DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use g Lp y Report No. 213a-KO AGRICULTURAL SECTOR SURVEY REPUBLIC OF KOREA (in four volumes) VOLUME IV ANNEXES 9 THROUGH 12 November 13, 1973 Asia Projects Department This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group autl:,orization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. GLOSSARY CURRENCY EQUIVALENTS (1972) US$1.00 = 400 won One won = US$0.0025 WEIGHTS AND MEASURES The metric system is used in this report. Korean statistics report land area in Cheongbo. One Cheongbo equals 0.9917 hectares. Cheongbos and hec- tares are considered equal in this report. Other land unit measures used in Korea are: Tanbo = 0.1 Cheongbo and Pyung = 35.56 square feet. ABBREVIATIONS MAF = Ministry of Agriculture and Fishery EPB = Economic Planning Board MHA = Ministry of Home Affairs MOC = Ministry of Construction MCI = Ministry of Commerce and Industry MHSA = Ministry of Health and Social Affairs ME = Ministry of Education ORD = Office of Rural Development NACF = National Agricultural Cboperative Federation ADC = Agricultural Development Corporation AFDC = Agricultural and Fisheries Development Corporation LIAs = Land Improvement Associations OOF = Office of Forestry OFA = Office of Fisheries Affairs CFFC = Central Federation of Fishery Cooperatives AERI = Agricultural Economics Research Institute FFYP = First Five-Year plan, 1962-66 SFYP = Second Five-Year Plan, 1967-71 TFYP Third Five-Year Plan, 1972-76 DESIGNATION OF ADMINISTRATIVE AREAS Do = Province Gun = County Myun = District Ri-dong - Village - REUJBLIC OF KOREA AGRICULTURAL SECTOR SURVEY VOLUME IV ANNEXES 9 through 12 ANNEX 9. MARKETING ANNEX 10. FORESTRY ANNEX 11. FISHERIES ANNEX :12. STATISTICAL ANNEX REPIBLIC OF KOREA AGRICULTURAL SECTOR SURVEY ANNIEX 9. MARKETPTG ANNEX 9 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY MARKETING TABLE OF CONTrENTS Page No.. I. SUMMARY AND RECOMMENDATIONS ........................... 1 II. BACKGROUND .................. 4 III. MARKETING ORGANIZAT'ION AND FACILITIES . . . 6 A. Commodity Market Channels . . 9 Grain ............................................. 9 Vegetables ........................................ 10 Fruit ............................................. 11 Other Crops and Industrial Raw Materials ......... 12 Livestock Products ...- .......... ................ 12 Fishery Products ......................, 13 B. Wholesale Markets ...................... 13 C. Storage Facilities ........... .......... 15 Grain .................. t5 Other Commodities ........... ........... 17 D. Transportation ..................... 18 IV. DISTRIBUTION SYSTEMS FOR FARM EQUIPMENT AND SUPPLIES .. 19 A. Fertilizer ......... ............. 20 B. Other Supplies ...................... 20 V. GROWTH IN DEMAND FOR MARKETING SERVICES .... ........... 21 VI. FOREIGN ASSISTANCE .................................... 22 VII. INVESTMENT PRIORITIES ............... o . ................ 22 VIII. PROJECT PROPOSALS .................................... 23 A. Warehouses for Government Food Grains ............ . 25 B. Improvement of AgriculturaL Marketing Structure ... 25 Public Sales Centers ............ .. ............... 25 Slaughter Houses . .............. ................ 26 Collecting Facilities for Fruits and Vegetables .. 26 Supermarket for Farm Products . . 26 Buffer Stock Warehouses .......................... 27 Rice and Barley Mills .. ......................... 27 Transportation Equipment ......................... 27 C. Improvement of Fisheries MAirketing Structure ...... 28 Public Sales Centers ........................ . 28 Direct Sales Store . . ... o...... o.. 28 D. Straw Pulp Mills ........................ 29 E. Integrated Agricultural Prcducts Processing Project 29 ANNEX 9 APPENDIX TABLES 1. Estimated Marketing Margins for Rice through Merchant Channels (Youngsanpo-Seoul) November 8, 1968 2. Monthly and Geographic Variation in Wholesale Prices of Rice, 1970 3. Estimated Marketing Margins for Table-Use Sweet Potatoes, 1968 4. Monthly and Geographic Variation in Wholesale Prices of Sweet Potatoes, 1970 5. Estimated Marketing Margin for Apples, Kuchang, 1971 6. Monthly and Geographic Variation in Wholesale Prices of Apples, 1970 7. Monthly and Geographic Variation in Wholesale Prices of Chinese Cabbage, 1970 ANNEX 9 Page 1 RE]?UBLIC OF KOREA AGRICULCURAL SECTOR SURVEY MARKETING I. SUMMARY AND RECO:ENDATIONS 1. High rates of urbani.zation and income growth have created an unusually large expansion of demand for agricultural marketing services. There has been considerable public an4. p4rivate investment in physical facilities, some of which are excellent, but other facilities presently in use are outmoded and inadequate. Such inadequacies are found in facil- ities for assembly of produce and delivery of supplies to farms, for storage, for processing, and for wholesale and re tail distribution in urban markets. Korea has a well developed transportation system including improved highways and railways for moving farm products to urban markets. But there is still need for improving rural roads to make markets more accessible to isolated villages. 2. By far the greater portion of all marketing services are provided by strictly private enterprise. Market channels exhibit great diversity, not only as between commodities, but even in alternative channels through which any one commodity may move from the farm to the urban consumer. While this may be inefficient, examination of price spreads and variations does not provide conclusive evidence to this effect. There is a dearth of cost data to compare with price differences. Keen competition appears to be effective in holding down margins and prcofits. Use of poor facilities affects quality of services. This, together with the small-scale of opera- tions, probably results in low returns to those engaged in marketing. It is essentially a low cost system, except its costs are increased by the effect of high interest rates on commodities, like grain, which may be in cormmercial storage for up to 10 or 11 monrths, and the small volume of sales per farm. 3. The government role is of considerable importance. This includes implementation of price policy, with respect to both farm products and farm supplies, encouragement of exports, procurement for government use and inspection and other regulatory services. The National Agricultural Coopera- tive Federation (NACF) with poLicy direction and guidance from the Ministry of Agriculture and Forestry (MkF) is the most important agency in the imple- mentation of the government roLe. The Central Federation of Fisheries Coop- eratives (CFFC) and the AgricuLture and Fishery Development Corporation (AFDC) have lesser roles. Finally, the Ministry of Commerce and Industry (MCI) is responsible for general supervision over central wholesale markets operated by municipalities. There appears to be some lack of coordination in planning the construction and use of marketing facilities by these govern- ment and semi-autonomous agenciLes. ANNEX 9 Page 2 4. NACF is a semi-autonomous government agency established in 1961 by a merger of the Agricultural Bank of Korea and the farmer cooperative system. In 1964 there were 18,963 multi-purpose primary cooperatives at the Ri-dong or local level. Since then the number of primary cooperatives has been reduced to about 1,800 in order to achieve greater efficiency. The objective is to have one primary cooperative for each Myon, the next largest administrative unit after the Ri-dong of which there are 1,376. In addition, there are 148 special primary cooperatives concerned with marketing livestock, horticulture, dairy and other special products. Primary cooperatives are supervised by Gun cooperatives of which there are 140, one of each of the ad-'nistrative sub-division of the 9 provinces. Gun cooperatives are dis- tinct legal and administrative entities but are closely integrated with NACF. The president of NACF appoints the presidents of Gun cooperatives and instructs them on local policies and procedures. Members of primary cooperatives gradually should be given increased authority and responsibility for business operations of cooperatives. The cooperative movement should ultimately be entirely in the private sector even though it may perform services for the public sector. Otherwise, much of the driving force of the cooperative move- ment will remain unmobilized. In view of the high educational levels of rural people, they should be well qualified to perform a larger role in managing the operations of cooperatives. 5. AFDC and other organizations have played a major role in expanding exports of marine products, raw silk, ginseng, tobacco, fruit and other agricultural products. Korea has large potentials for further increasing output of labor-intensive agricultural products because of its industrious and low-cost supply of labor. Consequently, Korea should continue to take advantage of expanding markets abroad. There are large potentials, for example, for expanding exports of fresh and processed vegetables to Japan. 6. Continued rapid growth in demand for marketing services is antici- pated as a result of further urbanization and per capita income growth. A predominantly rice diet is being diversified as incomes increase to include more fruit, vegetables, livestock and fishery products. These are more perishable than grain, and it is more expensive to deliver them to consumers in good condition. Planning for investment in marketing must include im- provement in quality of facilities as well as expansion of their capacity. 7. It is planned to increase NACF's share of total marketings of farm products from 16% at present to 23% by 1976. This expansion may be desirable as a means of demonstrating new and improved methods and increas- ing price competition by providing alternative sales outlets to producers and retail services to consumers. It is important that the government role in planning investments in transportation, storage, processing and distribu- tion facilities to be used by both private and semi-autonomous cooperative or public agencies, be exercised more effectively. This includes road construction and maintenance, construction of assembly area and central market warehouses, slaughter houses and other processing and urban wholesale and retail distribution facilities. ANNEX 9 Page 3 8. It is premature to be severely critical of private marketing on the basis of available information. The mission recommends that private marketing enterprises be supported and encouraged in various ways, such as with market information, collection and dissemination, inspection, grading, research and access to credit on terms as favorable as those received by institutional marketing agencies. NACF supplies some of these services, but is not adequately financed and may not even be the appropriate agency to meet all such needs of private, non-cooperative marketing. More research on market organization, costs and physical commodity losses and waste is needed. If NACF is to be solely responsible for such work more resources are needed, but greater MAP inivolvement is also desirable. NACF is a multi- purpose organization with many responsibilities, both to its members and to the government. It is naturaL for NACF to look upon strictly private cooperative marketing as competitive. This agency should not be expected to be the main source of information concerning agricultural marketing in general. 9. The mission concludes that the:re is need for better coordination of government activities concerned with marketing. Most conspicuous is the division of responsibility for central wholesale markets between two ministries. There are also urnderutilizeti cold storage, wholesale market and slaughter house facilities in Seoul tnd elsewhere, despite shortages overall. This should not halt: investmenl: but nevertheless should be taken into account in investment planning. Various regulations covering, for instance, taxes levied at slauighter houses, repayment of loans in kind at unattractive prices, and high inspection costs, divert produce from channels which would otherwise be most satisfactory. Changes in such regulations are needed. 