - consumption of agricultural and livestock products and food (KPMG 2019). South Korea's smart agriculture also has a structure that is considerably biased to the production stage where agricultural products are cultivated in the value chain. However, the spread of ICT infrastructure and the development of smart technology expand opportunities for farmers to participate in the agricultural value chain, from market research and seed development, which are the pre-production stages of crops.

Compared to traditional agriculture, where time and place are limited, smart farming can be monitored and controlled at any time, and through data and systems, it is possible to overcome the limitations of traditional farming that depended heavily on individual experiences. Unlike traditional agriculture, which focuses only on production, smart agriculture has the advantage of being easy for farmers to participate in secondary processing and distribution as well as production. For example, in the "pre-production" stage, agricultural biotechnology including precision agricultural technology and genetics and microbiome can be mainly used. In the "production, cultivation, and management" and "harvesting and selection" stages, where crop production and livestock management are performed, productivity can be improved through automation using an indoor farm system, robotics, agricultural machinery, and drones. In the "distribution and consumption" stage, food supply chain technology can be used for inventory management, realization of automation of transport and logistics, and traceability of agricultural products and foods from production to distribution.

The advantage of smart agriculture is that even small-scale farmers can more easily participate in the value chain. According to Song (2018), wireless data transmission technology allows even small farmers to have meetings with remote buyers and to make informed decisions when deciding about crop yields and how to bring products to market. In addition, drones and GPS technology can contribute to better decision-making and risk management for small-scale farmers, and robots can solve the problem of labor shortages in small-scale farmers (Song 2018).

KOREA'S SMART AGRICULTURE POLICY AND ITS IMPLICATIONS FOR SMALL FARMERS

The Ministry of Agriculture, Food and Rural Affairs, at the 5th Economic Affairs Ministers' Meeting held in April 2019, announced the ‘Smart Farm Expansion Plan’ as one of the key initiatives for innovative growth of the government (Park 2018). The government supplemented the strategy for distributing smart farms that had been carried out by farm households. In addition, it suggested basic directions such as expanding the policy beneficiaries to youth farmers and front and rear industries, and creating an integrated base of diffusion. The existing smart farm expansion project centered on individual farms was difficult for small-scale farmers to participate due to the high initial cost burden. Accordingly, the government sought to create an environment in which farmers can concentrate on production while dispersing the functions that had to be performed by individual farmers through the creation of a large complex. Among the policies related to the expansion of smart farms being promoted by the government, the ‘Smart Farm Innovation Valley’ creation plan is regarded as a representative policy of this nature (Park 2018).

The Ministry of Agriculture, Food and Rural Affairs proposed 'Smart Farm Innovation Valley' as a base for creating synergy between farmers, companies, and research institutes by integrating the functions of youth start-up, technology innovation (R&D), and market development. In 2018, four local governments were selected to build a smart farm innovation valley for facility horticultural agriculture, and are actively distributing smart farms (Park, 2018). Farmers are in charge of production, and companies are in charge of research and development. In particular, it will be operated in a manner that widely disseminates technologies and new products developed by small and medium-sized enterprises (SMEs) to rural areas in the future. In the smart farm innovation valley, a complex that can perform various demonstrations on greenhouses and drones for agriculture, as well as educational centers and training farms, is planned to be built in order to equip production, distribution and technology innovation functions related to the agricultural field.

The development of such a complex and the participation of small-scale farmers has an advantage in that it allows small-scale farmers to enjoy the opportunity to participate in the value chain provided by technological innovation while reducing the burden on farmers. As a result of such a policy, the supply area of smart farms related to facility horticulture, such as smart greenhouses centered on facility vegetables, is increasing. Until 2014, the area where smart farms were introduced in the facility horticultural sector was 405ha, but in 2017, the area increased to 4,010ha, which was more than 10 times larger, and to 4,510 ha in 2018 (Park 2018). As the smart farm distribution progresses, paprika, tomatoes, and strawberries are represented as the three major greenhouse crops, and as the productivity of these crops increases and the supply increases considerably, it is also the time when diversification of crops is required.

In the livestock sector, in response to the promotion of smart farms and government support for the past four years from 2015, the number of livestock and farms for smart farms has rapidly expanded. Target livestock breeds are expanding to pig farming in 2014, poultry farming in 2015, Korean cattle and dairy farming in 2016, and ducks and deer farming in 2017 (Ministry of Agriculture, Food and Rural Affairs 2019). The number of livestock farms that introduced smart farms increased from 23 in 2014 to 790 in 2017 and 1,350 in 2018 (Ministry of Agriculture, Food and Rural Affairs 2018). The government is continuously promoting the supply of smart farms with the goal of expanding facility horticulture to 7,000 ha and livestock farming to 5,750 units by 2022 (Ministry of Agriculture, Food and Rural Affairs 2018).

