In this study, we present how cooperatives help the elderly in the "food desert" and how it runs businesses with lower profits. We introduce a special cooperative, Dong-Rak-Jeom-Bbang (hereafter DRJB) which runs the business in a small village in South Korea. The food desert is described as a geographic area in which residents have limited and restricted access to affordable and healthy food due to the absence of food stores close enough to walk or do short travel. The DRJB, a cooperative, runs a mobile store business in the village without a store and market supplying food and daily necessities to cooperative stakeholders with limited mobility. It also plays a significant role in providing care for seniors in the village and connecting with a social worker if needed. Although the services are not profitable, the number of stakeholders, in particular seniors over 60 years, and sales continue to grow with the advantage of the cooperative. The DRJB case will provide a proper insight into the policy against the food desert and poor quality of life in rural areas.
Keywords: Older Consumers, Cooperatives, Rural areas, Food desert, Purchasing refugees
Older consumers in rural areas cannot purchase daily necessities such as food and emergency medicines because private stores are not willing to conduct business in rural areas which garner fewer profits compared to urban areas. To overcome this situation, they have to drive their cars to greater distances to shop for necessities. However, many of these consumers cannot drive a car, and public transportation is practically non-existent in most rural areas. We call this situation the “food desert.”
The food desert is described as a geographic area in which residents have limited and restricted access to affordable and healthy foods due to the absence of food stores close enough to walk or do short travel. The concept is relevant to the accessibility to local food stores within a short distance and residents' income level to use proper transportation.
A potential solution to install enough stores is a social economy, such as a cooperative. A cooperative is “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise” by the International Cooperative Alliance (ICA 1995). Persons who suffer from disadvantages become a member and participate in various activities to resolve the problem through voluntary ownership and cooperation.
In this study, we introduce a special cooperative, Dong-Rak-Jeom-Bbang (hereafter DRJB), as a potential solution for the food desert in rural areas. We present how the DRJB helps the elderly in the food desert and how it runs the business with lower profits. We employ a case study approach to introduce the DRJB and show how stakeholders participate in the activities and the cooperative performances grow by analyzing the business status and financial statement of the DRJB.
The concept of “food desert” first emerged in the early 1990s as a term referring to the areas located in the public district in Scotland (Cummins and Macintyre, 2002). After then, the definition of the food desert varies according to researchers. In 1996, the United Kingdom defined the food desert as a difficult area to access grocery stores that sold healthy foods (Whelan et al., 2002). Hendrickson et al. (2006) also defined the food desert as an urban area with 10 or fewer grocery stores and no more than 20 workers. Cummins and Macintyre (2002) defined the food desert differently from others as an area of poor cities where healthy food cannot be afforded.
The food desert is widespread in the world. In the United States, according to a report by Congress by the Economic Research Service of the US Department of Agriculture, approximately 2.3 million people, or 2.2% of all US households live more than one mile away from a supermarket and do not own a car (USDA, 2009). In rural areas, public low accessibility is more severe compared to that in urban areas, transportation is very limited, and supermarkets are far from rural residents. Twenty percent of rural areas in the U.S. are classified as the food desert (Treuhaft and Karpyn, 2010). Also, about 2.4 million individuals in small areas have low access to large supermarkets (ERS, 2019).
In Japan, the Ministry of Agriculture, Forestry and Fisheries, the Annual Report on Food, Agriculture and Rural Areas in Japan FY2011 includes “Difficulties in access to food,” as one of the important policy agendas in the field of food, roughly 78,000 of people have poor access to fresh food, including 17,000 or so aged 65 years and over concluding that up to 35 % of residents in Hodogaya ward live in a food desert and about 2.4 million people have low access to a supermarket (Yakushiji and Takahashi, 2013). In Kashiwa City, 5,044 elderly people are shopping weak and 7,951 elderly peoples have difficulty in accessing fresh stores (Ikejima, 2015).
In addition to the food desert, “purchasing refugee” is also used in Japan. The purchasing refugees refer to the seniors who have trouble buying food and daily necessities including fish, and vegetables on time. As Table 1 shows, about 7 or 8 million Japanese old people are purchasing refugees (野村実, 2021). The main reason for purchasing refugees is the aging of the population, being out of the business of local stores, and the lack of public transportation.
In South Korea, there is no official estimation of the population suffering from the food desert. However, the food desert has frequently been mentioned when researchers investigate the disadvantages in rural areas. In rural areas, the aging rate has already exceeded 20%, entering a super-aged society (Kim et al., 2021a). Rural seniors, in particular female seniors, are limited to access the necessary public services because most of them cannot drive a car. Since many villages take more than 10 minutes by car to move from rural villages to the local center, it is hard to access necessities including food and health-related goods (Kim et al., 2021b). The Korean government has tried to support many policies to solve this problem including the “1-dollar taxi,” and “local bus run by local governments”. However, the efforts are not paying off until now because losses were accumulated and the minimum operating expenses could not be earned.