10. Agricultural marketing is rightly accorded a high priority in the adjusted Third Five-Year Plan. Most of the proposed investment is in facil- ities for the cooperatives and for the government's own grain supply manage- ment and price stabilization program. Intprovements in infrastructure, which serve marketing, such as rural road networks are included elsewhere in the plan but are no less important. The document, Prospectus for I!provement of Agricultural and Fisheries Marketing Structure Project, October, 1972, received by the mission while in Korea, proposes investments totaling 73.5 billion won for a variety of purposes during 1973-76 but it contains only limited information providing economic justification for investment projects. The components of t;his package have been examined from the stand- point of their general appropriateness in the context of needs and priorities as evaluated and summarized above. Many of the component projects merit more careful consideration on the basis of further information on their design and a broader approach to benefit-cost analyses. Mission evaluations of proposed projects based on available information are summarized below and discussed in detail in Chapter VII. 11. The need for additionial warehouses for government food grains was evaluated by an IBRD/IDA mLssion in 1971. It was concluded that a USAID-financed program would meet the needs until at least FY-1974 and probably even longer. While the time is near when some additional storage ANNEX 9 Page 4 or upgrading of facilities will be needed, the proposed new building program appears excessive. There is a need for new facilities for some of the newly consolidated Myon cooperatives. 12. The proposal for additional NACF public sales centers reciuires further study to resolve the problems of coordination between NACF and municipally operated central markets. 13. The slaughter house project is not adequately justified in the presentation in view of the low level of use of existing facilities. More information is needed on how the supply of animals for the new facilities would be assured. 14. The proposal for expansion of collection facilities for fruits and vegetables is-promising enough to justify detailed project preparation and evaluation. 15. The proposed supermarket for farm products is accorded low priority, as an NACF enterprise, on the ground that privately operated general super- markets are already in this field and are gradually developing and supplying the demand for this higher class of service. 16. The buffer stock warehouse proposal should be further examined in terms of the present utilization of all existing storage facilities. There is evidence of lack of coordination among agencies operating cold storage facilities. The rice and barley mills for Myon cooperatives appear desirable if installation is phased with progress in primary cooperative consolidation. The same is true of the trucks for these cooperatives. 17. The CFFC public fish sales center project appears to be so large that it might encounter serious management problems as well as replacing parts of the distribution system that are now functioning reasonably well. The proposed 40 fish sales stores in Seoul may be excessive until the success of this kind of operation has been demonstrated, perhaps for the benefit of potential private operators of such stores. 18. The straw pulp mill proposal is discussed in Annex 10 on Forestry. The proposed integrated agricultural products processing project has been reviewed in detail and it has been decided that additional project prepara- tion is required before it will be ready for appraisal. II. BACKGROUND 19. The structural changes in the economy of Korea during the past decade have emphasized the importance of an efficient marketing system for agricultural products. Rapid industrialization has been accompanied by growth of urban areas which must be supplied with food mainly from numerous small farms each with only a small volume of produce to sell. Rapidly rising incomes have resulted in a demand for a more varied and higher quality ANNEX 9 Page 5 food supply. This means more perishable commodities available for lo..ger periods. More rapid transport:, better storage facilities and efficient distribution are necessary to meet this ,lemand. 20. The nonfarm population increased from 10.4 to 17.8 million between 1960 and 1970. Average real earnings of urban workers more than doubled in a similar period. Exports of agricultural products also increased. Whole- sale and retail trade in all commodities has exceeded the national economic growth rate, and this is probably also true of trade in agricultural commo- dities although comparable statistics are not published. 21. Rapid growth in volime and variety of marketing services has necessitated substantial investment in physical facilities for transport, storage, processing and distribution. While some of the newer facilities are modern and efficient, others still in use are poor and outmoded; for example, feeder roads, many oLder warehouses, small slaughter houses and urban central markets in congested areas need to be improved. Deterioration and spoilage in marketing channels is an economic loss which must be borne by producers or consumers. Agricultural progress may be hindered or ad- vanced by the efficiency of t'he marketing system and the rate at which it can be modernized. This annex undertakes to evaluate agricultural marketing efficiency with particular attention to government programs for improvement. 22. Government has intervened in marketing in various ways and for a number of reasons. To implement price policy, grain and certain other storable commodities such as red peppers, sesame, onions, garlic and apples have been purchased and stored to support farm prices and to stabilize retail prices. The NACF acts as government agent in these operations as well as in procurement of commodities for direct: government use. The Government owns and rents storage facilities in addition to those of NACF. CFFC per- forms similar functions for government on a much smaller scale in fish marketing. AFDC, a government corporation with some foreign and private domestic equity capital engages in processing, storage and sale of certain agricultural and fishery products. These semi-autonomous agencies are subject to policy control and general diLrection from the Ministry of Agri- culture and Forestry. 23. The Ministry of Commerce and :Industry supervises 54 urban whole- sale markets operated by municipal gover:nments. Seoul and some of the other larger cities have grown so rapidly thai: their market facilities are crowded and poorly located in relation to the needs of potential users. 24. The major portion of all marketing services is performed by private enterprise operating on a small-scale often with inadequate financing and deficient facilities. Markel: channels are diverse and frequently include as many as five or six middlemen transactions from producer to consumer. Government policy has been to improve the situation by means of increased financial support for the cooperative organizations, particularly NACF. ANNEX 9 Page 6 III. MARKETING ORGANIZATION AND FACILITIES 25. There is a wealth of published material on the agricultural market- ing system of Korea. As a part of the Korean Agricultural Sector Study (KASS) by the Agricultural Economics Research Institute of the Ministry of Agricul- ture and Forestry and Michigan State University, Special Report 7, Organiza- tion and Performance of the Agricultural Marketing System in Korea, published in 1972. Another report, Preliminary Agricultural Marketing Survey in Korea, published in 1968, was the result of a study by NACF and the International Marketing Institute. This annex draws heavily on the above and other publica- tions, which provide more detailed descriptions of the marketing system. 26. With the very rapid growth of nonfarm population and income strong incentives have been created for farmers to produce for the market. Since farms are small, however, many farm households have little choice other than to meet their own minimum food needs first, and are able to produce very little surplus for sale. Since rice is tho dietary staple and most farmers have paddy land, only about half the rice is marketed. Additional quantities go to pay workers' wages, rent, taxes and to settle other obligations. It is not known how much of this bartered rice subsequently reaches cash markets. In 1970, 49% of the rice crop was sold by farmers and an additional 25% was used to pay obligations of the kind described above (Table 1). For barley, wheat, millet and sorghum the proportions marketed are smaller, but for corn and beans larger. Most of the milk, fruits and industrial crops are marketed but considerably less than half of the vegetables. Table 1: RATIO OF MARKETED TO TOTAL PRODUCTION OF SELECTED COMMODITIES 1969 1970 Commodity Narrow Sense /1 Broad Sense /2 Narrow Sense /1 Broad Sense /2 - ---- - ----per cent----- -…-__________________ Rice 45.8 72.0 48.7 73.8 Barley 23.0 34.0 24.2 36.6 Wheat 25.0 34.0 20.7 29.6 Soybean 50.3 57.6 54.6 62.0 Sweet potatoes 30.1 36.3 29.8 35.3 White potatoes 21.8 25.7 26.9 30.8 /1 Includes sales, taxes and milling charges. /2 Includes in addition to the above, payments in kind for wages, rent, and other items. Source: NACF Monthly Review, September 1972. ANNEX 9 Page 7 27. Regional specialization is at an early stage. As long as rice is the main crop in all regions there is limited opportunity for specialization in other crops except on slopeland. The early stages of assembly are likely to involve high unit costs because of the numerous small individual farm marketings distributed over all significant farming areas. While the trans- portation network has been greatly improved in recent years, especially with the construction of the expressways, further improvement in secondary and feeder roads would facilitate assembly of produce. 28. Storage, wholesale and retail marketing facilities have not kept pace with the growing and changing needs of Seoul and other rapidly growing cities. Perishable foods are still preserved by traditional inexpensive methods. Cold storage is in an early stage of development and canning is too costly for the mass home market, but profitable for certain export products. 29. There are several alternative channels through which most commodi- ties pass from producer to comsumer. Charts depicting these flows are com- plex and also different for each commodity. They show many kinds of inter- mediaries, but the number and combinations of functions performed by each is highly variable. A frequenatly expressed official view is that producer- consumer price spreads are excessive because there are so many intermediaries. Considerable emphasis is placed on strengthening the role of the cooperative marketing system as a means oE increasing the quality and reducing the cost of marketing services. NACF handles about 16% of all agricultural commodity marketing, and plans to reach 23% by 1976. A related goal is to reduce the number of stages in the marketing process from five or six to two or three. 30. While price compariEsons are useful in evaluating marketing effi- ciency, data on actual costs writh reasonably efficient methods are needed for comparison with charges for services. Costs may be excessive due to poor facilities, low volume and other shortcomings in organization and management, or imperfect competition may permit excessive profit margins. Productivity is probably low, but conclusive evidence is lacking as to whether this results in low returns in the private marketing sector or whether lack of competition permits the burden of inefficiency to be passed back to the producer or on to the consumer. 