The government is accelerating the promotion of projects for the development of smart agricultural models in the field sector. As policy and business promotion is gradually expanded to the field, it is expected to achieve data-based smart farming proliferation. From 2018 to 2019, a pilot project related to field smart agriculturalization at the city and county level was promoted as a single-year project, but there were limitations in the project implementation, such as the project content limited to ICT equipment support.

Through the 'Field Smart Agriculture Demonstration Project', which has been promoted since 2020, the government implements data farming that can collect and utilize weather, crop conditions, and agricultural work information by incorporating IoT and ICT equipment along with cutting-edge agricultural work machines on agricultural land (Ministry of Agriculture, Food and Rural Affairs 2021). In addition, the government is promoting the development of related technologies to establish a foundation for collecting, analyzing, and utilizing data generated in the field, and to enable scientific production planning and observation and supply and demand management (Park 2018). The spread of ‘Field Smart Farm’ is expected to make it easier for small-scale farmers to participate in the value chain than before.

POLICY RECOMMENDATION

The era of untact, expressed as no-contact and touchless, has arrived. Furthermore, an untact era is predicted in which digital non-face-to-face services using advanced digital technologies such as artificial intelligence (AI) and robot delivery, and interactive online communication are strengthened and diversified (Hwang et al. 2020). In the untact market, the distribution stage will be drastically reduced through the strengthened connection between consumption and production sites. In addition, with the development of the fourth industry characterized by a hyper-connected and intelligent society, sales of agricultural products tailored to consumers using big data will expand. This will enable the establishment of a big data agricultural system that reinforces customized production and market prediction through big data analysis of the production-transaction-export-consumption value chain of agricultural products.

If such a system is established, village-level small farmers can register products on public online platforms operated by the government and sell them remotely. By transmitting sales data in real time, farmers will be able to harvest on time and sell through smart contracts. It is difficult for small-scale farmers to directly establish such smart agricultural infrastructure. Therefore, in order for small-scale farmers to participate in the value chain, the government needs to first establish an intelligent agricultural big data platform. It is necessary to establish private and public big data governance in accordance with the purpose of smart agriculture for the purpose of commercializing front and rear industries. In this governance, data must be collected at all stages of the agricultural value chain, and it must play a role as a “control tower” that commercializes and manages it so that small-scale farmers can easily use it. Through this, it should be supported so that numerous agricultural actors can easily access, analyze, and utilize big data related to agriculture. Then, in the future, more and more small-scale farmers will be able to increase their sustainability by participating in the value chain.

REFERENCES

Heo, J., M. Lee, C. Rhew, S. Woo, 2018. "Analysis of Influential Factors on Sustainable Agricultural Development", Korean Journal of Agricultural Management and Policy 45(4) 721-741.

Hwang, E. et al. 2020, "Impacts and countermeasures in the agricultural and rural sectors in response to COVID 19", KREI D501, Korea Rural Economic Institute.

KPMG, 2019. "Smart agriculture, redrawing the value chain of agriculture", Issue Monitor No.119.

Park, S, 2018. "Policy Direction for Proliferation of Smart Farms", TTA Journal 180 18-21, Telecommunications Technology Association.

Seo, Y, 2016. "Current Status and Major Tasks of Smart Agriculture in Korea ", World Agriculture 185, Korea Rural Economic Institute.

Song, H., 2018. "Theoretical Framework of Sustainable Smart Agriculture and Agricultural Big Data & Current Issues and Strategic Directions of Smart Farmers in Korea", Journal of Training and Development 37 49-77.

Ministry of Agriculture, Food and Rural Affairs, 2018. “2018 Agri-Food Business Report”, Briefing Reference. (https://www.mafra.go.kr/mafra/1169/subview.do), accessed online 2021.03.19.

Ministry of Agriculture, Food and Rural Affairs, 2019. “Smart Farm Policy Plan”, Briefing Reference. (https://www.mafra.go.kr/mafra/2711/subview.do), accessed online 2021.03.12.

Ministry of Agriculture, Food and Rural Affairs, 2021. “2021 Agri-Food Business Report”, Briefing Reference. (https://www.mafra.go.kr/mafra/1169/subview.do), accessed online 2021.03.14.

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