DISADVANTAGE IN RURAL AREAS
Rural villages in South Korea lack infrastructure compared to urban cities, and residents in rural villages cannot even obtain daily necessities. The cause of this problem is ultimately due to the lack of population and low population density. Almost all services and the corresponding facilities are concentrated in the center, and residents living in surrounding areas have restrictions on visiting facilities for the use of service. For example, in urban areas, the elderly has to travel about 0.98 km to move to the center. However, in rural areas, they have to travel about 4.04 km. In terms of travel time, in urban areas, seniors need 1.26 minutes to reach the center of cities by car while they need 4.38 minutes in rural areas (Kim et al., 2021b). If rural residents cannot drive a car or take public transportation, there would be a limitation in accessing the center to use general services. Thus, they live in the “food desert” and are a “purchase refugee.”
The problem originates from the fact that young people moved to urban areas to find jobs and amenities. After the movement, rural areas are in a position to worry about extinction due to the deepening aging of the population. The proportion of the aged 65 years or older in rural areas is more than 24% in 2021, which is higher than the 9% in urban areas. Even in small villages where the aging is severe in rural areas, the aging rate is more than 30%, which is more than twice as much as in urban areas (Kim et al. 2021a). As a result, food stores cannot make enough profit to run business and even small stores disappear. Korean government has tried to support to solve the problem, but the uncomfortable situation still exists.
Myoryang, located in Youngkwang-gun in the eastern part of South Korea, is a small village. It has a population of 1,806 which is much below the average population of villages, about 2,500 to 3,000 in South Korea. About 40% of them are over 65 years old within 44.76km2, which is also much higher than the average aging rate in rural areas, about 24%. Most small rural areas are similar vicious circle with a small population, a high proportion of the aged 65 years or older, and in turn a decrease in population. The last shop in this village shut down and the elderly cannot purchase daily necessities including food and emergency medicines. Afterwards, the elderly became the purchasing refugees in the food desert because most of them cannot drive cars and are restricted to use public transportation. In Myoryang, public bus runs about 5 times a day.
INTRODUCTION TO THE DRJB
The DRJB, a cooperative, has run businesses in Myorang village. In the neo-classical economics world, a corporation maximizes profit to survive. If there is no profit, companies stop their business regardless of the presence of consumers in a region. It is economically reasonable in the neo-classical world, but not socially justified. Thus, a cooperative is a feasible solution to fill the gap between neo-classical economic principles and consumer well-being for economically excluded consumers in rural areas.
The DRJB has played a significant role in reducing the economic exclusion of older consumers in rural areas as a cooperative providing them with enough food and necessities for senior residents. It is a community-contributing non-profit corporation that helps the elderly live their lives, creates jobs, helps farmers earn income, and returns union profits to the promotion of village welfare, with 370 local residents participating as members.
The DRJB was created in August 2011. When the only small store in Myoryang village was closed due to no profit, villagers needed to go out to the center to even purchase bottled water. A village store was opened as a substitute for a supermarket and purchased a used truck in November of the same year. In the early days, the DRJB has few customers because villagers were not familiar with the moving stores. It was about to be out of business. However, it becomes a necessary business in the area in which about 300 people purchase many items a week. Finally, it was founded as the first social cooperative in Jeollanam-do in 2014. The social cooperative is defined as “a cooperative that carries out business activities related to the enhancement of rights, interests, and welfare of local residents or provides social services or jobs to disadvantaged people but that is not run for profit” by the International Cooperative Alliance. It is the organizational structure consistent with the DRJB’s activities
The DRJB pursues the "Jeonnam No. 1 Social Cooperative." It connects 42 natural villages located in Myoryang, Jeollanam-do, and supplies foods and daily necessities by reopening a grocery store. This store provides cooperative stakeholders who are the purchasing refugees with basic necessities, such as bean sprouts and tofu, fluorescent lamps, toothbrushes, soaps, and so on. It also supplies agricultural products small farmers and retunees harvested and processed in the region for elderly farmers.
The DRJB businesses can be divided into three parts: a micro store, a mobile store by truck, and direct transactions between urban and rural areas. The Main business of the DRJB is selling daily necessities and foods by operating a micro shop and a special vehicle. The DRJB runs a micro store for stakeholders who live nearby and can walk to the shop shown in the left in Figure 3. The mobile store shown in the right in Figure 3 is opening a small moving market every Thursday and Friday by riding a one-ton truck to 42 villages in Myoryang. It delivers the necessity that villagers want but cannot purchase it. If a resident needs something it does not have, the moving store prepares them for the next opening and helps them buy them. The main customers of the truck store are the rural elderly who cannot visit the market due to poor transportation and limited mobility. There is no market regardless of the size of stores except for the market located in the small downtown. Thus, the opening day of the market becomes a special day for residents living in villages where no store exists.