31. The analyses that have been made of producer-consumer price spreads, seasonal price variations and geographic price differentials must be inter- preted with considerable care (see Appendix Tables 1-7). The same is true of comparisons of margins in cooperative and private channels. This can best be done on a commodity by comntodity basis. 32. The NACF is a multipurpose organization providing credit, farm supplies, insurance and banking as well as marketing services. It was created in 1961 by combining the Korea Agricultural Bank and the agricultural coop- eratives. The Ministry of Agriculture and Forestry has a considerable measure of authority and responsibility for its policies and operations. Officers are appointed or subject to government approval down to the primary ANNEX 9 Page 8 cooperative level. The organization acts as agent for the government in price stabilization operations and procurement of supplies for government use. T.his is in addition to and sometimes in conflict with cooperative functions on behalf of its farmer members. The government purchase price at times has been below the free market price. NACF is commissioned to provide inspection services for fees, and inspection of government purchased commodities is required. Farmers sometimes find that inspection costs, including extra handling, are burdensome. They can be avoided by selling through private channels. 33. General purpose primary cooperatives were originally organized by minor civil divisions called Ri-dong. There were several thousand, but a policy of consolidating small cooperatives has reduced the number to about 1,800. The objective is one strong primary cooperative for each Myon, the next larger civil division of which there are 1,376. Primary cooperatives are members of Gun cooperatives, of which there is one in each of the 140 Gun, the next larger civil division. Above the Gun level are the nine pro- vincial branch offices of the NACF headquarters in Seoul. There are also 148 primary special cooperatives organized on a commodity basis. There is overlapping membership between primary and general purpose cooperatives. Over 90% of all farmers are members of cooperatives. 34. NACF receives funds from the government budget, including foreign aid; it borrows from the Bank of Korea and it generates funds from its own banking, insurance, credit and other types of operations including capital subscriptions of members 1/. 35. AFDC was established in late 1967 to promote agro-industrial devel- opment, to benefit farmers and fishermen and to expand exports. It identi- fies promising new ventures, encourages private investment from both domestic and foreign sources, provides both equity capital and loans and in some cases pioneers new ventures entirely on its own. The AFDC interest may be sold when the enterprise has become viable. As of the end of 1971, 15.5 billion won had been channeled through this organization. It has a relative- ly modest role in marketing, mainly export but also some domestic. The principal exports are mushrooms, ginseng, tobacco, raw silks and fishery products. Total value of exports in 1971 was $16.36 million and for 1972 the estimate is $22.86 million. Processed fruits are sold on the domestic market. 36. The Korea Cold Storage Company, Ltd. is a wholly owned subsidiary of AFDC. It operates a "cold storage chain" with four very modern plants with capacities as follows: 1/ KASS Special Report No. 1. The National Agricultural Cooperative Federation: An Appraisal, provides a comprehensive description of the organization and its activities. ANNEX 9 Page 9 Seoul 9,000 m ton Busan 4,000 Mogpo 1,200 Mukho 750 The facilities were completed early in 1971. Except for the Busan facility they are not yet fully utilized. A large fish, fruit and vegetable wholesale market facility is operated as a part of the Seoul complex under Municipal and Ministry of Commerce and Industry auspices. Cold storage facilities for vegetables and fruit have been built at Daegu and Busan and on Jeju Island to complement the refrigeration complexes. A. Commodity Market Channels Grain 37. NACF acts as government agent in the market of domestic grain purchased to meet government needs and to accomplish price policy objectives. In 1971 just over a million tons of government grain and just over 200,000 tons of grain for NACF's own account were sold. These sales were from whole- sale market centers. Both farm and retail prices of government grain are fixed with a view to controlling margins and seasonal fluctuations. In commercial trade, margins ancl seasonal variations are somewhat larger, al- though presumably less than t:hey would be without the influence of govern- ment price stabilization program (see Appendix Tables 1 and 2). 38. An NACF study of November 9, 1968 found that farmers in the Honam area received 89.5% of the Seoul retail price when marketing through coop- erative channels compared wil:h 86.3% through commercial channels. For the Gyeonggi area, the corresponding figures were 92.7% and 89.6% respectively. It should be noted that subsidies mainly in the form of lower interest rates may contribute to the ability of the cooperative system to operate with narrower margins. Since the retail price used in the comparison was the official one, the benefits of the narrower margins in cooperative channels accrued to the farmers. The consumer price, in private markets, at times has been above the official price because demand at the government price was in excess of available supplies of government grain. This problem has not been encountered in 1972. 39. The government attempts to control grain storage charges at rates which are not attractive to private businessmen using noh-institutional credit. The IBRD Agriculture Warehouse Appraisal Mission in December 1971 estimated the rate of return on investment in warehouse operations at 85% capacity as only 4% 1/. 1/ IBRD/IDA Office Memorandum, Korea - Agricultural Warehouse Project Appraisal Mission, Full Report December 1971, p. 7. ANNEX 9 Page 10 40. Estimates of storage losses vary widely. A 1968 study by Kansas State University estimated all losses of rice on the farm and in market chan- nels, storage, and handling, at 17% of production 1/. The IBRD report, re- ferred to above, estimated that good storage at the Gun cooperative level could reduce losses by 5% of the volume of grain stored. For grain stored in the open, losses could be reduced by 10% of volume stored. It is evident that rates of loss depend not only on storage conditions but length of time in storage. Data are lacking to show how much grain is stored for different lengths of time under different conditions. Generally the better storage facilities will be used for longer time storage. Thus, total losses as a propcrtion of the total supply may be much lover than observed for particular lots of grain stored for 8 or 10 months under poor conditions. Such losses may apply to only a small part of the crop. Even so there is an opportunity for significant reduction in storage losses by further upgrading grain storage facilities. 41. While, in principle, cooperative marketing channels, in which prices are not unduly depressed by excessive margins or by large volume sales follow- ing harvest, are open to farmers, in practice they may have financial obli- gations which can only be settled by marketing elsewhere. In rice years 1968, 1969, and 1970 the average government purchase price for November, December and January, was below the comparable free market farm price. In 1971 and 1972 this relationship was reversed. Another reason for choice of commercial outlets is strict application of grading standard in govern- ment procurement. NACF makes payments to farmers for grain purchased on government account. 42. Examination of the seasonal pattern of wholesale rice prices suggests that the average seasonal spread is not wide enough to make storage financially attractive wher credit at commercial interest rates is used. In 1970, for example, the average wholesale price of rice increased 11% from January to October (see Appendix Table 2). Also variability from year to year in seasonal price patterns makes storage somewhat risky. Price differ- entials between urban markets fluctuate considerably suggesting the need for wider dissemination of market information. 43. Marketing channels for barley, the other major grain crop, are similar to those for rice. Price stabilization operations are also important in determining channels used as well as prices. Vegetables 44. Next in importance to cereals which accounted for 57% of the gross value of agricultural (and livestock) products in 1970, vegetables accounted 1/ Review of Grain Storage, Handling, Processing, and Distribution Problems and Proposals in the Republic of Korea, Kansas State University and USAID, Seoul, September 1968. ANNEX 9 Page I11 for 14%. For red peppers, the most important single vegetable, and sesame there are special government price stabilization programs which include purchasing and maintenance of buffer stocks. Aside from red peppers, radishes and cabbages are the two major vegetables. Though perishable they are marketed throughout the year, thanks to a combination of extended harvest periods and traditional underground storage, rather than to extensive use of modern cold storage facilities. Prices are seasonally low through the summer and early fall, when there is much home processing of kimchi. Peak prices in April 1970, averaged more than four times the June low for radishes and over five times for Chinese cabbage (see Appendix Table 7). 45. These commodities flow through a variety of commercial channels, and there is little information about price margins, spoilage and quality standards. Auction sales are held in central wholesale markets and NACF marketing centers, but the proportion of total volume handled in this way is probably too small to have more than limited effects on prices in other parts of urban markets. Fruit 46. Although the volume of fruit production is small it is increasing rapidly and is thought to have considerable potential because it can be grown on slopeland, is a high value per hectare crop and may have further export potential, and there is a rapidly increasing domestic demand. Fruit farms are well above average size and production is primarily for the market. There are 53 special horticultural cooperatives. A special study in the Taegu area in 1971 showed 50% of the apple crop handled by consignment merchants in the area and only 22% handled by cooperatives. 47. Another special study showed the producer-consumer price spread for apples to be about 40% of the retail price with only a very small ad- vantage of the cooperative ovier the commercial channel. Wholesale apple prices in five cities over a Eive year period increased an average of 51% from harvest time to the peak near the end of the market season 7 or 8 months later. Much of the storage is on the farm and seems to be satisfac- tory for several months at least. The storage season could probably be extended somewhat by the use of modern cold storage. Pricing of apples at the wholesale level appears well organized as indicated by modest day to day price fluctuations. 48. Peaches are highly perishable and their marketing season lasts only three months. A 1970 suirvey indicated that special cooperatives handled about 53% of the crop. Farmers were indicated to receive 50% of the retail price when marketing through cooperative channels, and 57% through other channels. Prices fluctuate considerably from day to day. 49. Pear, persimmon, and grape marketing are characterized by similar problems of small volume, high perishability, high market costs and price uncertainty. ANNEX 9 Page 12 Other Crops and Industrial Raw Materials 50. Soybeans and other pulses, sweet potatoes and white potatoes are mainly marketed through commercial channels with what appear to be wide margins and erratic price characteristics. Cooperative channels play only a minor role. NACF sales of industrial raw materials crops are shown in Table 2. The Office of Monopoly of the Ministry of Finance regulates production and marketing of tobacco and ginseng. NACF and AFDC both are concerned with expansion of production, processing, and export of mushrooms. Table 2: NACF SALES OF INDUSTRIAL RAW MATERIAL CROPS Dried Sweet Sweet Year Cocoon Potatoes Potatoes Other /1 Total …-----million won…------------------------_ 1965 1,882 1,639 398 273 4,192 1966 3,052 1,073 605 610 5,340 1967 3,580 692 1,148 598 6,018 1968 6,382 1,255 1,352 925 9,914 1969 8,076 1,118 1,417 1,486 12,097 1970 9,369 1,260 1,140 669 12,438 1971 13,964 1,021 1,235 585 16,805 /1 Includes ramie, castor beans, rapeseed, flax, malting barley and corn. Source: NACF Monthly Review, September 1972. Livestock Products 51. Livestock and livestock products account for only about 12% of agricultural output, and farmers who sell cattle or hogs typically sell only one or two animals annually. Such sales are often to meet emergency cash needs 1/. There are 680 slaughter houses mostly very small with limited facilities, frequently used at much less than intended capacity. Special slaughterhouses in the Seoul area, with modern facilities, in 1971 operated at 26% of capacity for cattle and 13% for hogs. Central wholesale market charges and taxes cause a large portion of the cattle and hogs to be marketed outside legal channels in which the consumer is given some protection by health and sanitary inspection. The tax yield is small and it works to the detriment of the maintenance of health standards. 52. Poultry and eggs are a strong second to cattle in terms of gross value of production, but the marketing of these items has not attracted much attention as a subject for study. Hence very little descriptive information is available. 1/ The Marketing System for Cattle and Hogs, Agricultural Economics Research Institute, MAP, Seoul, 1972. ANNEX 9 Page 13 Fishery Products 53. A big change in domestic fish processing and marketing has been the introduction and expansion of freezing since 1960. All other process- ing such as drying, salting and cooking has been outstripped by freezing. The volume frozen in 1970 was 62,300 m ton of a total of 105,600 m ton of all processed products. A much larger volume is consumed fresh. Except for AFDC and CFFC operations, both fresh and processed fish flow through private channels. Ministry of Commerce and Industry (MCI) sponsored whole- sale markets handle fish, as indicated in a subsequent section, but other channels are used as well. CYFC operates one public sales center in Seoul with annual sales of about 20,1300 m ton. Total domestic sales in 1971 were 355,000 mn ton. B. Wholesale Markets 54. MCI has general jurisdiction over 54 central wholesale produce markets by virtue of 1951 and 1952 legislation. The Agricultural Coopera- tives Law of 1957 resulted in the establishment after 1961 of NACF agricul- tural and fishery cooperative wholesale markets under the general jurisdic- tion of the Ministry of Agricu.ture and Forestry (MAF). NACF now has 9 main urban marketing centers and 6 branches. There has been an extended contro- versy over the roles of the two ministries in the central wholesale market field. Proposed legislation giving full responsibility to MAP failed to pass the last two National Assemblies. 55. The 54 MCI markets 1nave 7 meat departments, 36 fruit and vegetable departments and 14 fish departments (Table 3). In the first half of 1972 their total sales volume was as follows: million won Fishery products 8,934 Fruit and vegetables 5,648 Livestock products 12,326 Fruits and fishery products 853 TotaLl 27 761 ANNEX 9 Page 14 Table 3: WHOLESALE CENTRAL MARKETS UNDER AUSPICES OF MINISTRY OF COMMERCE AND INDUSTRY Fruits & Meat Vegetables Fish Volume of Sales Location Number Depts. Depts. Depts. 1970 1971 ----million won- Seoul 6 2 3 3 13,370 6,053 Busan 17 1 16 - 1,341 940 Gyeonggi 2 1 1 - 500 636 Chung Bug 1 - 1 1 544 643 Chung Nam 4 - 2 2 /1 340 Gyeong Bug 6 - 4 2 2,567 2,698 Gyeong Nam 7 1 3 3 5,183 5,920 Jeon Bug 4 - 3 1 772 754 Jeon Nam 7 2 3 2 3,577 1,305 Total 54 7 36 14 27,854 19,289 /1 Less than 500,000 won. Source: Statistics for Commercial Affairs, Ministry of Commerce and Industry, August 1972. 56. During the first half of 1972 cooperative markets had a sales volume of 60,219 million won, but 37,130 million won was from government grain and 16,355 million won from other grain. Thus, the remaining volume of fresh produce was much smaller than that handled in MCI regulated markets. Recent rapid increases in sales volume of the cooperative marketing centers are shown in Table 4. The volume of produce by-passing both these kinds of markets is not accurately measured but it is considerably greater than that for the two combined. Table 4: NACF SALES BY COOPERATIVE MARKETING CENTERS (million won) Vegetables Government Other and Livestock Year Grain Grain Fruit Potatoes Products Other Total 1965 3,697 3,849 648 453 98 24 8,768 1966 9,351 4,024 746 564 51 40 14,776 1967 12,084 3,474 915 702 76 65 18,036 1968 20,598 4,089 1,208 919 112 5 26,941 1969 41,582 16,857 1,716 1,417 120 149 61,841 1970 46,854 10,453 2,050 1,622 110 1,295 62,383 1971 79,587 14,380 2,796 2,058 74 458 99,353 Source: NACF Monthly Review, September 1972. ANNEX 9 Page 15 C. Storage Facilities Grain 57. Initial storage of domestic grain after threshing is in the farm home or other farm buildings. The large unmarketed portion must of course remain there until consumed in, the farm household. Little is known of farm storage losses. 58. The heaviest marketings are in the months immediately following harvest, but some sales take place throughout the year. Since the rice har- vest is in late fall and the barley harvest in early summer, peak storage requirements for the two grainis are well separated. It is the much larger rice crop that mainly determines requirements. Table 5 shows one peak in April and May and a higher peak in December. Imported grain received at Pusan and Inchon is bagged and transported to commercial flour, feed and polishing mills where it is sitored as necessary. Little government storage or handling is involved. The Kansas State Grain Storage Report (see para 40) states that both dock side storage and storage at the grain mills are in- adequate, but these inadequacLes are not considered too serious by grain importers. 59. The government-owned warehouses had a total capacity of 143,000 m ton at the end of September 1'972, and 27,000 m ton additional capacity was under construction. NACF, private and Korea Express Corporation combined storage capacity was 993,000 m ton with 270,000 m ton additional under construction. This included 514,000 m ton of type C storage not suitable for storing grain and 276,000 m ton of type B which is not satisfactory and should be phased out of use for this purpose. AN4NEX 9 Page 16 Table 5: VOLUIIE OF GRAIh AND FFPTILIZER STORED BY NACF RELATIVE TO STORAGE CAPACITY, 1971-72 (000 m ton) Storage All Stored Stored Conmodities /2, End of: Canacity /1 Grain Fertilizer % of capacity July 1,016 94 708 76 Auoust 1,018 173 731 95 September 1,018 80 784 91 October 1,017 30 742 93 Nlovember 1,017 285 781 n.a. December 1,028 572 743 131 January 1,029 330 766 112 February 1,029 290 766 111 Mlarch 1,02S 263 731 108 April 1,n40 347 754 102 lay 1,030 349 680 115 June 1,064 205 594 87 /1 Includes rented warehouses. /2 Straw goods and other commodities are also stored in these warehouses but have not been included because the data as published, cannot be converted to space requirements. Source: NACF Monthly Review, September 1972. 60. Estimates of requirements have differed substantially. The impor- tant assumptions relate to rate of increase in production, rate of increase in proportion of crop marketeU and seasonal movement in and out of storage which finally determine maximum amount of storage at any one time. Since this maximum will not come at the same time all over the country aggregate capacity must be greater than the largest amount stored in all facilities at any one time. 61. NACF storage facilities are now located mainly at Ri-dong or Gun cooperative headquarters. Many of these, especially at the Ri-dong level are type C. With the consolidation of small cooperatives into larger Myon cooneratives and a shift in emphasis to this level, additional storage facilities are needed in new locations. This introduces a new locational and institutional consideration along with the aggregate capacity needed. 62. The government's estimate of storage capacity requirement in 1976 is 1,858,000 m ton of which 1,231,000 m ton is for rice and 627,000 m ton for other grains. It is not clear for reasons stated above why rice and other grain requirements should be added to arrive at total requirements. Included in the above totals are 58,000 m ton of imported grain. The IBRD ANNEX 9 Page 17 Agricultural Warehouse Appraisal Mission in December 1971, estimated require- ments at 1,019,000 m ton. This estimate was based on rice alone and did not include provision for impcrted grain. The mission excluded government terminal facilities which are used for imported grains and emergency opera- tions, all C type facilities and allowed for a 10% annual reduction in A and B type capacity to take care of deterioration. On this basis the deficit in 1976 was 159,000 m ton. Available capacity was taken as that owned by NACF only, although the government currently also uses rented facilities. 63. The government proposes to build facilities with a total capacity of 788,000 m ton in 1973-1975. While the methods of estimating both re- quirements and available capacity differ in several details, nearly all of the difference in results is due to adding storage requirements for other grains to those for rice in one case and not in the other. Sone additional storage is clearly needed in addition to that under construction and planned in the USAID project, (see subsequent section on Foreign Assistance for brief description of this project), but probably less than the total estimated by adding rice and other grain requirements. The situation would be more healthy for private and cooperative investment in storage facilities if prices were allowed to advance during the rice year sufficiently to cover storage costs. It may be seen from Table 5 that in 1971-72 the volume of fertilizer stored in NACF warehouses was much greater than the volume of grain. Stocks were in excess of needs to service farmers. Average monthly movement out of storage during the 12 month period was 133,499 m ton, and the largest quantity moved out in any one month was 230,113 m ton in June, 1972. Requirements for fertilizer storage are not as high as for grain and it was necessary to use some facilities suitable for grain for the excess stocks of fertilizer. This should be avoided in the future. Other Commodities 64. NACF publishes data on warehousing of grain, fertilizer and straw goods, but there is little available information on storage capacity or volume for other commodities. The Korea Cold Storage Company capacity at its four facilities wqas estimated to be about one-third of total cold storage capacity. This would make total capacity about 135,000 m ton. The govern- ment stored about 8,000 m ton oIL red pepper, sesame seed, onions and garlic purchased under the-buffer stock program in 1971. As in many countries it has been traditional for consumption patterns to clhange with the seasonal availability of perishables. Only as income rise so that consumers will pay storage costs in order to consurrie fresh produce in off seasons will more storage become profitable. With rising incomes storage requirements may be expected to increase rapidly.. ANNEX 9 Page 18 1/ D. Transportation- 65. Ministry of Construction data show that in January 1971, there were 537 km of super-highways, 8,122 km of national roads, 10,894 km of provincial roads and 15,216 km of city and Gun roads, (exclusive of special city roads in Seoul and Busan). Attention is directed here to the last category which includes roads connecting villages to national or provincial roads, roads connecting farms to villages and roads connecting villages. Construction of such roads comes under the Section of Rural Development of the Ministry of Home Affairs. New roads associated with paddy rearrangement are the responsibility of the Ministry of Agriculture and Forestry. 