The DRJB runs businesses but does not make a profit from the business, which is an important characteristic of a cooperative. Most supermarkets in South Korea want to maximize profits. For more profits, they run businesses in large cities or only in the center or downtown in rural areas. The DRJB is a cooperative whose purpose is to help villagers to purchase necessities. It tells us that DRJB can last a long time because maximizing profits is not the purpose of DRJB.The DRJB does not only provide daily necessities and food. It also plays a significant role in providing care for seniors in the village. The public care system works poorly in rural areas because private enterprises run care businesses in South Korea. They are unwilling to enter the rural care market without equivalent profit to what they can make in urban areas. Consequently, in urban areas, it is necessary to travel about 0.57km to facilities that provide nursing services, but in rural areas, traveling 7.02km is necessary to access facilities due to insufficient infrastructure (Kim et al., 2021b). The DRJB's staff is asked about the daily lives of the senior residents and responds to chatter by stopping the truck. Sometimes they are asked to read documents and papers on drug bottles or food wraps. When they visit an elderly person living alone with difficulty moving, they observe their health and connect with a social worker at the welfare center in an emergency. Thus, the DRJB deserves to be called a social worker and a caregiver in this village.
PERFORMANCE OF THE DRJB
The performance, in particular sales, of businesses run by the DRJB is shown in Table 1. The result indicates that the food sales of the DRJB were US$126,047 which consists of US$86,382 from the small shop and US$39,665 from the mobile shop in 2019. The half-year sales in 2020 are US$91,670. It would be higher than expected despite of the ongoing COVID-19 pandemic. If we assume that total sales in 2020 are twice as much as those in the half-year 2020, the annual growth rate from the food sales estimated by the compound annual growth rate is 22.6%. The growth rate is very high considering that the village is very small and the number of cooperative stakeholders is only about 300 to 400. The annual growth rate in the mobile store is about 14.2% even though the elderly population in this village is decreasing. Also, in the early days, micro and mobile store businesses did not account for much. In 2017, the proportions of sales from the micro and mobile stores are 16.0% and 11.4%, respectively. However, in the half-year of 2020, the proportions rise to 38.3% and 19.4%, respectively despite the decrease in the old population in this village. Thus, we can conclude that the DRJB’s store business for managing the food desert would be successful, and the economic well-being of elderly residents in this village would be better than before the business and other villages around.
The argument is also supported by the purchasing amounts by stakeholders of the DRJB shown in Table 2. The result indicates that most consumers are over 60 years old. The number of stakeholders over 60 is 326 accounting for 80.9% of all stakeholders in 2019. Also, the number of actual stakeholders using the DRJB’s service is 279 accounting for 85.6% of all stakeholders. Sales from stakeholders over 60 years is US$30,749 accounting for 49.9%. In the half-year of 2020, the number of stakeholders over 60 years decreased due to natural death, but the rate rises 84.7% and 86.1%, respectively. The sales from stakeholders over 60 account for 45.8% of all sales, which decreased but is still high. Thus, we can conclude that the DRJB’s business for the food desert would benefit seniors who fail to access enough food and necessities in a small village.
If the DRJB is a private corporate, it cannot survive. Although the commodity price is about 10% higher than ones in supermarkets, it cannot cover all costs of running the mobile shop such as fuel and depreciation costs, labor fees, utility bills, and so forth. However, the store has run well by using profits from micro shop, selling agriculture products to urban residents, and others. The strategy of a private corporate is to shut down the mobile shop and focus all resouces on the part which can make profits to maximize the profit. Since the DRJB is a social cooperative, it does not need to reserve a surplus and use the surplus for the mobile shop.
The DRJB is a cooperative that provides older consumers in rural areas with daily necessities including food and emergency medicines regardless of obtaining profits. It runs cooperative businesses in the marketplace where private enterprises no longer enter. The mission is ongoing and expects to be successful based on the purpose of the cooperative and the performance representing sales and the number of old consumers.
The target consumers for the DRJB are older persons who have been economically excluded to purchase food and emergency medicines. Thirty percent of the total population in Myorang village obtain benefits by using micro and mobile stores. Based on the user-benefit principle, “distributing benefits to users based on their use,” (Cobia, 1989) the DRJB achieves its regional mission.
Although the DRJB is a proper role model to reduce the food desert in rural areas in South Korea, good news about another DRJB appeared. The representative of the DRJB told researchers that many potential social entrepreneurs have visited there and studied the structure and management skills for several years. However, no cooperative provides ongoing and sustainable services similar to that of the DRJB. The main restriction is the lack of minimum operational profits. The DRJB suffered from a similar problem in the early days. It overcame them, and the know-how was accumulated. However, the newbies failed to overcome the difficulties and gave up the business.
The Korean government has supported the social economic organization as a solution for the revitalization of rural communities and the economy. However, the amounts of support are insufficient because it is not popular for rural residents who prefer agricultural funds. Also, they cannot help cooperative newbies to obtain know-how from the DRJB that money alone cannot buy. For a more effective policy to remove the food desert, policy authorities need to provide more funds for residents to participate in cooperatives and be active in it. Further, they need to build networks connecting cooperatives in rural areas to share their know-how and set up a system to educate activists who want to attend the social business for disadvantaged persons in rural areas.
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