66. Of the 15,216 kin of city and Gun roads over 12,000 km were improved but 2,600 km were unrepaired at the beginning of 1971. Even more important, a 1969 survey estimated a need for over 46,000 km of additional feeder roads. Table 6 shows that many villages could not have deliveries of supplies and pick-up of produce by truck. Good progress was made in 1970 and 1971 in meeting this need as 27,000 km were constructed. The remaining 19,000 km needed as of 1969 are being planned. Needs by 1976, however, may be expected to be greater. Table 6: PROVINCIAL DISTRIBUTION OF VILLAGES BY ROAD CONDITION, 1969 Number of Villages by Road Condition Province 1 2 3 Kyonggi 2,874 404 971 Kangwon 1,618 139 822 North Chungchong 1,676 194 881 South Chungchong 1,755 281 1,093 North Cholla 2,029 435 1,253 South Cholla 2,674 519 1,565 North Kyonsang 4,094 518 2,007 South Kyonsang 2,969 294 1,420 Total 19,689 2,784 10,012 1. Truck can go in and turn around. 2. Truck can go in but not turn. 3. Truck cannot go in. Source: KASS, Rural Infrastructure, Special Report No. 2 by Kim, S.G. and Libby, L.W. page 9. 1/ This section is based quite largely on KASS Special Report No. 2, Rural Infrastructure by Kim, S. G. and Libby, L. W. ANNEX 9 Page 19 67. Rather striking evidence of the effects of access to roads is pro- vided by a study of two villages, one (Hwengge-ri) on the Seoul to Gangneung City road and another (Yongsan-ri) 7 km off this road 1/. The village on the road had 70% commercial crops as compared with 41% for the other village. The higher rate of commercialization was due not only to farm to market transport but also to better communication of market information and new production practices essentia.L to commercial operation. Average gross value of crops per hectare was 11,900 won in the first village compared with 6,800 won in the second. Not only *ere higher value crops grown by the first village but higher prices were received for the same crops because less of the market price went to pay for transport. More labor as well as more machinery and other inputs were used in the village on the road, and farm values were higher, in part because of larger investment in improvements. Off farm earnings were also higher. 68. Analyses of benefits and costs of feeder roads in Korea have shown attractive rates of return. This is mainly because high population density results in a large number of people served per km of road. Increasing use of power tillers in moving prc,duce from farm to village and from village on- ward has increased the demand for roads suitable for this use, and such roads are being built at quite modest costs per km. IV. DISTRIBUTION SYSTEMS FOR FARM EQUIPMENT AND SUPPLIES 69. Government policy is to encourage the use of purchased farm inputs by attractive, often subsidized, prices, liberal credit and a distribution system that is readily accessible to a large proportion of farmers. In July, 1972 the indices paid by farmers (1965 = 100) were fertilizer 96.6; farm chemicals, 129.1; farm implements, 202.4; equipping materials, 143.6; and feed, 223.3. These indices may be compared with prices received of 310.5 for rice and 286.6 for all farm products. 70. NACF has a major role in farm supply as a source of credit, as a commission agent and a dealer. It has a monopoly in fertilizer, and in 1971 handled a volume of 17.2 billion won of other supplies, of which feed accounted for more than half (Table 7). There are .3,314 NACF distribution points including one in every Myon. 1/ Lee, Kyung Won, Some Effects of Roads on Agricultural Production and Rural Life, Seoul National. University, Department ot Agricultural- Economics, 1969. .AN EX 9 Page 20 Table 7: NACF SALES OF FAfIN SUPPLIES /1 (million won) Farm Farm Year Chemicals Implements Teed Seed Livestock Other Total 1965 32 273 157 529 106 517 2,363 1966 56 235 64 868 78 190 2,395 1967 78 827 251 1,226 - 201 3,699 1968 165 1,065 624 1,290 100 245 4,952 '969 440 2,042 1,105 1,975 329 366 9,207 1970 432 2,196 956 1,354 114 700 8,089 1971 648 4,102 8,316 1,146 - 249 17,175 /1 Excludes fertilizer of which the sales volume in 1971 was 30.6 billion won. Source: NACF Monthly Rleview, September 1972. A. Fertilizer 71. The government subsidizes ahout 60% of the selling price of ferti- lizer to NACF. Credit is available but about 65% of sales are for cash, and this proportion has been increasing. About one-fourth of the credit sales are for repayment in kind after harvest. This arrangement has not been very popular, and its use has been declining since the accounting price for the grain has often been below the market price. 72. Fertilizer is delivered on order by NACF to all distribution points by Korea Express Company. Transportation costs are pooled so that the farm price is the same throughout the country. There are 4,600 warehouses in which fertilizer is stored, all but 10% of which are owned by NACF. Sales of fertilizer in 1971 were 1,333,204 m ton and stocks in storage were over 700,000 m ton in all but one month. There have been problems of overestimat- ing sales and excessive stock accumulation as noted in the section on grain storage. The same price is maintained throughout the year; the only incen- tive to advance purchases by farmers is that fertilizer purchased on credit in January and February bears no interest in those months. Commissions to NACF and member cooperatives total 156 won per m ton which does not cover costs. B. Other Supplies 73. Other farm equipment and supplies are delivered to distribution points by the manufacturers. WACF negotiates an f.o.b. price to which transport costs are added. Formerly NACF made farm deliveries from distrib- ution points to villages, but the volume was too small for this to be econo- mic. Farmers now must pick up their purchases at the distribution points. ANNEX 9 Page 21 Commissions are received by NA,CF, and the Gun and primary cooperatives. Recent trends in sales volume are shown in Table 7. 74. NACF has 30 service centers for farm machinery, and it is planned to increase the number to 140 in 1973. There are also manufacturer licensed stations, but they are considered by NACF to be inadequate. 75. Despite the services provided by NACF at less than cost and with liberal credit a much greater volume of supplies (other than fertilizer) moves through private channels. The reasons for this are complex and not well documented. V. GROWTH IN DEMAND FOR MARKETING SERVICES 76. The total population will be 9.7% larger in 1976 than in 1970 according to Economic Planning Board (EPB) projections. The rate of growth in nonfarm population will be much greater. This is indicated by employ- ment in sectors other than agriculture, forestry and fisheries, which is estimated to increase 41% during the same period. This may be a fairly good indication of the increase in population to be served by the food marketing system. Also to be taken into consideration is the effect of increases in per capita income which affect botih total demand and its commodity composition. The projected 23% increase in per capita GNP does not translate directly into spendable personal income but is indicative of the rate of increase. Taking the above factors into consideration the demand for marketing services is likely to be more than 50/ greater in 1976 than in 1970, perhaps an increase of as much as 10% annually. 77. Household expenditure data for cities indicate that cereals accounted for 66% of all food expenditures in 1964. By 1971 this proportion was down to 42%. The cost of marketing cereals is much less per ton than the cost of marketing such perishable products as fruits, vegetables and livestock products which are becoming a relatively more important part of the food supply as incomes increase. Transport, handling and storage facilities must be much better to protect these commodities and get them to the consumer in good condition over more extended marketing seasons. VI. FOREIGN ASSISTANCE 78. A USAID loan to finance commodity imports was negotiated in 1971 witlh a provision that part of the local currency proceeds from sale of the commodities would be used to construct grain storage facilities for Ri-dong cooperatives. Initially US$6 million was allotted for the construction of 450 warehouses in 1971-72. The program was later expanded to 675 such ware- houses with a total capacity of 350,000 m ton over a period of three years. As of the end of September 1972 warehouses with a total capacity of 270,000 m ton were under construction. These facilities will be owned by NACF. ANNEX 9 Page 22 79. AFDC is active in promoting foreign investment from both public and private sources in production and marketing enterprises. Since its establishment in 1968 AFDC has induced commitments of $18,284,000 as equity and loans of which $9,823,000 had been spent by the end of 1971. An Asian Development Bank loan of $5 million for cold storage plants financed con- struction beginning in 1969 and completed in 1972. A total of $8,361,000 has been used or programmed for food production and processing projects, and $4,923,000 for processing nonedible products including silk, tobacco, laver and rush products. The food production and processing project total includes an IDA credit of $7 million for a dairy project. Negotiations are underway with Japan for a large credit for multiple product processing facIlities. UNDP is assisting with the financing and operation of a food processing center 1/. 80. A package of projects for improvement of agricultural and fisheries marketing structure estimated to cost 47.66 billion won has been prepared for consideration by interested foreign aid donors. It is discussed in Chapter VIII of this Annex. VII. INVESTMENT PRIORITIES 81. Despite the recent growth in the marketing activities of NACF and AFDC, these semi-autonomous organizations, which are partially supported by public funds and implement goverment marketing and price policies, carry on only a small share of agricultural product marketing. NACF volume of marketing was about 120 billion won in 1971 while AFDC export and domestic sales totaled 1.3 billion won. There are no recent figures on total volume of marketing through all channels. Total value of agricultural production in 1971, excluding fisheries, was estimated at 985 billion won at current prices and the retail value of marketings may have been half this amount. 82. Well-planned investment in physical marketing facilities including transport promises favorable rates of return. Rapid growth in volume of marketing provides an opportunity for upgrading as part of the process of expansion. The Government's proposal for investment in specific projects should be viewed in this framework. Also to be considered are additional private investments to expand and improve private marketing facilities, since the proposed investments through NACF and AFDC are in no way adequate to meet aggregate needs. For the next few years at least the role these two agencies can play is to introduce improved facilities and methods and to establish standards for minimum margins necessary to cover costs while providing farmers an alternative to regular commercial market channels. They cannot expect to take over all or most marketing services. Consider- ation might be given to the provision of credit on favorable terms to finance private investment in facilities that meet prescribed standards and fit into a well integrated national system. ANNEX 9 Page 23 VI1'. PROJECT PROPOSALS 83. Project proposals are for improvements all along the marketing channel from transport, processing and storage at the primary cooperative level to retail distribution in large cities. Since the primary objective of NACF is to serve the interests of its farmer members this suggests higher priority for those investments through NACF at the producer rather than the consumer end of the marketin; chain. At the present time even though 92% of all farmers are members of one or more cooperatives, they sell the greater part of their marketable surpluses to private traders. NACF, as has been noted previously, collects commissions which may not cover costs despite the various subsidies received. There appears to be a need to overcome the more serious constraints wqhich influence farmers against using cooperative marketing channels in order that investments in cooperative facilities may have maximum productivity. Increased volume and availability of cooperative credit would probably reduce financial commitments that limit the choice of marketing channels. 84. The package of marketing projects presented to the mission for consideration represents an estimated total investment of .47,666 million won of which 18,263 million won would be private. These projects and their individual financial requirements are listed in Table 8. The justifications have been presented only very briefly and in rather general terms. Pro forma income statements for the operator of the facility are presented and rates of return are calculated from investment, revenue and operating expense projections. Debt anmortization schedules a-re also provided. These data are of only limite.d value in determining the benefit-cost relationship in economic terms. NACF provides marketing services for farmer- members and its success may be reflected in reduced operating margins rather than profits that represent a. high rate of return on invested capital. The method of estimating revenues and expenditures is not explained. Pre- sumably it is based on the records of recent past operations. AhNEX 9 Page 24 Table 8: PROPOSED PROJECTS FOR IPTROVE,NJT OF ACRICULTUTRE AffND FISHERIES MARKETING Required Funds Total Government Privete million won…--------- 1. :fanagament of Government Food Grains 8,870 6,900 1,970 2. Improvement of Agricultural Yarketing Structure A. Public sales centers 2,803 2,803 Teletype facilities 64 64 Training for professional salesmen 107 107 Sub-total Sub-iteTa A 2,974 2,974 B. Slaughter houses 641 641 C. Collecting facilities for fruits and vegetables 60 60 D. Supermarket for farm products 327 327 E. Buffer - stock warehouses 453 453 F. Processing facilities (rice mills) 1,800 1,545 255 G. Transportation equipment 3,080 3,080 Sub-total Item 2 9,335 9,080 255 3. Improvement of Fisheries Marketing Structure A. Public sales centers 2,400 2,400 B. Direct sales stores 400 400 C. Lowz temperature warehouses 316 316 Sub-total Item 3 3,116 3,116 4. Processing Industries for Agricultural By-Products (straw pulp mills) 2,295 2,295 5. Integrated Agricultural Products Processing 4,050 8,012 16,038 Total 47,666 29,403 18,263 Source: Prospectus for improvement of Agricultural and Fisheries MTark,eting Structure Project , MAF, October 1972. ANNEX 9 Page 25 85. The projects will be considered one by one against the background of the earlier discussion of investment priorities. It is understood that detailed work on project preparation and justification must follow decisions regarding the kinds of investment that appear to offer the most promising possibilities. A. Warehouses for Government Food Grains 86. It is proposed to construct 985 grain warehouses during the three years 1973 to 1975. Each would have a capacity of 800 m ton or a total addition to present capacity of 788,000 m ton. The cost is estimated at 8,870 million won of which 1,970 million won would be from private souroes and 6,900 million won ($17 ,250,000) from government. These warehouses would each serve a large Myon cooperative created by merger of smaller Ri- dong cooperatives. 87. Present and prospective grain storage capacity and requirements have been analyzed in the earlier section on grain storage. It was con- cluded that at least part of the proposed additional facilities will be needed but probably not the total amount. Beyond the capacity justified by a consideration of overall needs is the question of such restructuring of facilities as may be necessary to fit the new pattern of fewer and lasger primary cooperatives. These facilities would eliminate the need for storing grain in adequate facilities now in use by some of the Ri-dong cooperatives. B. Improvement of Agricultural Marketing Structure Public Sales Centers 88. NACF now operates 9 sales centers and 6 branches in five cities. Sales at these centers in 1971 accounted for 16% of total transactions in these markets. There was a 19% increase from 1969 to 1970 and a 62% increase from 1970 to 1971 to 99 billion won. It is proposed to construct 13 more centers, some in the same and some in other cities. Also teletype facilities for disseminating market information would be installed and a training pro- gram for sales personnel established. Total cost of the project would be 2,803 million won ($7,000,000). By the fifth year the new centers would be expected to handle about 30% of the value of commodities handled by the present 9 centers in 1971. 89. It appears that better handling of produce, especially perishable commodities, to reduce spoilage and waste, to permit economies in handling and perhaps more competitive price determination would produce benefits justifying a very considerable investment. This presumes that jurisdictional questions are resolved and plans are made which utilize all existing facilities, public and private, which can be used economically in a coordinated system. ANNEX 9 Page 26 Slaughter Houses 9). It is proposed to construct three slaughter facilities in Busan, Daegu and Gwangju at a cost of 640 million won ($1,603,000). In the third year these plants would each have a volume of 30,000 head of cattle and hogs and 1,050 m ton of poultry. 91. The presentation justifies the project mainly on the basis of rapidly increasing demand for meat and recent modest increases in livestock production. There are 680 slaughter facilities, all but 15 of which are designed as ordinary, simple slaughter houses. A sample of these facilities was found to be slaughtering an average of 8.5 hogs and 3.0 head of cattle per operating day which was less than 20% of their intended capacity 1/. Seoul has one facility which has been slaughtering 300 head of cattle and 800 hogs per operating day, which is about 20% of its capacity. This facility operates in connection with a central wholesale market where the market commission of 6% and tax of 6% of the value of the animal is said to divert livestock to other channels where facilities and sanitary standards are much poorer. Other countries have found it unprofitable to operate modern slaughter facilities with adequate inspection and health safeguards when volume is small and consumer demands are modest because incomes are low. The only satisfactory solution may be a public subsidy justified on public health grounds and the possibility of encouraging production until it reaches a more nearly viable level. The choice of locations and sizes needs to be reviewed in the light of the findings with respect to economic pro- duction potentials for expanding livestock production. Collecting Facilities for Fruits and Vegetables 92. There are now 14 collecting facilities operated by special horticul- tural cooperatives. They serve as intermediate assembly points for the wholesale markets in larger cities. It is proposed to install 12 more facilities at a cost of 60 million won ($150,000) in the same general specialized producing areas. These are simple facilities needed for the efficient assembly of apples, peaches, grapes, radishes and cabbages, the production of which is increasing fairly rapidly. This appears to be a desirable investment. Supermarket for Farm Products 93. It is proposed to establish a supermarket in Seoul at a cost of,, 327 million won ($816,700) with a floor space of 600 pyong (about 2,000 m-). Annual volume of sales in the tenth year is estimated at nearly 1.5 billion won. It would handle grain, fruits, vegetables, livestock products and processed foods. 1/ KASS, Special Report No. 7, page 53. ANNEX 9 Page 27 94. There are a number of privately operated supermarkets in Siou! which have food sections in which foods are well handled and perishables are displayed in refrigerated cases. This method of food retailing is gradually gaining acceptance even though prices are somewhat higher than in food stores where products are kept and displayed under less favorable conditions. 95. The question naturailly arises as to whether a farmers' cooperative organization should attempt to compete with private retailers in this field especially in view of competing cooperative demands for capital. Private enterprise is pushing ahead with developing this kind of market demand. NACF should perhaps give higher priority to investments in the assembly, storage and wholesale part of the marketing chain. Buffer Stock Warehouses 96. It is proposed to c:onstruct three warehouses, one each in Seoul, Busan and Daegu for storing the buffer stock commodities, red pepper and sesame, at a cost of 453 million won ($1,132,000). Under the operational plan 2,400 m ton would be stored in these warehouses. In 1971, 2,285 m tons of red pepper and sesame were storecl under this program, some in facilities not considered entirely suitable. There are suitable unused facilities in Seoul at the Korea Cold Storage Company facility and the question arises as to why they should not be used for this purpose. The cost of the new Seoul site alone is estimated at 210 million won which is 46% of the entire cost of the facilities in the three cities. The situation may be different in Daegu and also in Busan where the KCSC facility is quite fully used. Rice and Barley Mills 97. The policy of strengthening Myon cooperatives would be advanced by this project which would establish rice and barley mills with storage and transport facilities for 150 of these cooperatives. The cost would be 1.8 billion won of which 1.5 billion won ($3,863,000) is government and 255 million won private. Under the operational plan each mill would collect and mill 1,200 m ton of rice and 450 m ton of barley annually. Storage capacity would be for 1,060 m ton of grain. There are many Ri-dong coops which operate small mills under pocir condittons. Installation of larger and better facilities at the Myon level would seem to be a move toward increased efficiency and thus a promising investment. Storage construction should be coordinated with the government foodgrain storage project. Transportation Equipment 98. It is proposed to provide 1,400 four-ton trucks, one for each Myon cooperative over the next four years at a cost of 3.08 billion won ($7.7 million). The trucks would be made in Korea. This like the previous sub- title would further the policy of strengthening Myon coops and has strong justification on that basis. It is understood that there are 1,376 Myon and that not all have cooperatives organized on a Myon base. Hence the number of trucks may be larger than the immediate requirement. ANNEX 9 Page 28 C. Improvement of Fisheries 'Marketing Structure Public Sales Centers 99. It is proposed to establish 6 centers, one each in as many cities, with facilities for processing, cooling, freezing and sales. Each center would plan to handle 10,000 m ton of sales annually with daily capacity of 50 m ton of ice, 20 m ton cooling and 800 m ton freezing. The cost is 2.4 billion won ($6 million). The centers would operate on a consignment basis with charges for specific services plus fees. 100. CFFC now has only one sales center which handles an annual volume of about 20,000 m ton. The six new centers could handle an additional 60,000 m ton. Annual consumption in nine large cities in 1971 is reported as about 78,000 r-n ton. The new centers would thus bring CFFC capacity up to reported 1971 sales in the nine large cities. The justification presented is that present private facilities are very poorly equipped for handling fish properly. 101. Good fish handling facilities are certainly needed but questions arise as to whether CFFC should be equipped too handle so large a portion of the market especially since there are other institutional fish markets now in operation. Direct Sales Store 102. There are now nine direct sales stores for fish in Seoul and it is proposed to establish 40 more, also in Seoul, at a cost of 400 million won ($1 million). They would be in residential areas and would operate on a commission basis. Each store would sell 2,500 m ton of fresh and 200 m ton of dried fish. Thus their total new capacity would be 100,000 m ton of fresh and 800 m ton of dried fish annually by 1976. This may be excessive. It is not clear why such stores should be established only in Seoul, and further whether so large a portion of the retail trade in Seoul should be handled by CFFC when there are other facilities. 103. It is proposed to establish eight low temperature warehouses in as many cities. Each would have a floor space of 250 pyong (827.5 m2). The estimated cost is 316 million won($790,000). There are now 118 low temperature warehouses for fishery products attached to freezing plants. Also there are 51 warehouses for seaweed and dried fish. The main justifica- tion given for this project is that present facilities are inadequate and not well equipped. Additional information is needed on present facilities and their use relative to requirements before it will be possible to evaluate the economy of investments for these warehouses. ANNEX 9 Page 29 D. Straw Pulp Mills 104. It is proposed to install 5 pulp mills at a total cost of 2,295 million won ($5,739,000) which includes working capital of 800 million won. Each plant would have a capacity of 6,000 m ton of pulp. One objective is to hold down the rapidly increasing imports of pulp. It is stated that it would also pay farmers a higher price for straw than its value to them in alternative uses. This project is discussed in the Annex 10 on Forestry. E. Integrated Agricultural Products Processing Project 105. This project, sponsored by AFDC, would facilitate integrated development of an export oriented food industry including production of raw materials, processing and marketing. Mushrooms, asparagus and stawberries would be the commodities. The estimated cost is 24,050 million won of which the domestic( private) contribution would be 16,038 million won. This project proposal has been submitted for review by the Bank and it has been decided that additional information concerning it needs to be supplied before it will be ready for appraisal. ANNEX 9 Appendix Tables 1 & 2 REPUBLIC OF KOREA A',RICULTURAL SECTOR SUiRVEY TABLE 1 - ESTI4ATEwD I'U TING MR3RINS FOR 3ICE rTROUGH KERCHPT CHANNELS 'YOUNGSANPO-S ER 9. 1968 (won per o0 kg bag) Selling Classification Price Margin Cost Producer 4,742 - - Collector 4,792 50 14 Shipper 5,250 458 351 Wholesaler 5,300 50 25 Retailer 5,500 200 100 Total - 758 490 Source: Or4anization and Performance of the Agricultural Marketing System in Korea. Special Reports No. 7, Agricultural Economic Research Institute, MAF, and Michigan State University, 1972^ p.13 TABLE 2 - MONTHLY AND rGEOGRAPHIC VARIATIOIN IN WHOLESALE PRICES OF RICE. 1970 (won per 80 kg bag) City Month Average 1 2 3 47 8 9 10 U. 12 Seoul 5,796 5,826 5,827 5,892 5,902 6,029 6,191 6,132 6,401 6,390 -7,042 6,987 6,199 Busan 5,579 5,714 5,750 5,745 5,702 5,700 5,700 5,700 5,700 6,079 6,654 6,916 5,911 Daegu 5,704 5,800 5,800 5,754 5,800 5,800 5,800 5,922 6,460 6,267 6,555 6,879 6,045 Owangju 5,290 5,416 5,400 5,543 5,650 5,659 5,700 5,787 5,929 6,oo8 6,570 6,391 5,779 Daejeon 5,536 5,649 5,654 5,793 5,944 5,967 6,108 6,069 6,290 6,193 6,614 6,663 6,040 Average 5,581 5,682 5,681 5,746 5,800 5,831 5,900 5,922 6,156 6,187 6,687 6,767 5,995 Source: $une as Appendix Table 1, above,p.l5 AN;= 9 Appendix Table.8 3 & 4 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY TABLE 3 - ESTIMATED MATRKETING MARGINS FOR TABLE-USE SAEET POTATONS, 1968 (won per kwan, 3.75 kg) Selling Classification Price Margin Cost Producer 24 - nholesaler 35 U 8 Retailer 45 10 3 Total - 21 11 Source: Sane as Appendix Table 1, p.31 TABLE 4 - MONTHLY AND GEOGRAPHIC VARIATION IN WHOLESALE PRICES OF SdEET POTAtTOES. 1970 (won per kwan, 3.75 kg) City Month Average 1 2 _ . _ L I 6 7 B 2 10 11 12 Seoul 64 74 85 93 _- - 114 78 61 61 73 78 BusaD 49 67 88 103 114 - - 154 101 60 55 67 87 Daegu 84 100 105 105 120 - - 133 99 71 67 74 96 Gwangju 47 51 60 76 - - - 86 68 50 43 48 59 Daejeon 72 75 77 78 135 - - 116 76 59 51 64 80 Average 63 73 83 . 88 113 - - 126 84 61 55 66 80 Source: Same as Appendix Table 1, p.32 ANNX 9 Mpendixc Tables 5 & 6 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY TABLE 5 - ESTIMATED MARKETING MARGIN FOR APPLESKUCHANG. 1971 (won per box of 1B.75 kg) Channel Classification Selling Margin Cost Price Cooperative Producer 1,070 - - Narketing Center 1,530 460 380 Retailer 1.750 220 N.A. Total 680 N.A. Private Producer 1,038 - - Wholesaler 1,530 492 26.9 Retailer 1,750 220 N.A. Total 712 N.A. Source: Same as Appendix Table 1, p.39. TABLE 6 - MONTHLY AND GEOGRAPHIC VARIATION IN WHOLESALE PRICES OF (won per box of 18.75 kg) Mity Month Average 1 2 3 i i 7. 8 2_ 10 U1 12 Seoul 1,234 1,258 1,358 1,485 1,714 1,963 - - - - - 1,546 1,450 Basan 975 1,108 1,164 1,372 1,658 1,737 - - - - - 1,474 1,355 Daegu 1,158 1,232 1,249 1,445 1,533 1,716 - - - - - 1,436 1,396 Nwangju 890 965 950 1,064 1,281 1,634 - - - - - 1,217 1,143 Daejeon LI,045 1,230 1,250 1,280 1,527 1,592 - - - - - 1,180 1,301 Average 1,061 1,159 1,195 1,329 1,543 1,688 - - - - - 1,371 1,335 source: Sarm as Appendix Table 1, p.42 ANNEX 9 Akpendix Table 7 REPUBLIC OF KOREA AGRIMTI4URAL SECTOR SJRVEY MONThY AND GCOGRAHC VARIAIION IN WHOLESAIE PRICES OF CIINESE CABAGE, 1970 - w r per kwan, 3.75 kg) Ciy Month Average 1 2 .3 4 i 6 7- 8 2. 10 11 12 Seoul 90 117 112 163 104 36 34 41 56 67 66 106 85 Busan 95 103 134I'19 100 30 38 47 87 92 74 114 94 Daega 95 107 108 156 124 49 35 45 7L 90 59 106 87 Gwangju 68 85 106 153 77 35 42 63 1l 99 85 105 86 Daejeon 91 106 100 139 110 47 29 51 83 128 107 116 92 Average 87 103 118 166 103 39 36 49 83 96 78 109 89 Soarce: Same as Appendix Table 1, p.,51 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY AMJEX 10. FORESTRY ANNEX 10 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY FORESTRY TAB,LE OF CONTENTS Page No. I. SUMMARY .......... ..................................... 1 Background ....................................... 1 Domestic Requirements ..... ....................... 2 Selection of Plantation Areas .................... 3 Ownership and Management of Plantations ......... . 3 Profitability oE Forestry ........................ 4 Fuelwood ........ ................................ . 4 Competing Claims for Use of Forest Land .......... 5 Erosion Control and Watershed Management . ...... 5 The Future of thie Plywood Industry .... ........... 6 II. MARKETS FOR FOREST PRODUCTS ..... ............. 7 A. Domestic Consumption ............................. 7 B. External Trade , , ... 7 Imports ..................... 7 Exports ...... 7 Future Markets ..... .................... 7 Main Features of the Markets ................ 8 III. FOREST RESOURCES TO [EET MARKET DEMANDS .... ........... 9 A. Forest Area ....... ............... 9 B. Industrial Plantations ..... ...................... 11 C. Resource Development and Potential ............. *. 13 IV. ROUNDWOOD SUPPLY AND DEMAND BALANCE ... ................ 14 A. Overall Position ................................. 14 B. Plywood Logs ..................................... 15 ANNEX 10 Page No. V. FOREST INDUSTRIES .................. ................... 16 A. Plywood ......... ................................. 16 B. Sawmilling .......... ............................. 18 C. Particle and Fiber Board ......................... 19 Particle Board ....... ....................... 19 Fiberboard ........ .......................... 20 D. Furniture ........... ............................. 20 E. Pulp and Paper ........ ........................... 21 Pulp ........... ............................. 21 Paper ............. ........................... 21 Other Forest Industries ..... ................ 22 VI. FUELWOOD ........... ................................... 23 A. Background .......... ............................. 23 B. Accelerated Fuelwood Program ..................... 25 C. Urgency of the Problem and Possible Strategy ...... 25 VII. SPECIAL TREE CROPS ................. ................... 26 A. Generation of Cash Income ........................ 26 B. Future Development ............................... 26 VIII. OTHER FOREST ACTIVITIES ............. .. ................ 27 A. Erosion Control and Watershed Management .... ..... 27 Relative Priority and Strategy .... .......... 27 Methods .......... ........................... 28 Costs .......... ............................. 28 Area Treated and Extent of Area of Existing Erosion ..... .................. 29 Land Use and Watershed Management .... ....... 29 Contributary Causes of Erosion .... .......... 30 Feature Management ...... .................... 30 B. Forest Protection ....... ......................... 31 Illegal Cultivation and Resettlement .... .... 32 Forest Pests and Diseases ..... .............. 32 Fire Protection ...... ....................... 33 ANNEX 1 0 - iii - Page No. IX. INSTITUTIONS ................................................. 33 A. Forest Administration ............................ 33 Office of Forestry ...... .................... 33 Provincial Forest Administrations .... ....... 34 Forest Associations ...... ................... 35 Proposed Forest Development Corporatibn 36 Separation of Functions ..... ................ 36 B. Research ........... .............................. 37 Emphases and Weaknesses ..... ................ 37 Forest Research Institute, Seoul .... ........ 38 Institute of Forest Genetics, Suwon ........ . 39 Seed Orchards and Collection ..... ........... 39 Development of Hybrids ..... ................. 39 Exotic Species Trials ...... ................. 40 Forest Resource Survey Research Center 40 Provincia]L Research Stations ..... ........... 40 C. Education and Training ........................... 40 General Bsckground ...... .................... 40 Position of Existing Staff ..... ............. 41 Provision of Technical Training .... ......... 41 Assessment: of Training ..... ................. 42 D. Forest Employment ....................... 43 Forestry Staff ..................... 43 Labor .......... ............................. 43 Forest Industries ........................... 44 X. FINANCIAL RESOURCES AND EXPENDITURES ... ................ 45 A. Source of Finance and Revenue . ................... 45 B. Stumpage .................... ..................... 47 C. Expenditures .................. .................... 48 ANNEX 1 0 -iv - Page No. XI. RECOMMENDATIONS ....... ............................... 49 A. Policy Oriented ................................. 49 Forest Land Ownership and Use .... .......... 49 Industrial Plantations Establishment ....... 50 Fuelwood ....... ............................ 50 Erosion Control and Watershed Management ... 51 Research ....... ............................ 51 Particle and Fiber Board ..... .............. 51 The Plywood Industry ..... .................. 51 B. Investment Oriented ...... ....................... 52 APPENDIX TABLES 1. Indicative Table of Domestic Supply, Imports and Consumption of Roundwood 2. Production, Imports and Consumption of Pulp 3. Production, Imports and Consumption of Paper 4. Table of Value of External Trade (At Current Prices) 5. Roundwood Supply and Demand Balance 6. Annual Plywood Production, Domestic Supply and Production 7. Capacities and Products of Major Plywood Plants - 1972 8. Particle Board - Capacity, Production, Proposed Expansion and Estimated Future Production 9. Fibre Board - Capacity and Production 10. Locations and Capacities of the Major Pulp and Paper Plants 11. Minor Forest Industries 12. Chart of Forest Administration 13. Full Time Employment of Staff in Forestry - 1972 14. Estimated Paid Employment in Forestry - Industrial Workers - 1972 15. Revenue and Expenditure of Office of Forestry 1971-1973 16. Draft Preliminary Loan Requests 17. Suggested Programme of Implementation of Policy ANNEX 10 Page 1 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY FORESTRY I. SUMMARY Background 1. Two-thirds of the total land area of Korea is classified as forest land. Because of devastation through wars, severe overcutting and fuel re- moval, including litter raking by the rural population, most of the area has been denuded of any productive Eorest which may have existed. The annual production of industrial roundwood is currently around I million m3 and is not expected to increase appreciably beyond this for several years. Korea has large physical potentials for greatly expanding output of timber, pulp wood, and fuelwood and at the same time for releasing substantial areas of forest land for pasture and forage production for livestock. But the economic costs and return from investments for expanding forestry production have not been analyzed in detail. 2. The growth in domestic consumption of wood-based products 1/ over the period 1960-72 has been from about 1 million m3 roundwood equivalent to about 4 million m3. This growth trend is expected to continue beyond 1980. The expected level of roundwood equivalent consumption in 1980 is over 7 million m3. Imports of timber have been rapidly increasing to meet this expanding domestic market. 3. The rapidly increasing demand for forest products and lack of domestic wood supplies were the main justification for a Government decision to introduce a major reforestation program in the early 1960's. Seventy-five percent of the forest land is privately owned, with 95% of private ownership being in holdings of less than 10 ha. Since only 820,000 ha is effectively managed as National Forests, the main emphasis has been directed to reforestation of pri- vate forest lands through subsidy schemes in which private owners have received free seedlings and in some cases part payment of wage costs of planting. 4. Whilst an impressive area has been planted (the book entry is of the order of 500,000 ha on private forest lands and 100,000 ha on national forest land), the scheme has not been successful in creating industrial planta- tions. Many of the earlier plaLntations are stunted and badly stocked as a result of poor species selecticin and provenances, and maltreatment of the 1/ Includes saw logs, ply logs, mining timber, pulp and paper but excludes poles and fuelwood. ANNEX 10 Page 2 planted area through the continuation of fuel gleaning practices. There has been no coordinated plan of siting plantations in relation to future industrial sites. The strategy has been to cover as large an area as possible with limited Government expenditures; there has been limited success with respect to t'e area covered but the problem of economic industrial plantations still remains to be tackled. The Government has enacted legislation which will ena-ole 'Special Development Areas' for large-scale industrial plantation to be delineated and managed by a centrally controlled Forest Development Corporation. The fragmented pattern of private forest ownership is likely to be one of the main problems to be overcome if this objective is to be achieved. 5. A concurrent development has been an attempt to establish fuelwood blocks for local use through subsidy payments in the form of seed, seedlings and fertilizer, in order to eliminate the indiscriminate fuel gleaning. It is estimated that some 1 million ha of fuelwood blocks will be needed to supply the fuel needs of the rural population for the next 10-20 years. National records indicate that some 800,000 ha of fuelwood blocks now exist. A crash program for the establishment of a further 200,000 ha and the enrich- ment of existing area is now proposed. Substitute fuels of coal and oil are in increasing use but the speed of their adoption in the rural areas will be limited by low purchasing power and the cost of conversion of heating and cooking systems in the homes, particularly with respect to oil the supply position of coal and oil (domestic deposits of the former are limited and the latter requires foreign exchange). Never-the-less, potentials for ex- panding the supply of alternative fuels to reduce fuelwood requirements need to be studied. 6. Erosion control work is an important component of forest activities engaging some 18% of all forest staff and currently costing some US$3-4 million annually (about 20% of total expenditure in forestry). While a large area has already been treated, estimated at some 450,000 ha, there still remains a substantial area of severe erosion in the private forest land to be dealt with, estiTrated at 70,000 ha. There is also the problem of instituting and maintaining land use management regimes over the watershed areas which will not impair their water catchment function. A strategy is being developed of specializing this work through erosion control stations; 36 of these stations have been established. 7. The Korean hardwood nlywood industry, based wholly on imported logs from Indonesia, Philippines ami Malaysia, has developed rapidly; exports have risen from around 400 m3 in 1960 to 1.1 million m3 in 1972; Korea is now the world's largest exporter of this product. Plywood exports are currently valued at around US$140 million; 13% of the value of total exports and 88% oi sales are to the USA. The remarkable success of the industry is attributable to the cost advantage it has been able to develop in producing hardwood plywoods for the special market for panelling. Domestic Requirements S. Preliminary estimates indicate that domestic roundwood consumption will be in the order of 7.3 million m3 by 1980 and the demand for wood ANNEX 1 0 Page 3 products can be expected to continue to expand beyond this date. An estimate of the domestic demand for wood pulp alone is 1 million metric tons by 1990 1/. This would require an area of 500-600,000 ha of pulpwood plant- ations on the basis of an average growth rate of 8 m3/ha per annum (mean annual increment) which is considered a reasonable estimate of plantation yield. The indications are that by 1990 a similar area will be required for sawlogs, and mining timber, so that a first target of around 1 million ha is realistic. Future planting targets should take into consideration the extent to which the forest industries are expected to be developed over the next 30-40 years. An overall study of all industrial roundwood requirements is needed. Selection of Plantation Areas 9. The demarcation of plantation areas both with respect to absolute size and geographic location in relation to feasible and economic location of forest industries, is being tackled by the setting aside of 'Special Development Areas' under legislation recently enacted. These will receive priority for capital flows into reforestation. The actual location of the plantation areas will require evaluation with respect to the range of possible sites for forest industries. This will need to take account of the proposed size of plants, the availability of water, energy, communication and markets. Ownership and Management of Elantations 10. The Office of Forestry have been purchasing private forest land to augment the area of National Forests. In 1971, 2,000 ha was purchased at an average cost of US$150 per ha. This price may be difficult to justify for forest plantations. The new legislation provides for a fund of US$5 mil- lion per year over ten years for low interest (3-1/2% to 7%), 20 year loans for reforestation investment which will be available to the private sector and the Forest Corporation. It envisages the separation of user rights from ownership rights for the private forests falling within 'Special Development Areas', with the Forest Development Corporation controlling the management of the area. Owners would receive 10% of gross revenues. With the long rotations which will be needetd (20-30 years for pulp and up to 40-50 years for pulp and up to 40-50 years for saw timber) and the small scale ownership patter] such an arrangement will be very difficult to administer and does not appear to have any element of strong appeal to the owners. In short, the acquisition of large blocks of land for siustained industrial plantations development is likely to be a major problem. Outright purchase of private forest land by Government could be a possible solution. Another alternative could be a system of leasing (with or without aLn option to sell), with rentals based on the expected value of the 10% sheLre of gross revenues. However, more attention also should be given to supporting the establishment of well-managed forest enterprises on small private ownership units as has been done successfully in European countries. I/ Present imports of pulp and paper are costing some US$50 million. ANNEX 1 0 Page 4 11. The rapid growth of the plywood and particle board industries and the existence of a pulp-paper industry shows that adequate talent and organ- izational ability exists for expanding forest industries. However, it is not known to what extent Korea can supply industrial raw materials at com- petitive prices from existing timber stands and planned plantations. In order to answer this question, there is need for thorough land capability analysis, assessment of transportation costs to potential processing sites, and vertical cost analysis of the industry. Profitability of Forestry 12. There has been no rigorous attempt so far to establish criteria and measure profitability. The resource flows into plantation species planted up to the present could not be justified using normal methods of evaluation. However on the basis of available data, a preliminary assessment of pulpwood grown on a 25-year rotation at establishment costs of US$150 per hectare and a stumnpage of US$ 6/m3 gives an internal rate of return of about 8% on a plantation investment. In order to earn the same rate of return on sawlogs grown on a 40-year rotation, stumDage prices in the order of US$9 to US$11 per m3 would be required. These estimates need further study in relation to specific plantation areas. Import prices of pulpwood have averaged around US$10/m3 and prices of pulpwood as well as sawlogs likely will increase in the future. Further studies should take account of full establishment costs, i-ncluding management and overhead costs, and take into consideration the profitability of the related industries. They should also include an eval- uation of the employment which the plantations and related industries will generate, the extent to which forestry can be used in the resettlement of illegal cultivators, possible reduction in erosion control expenditures and benefits from improvement in watershed quality and the effects on foreign exchange savings. Fuelwood 13. Lack of sufficient fuel is a constant problem in the upland areas (synonymous with "forest area"). Besides the 1.5 million private forest ,owners a further 900,000 non-owners have collection rights over this area. This is the basic cause of the malpractices of lopping and litter raking. 1/ 14. The Government's intention of creating village fuelwood blocks to meet the demands of all rural dwellers will help to overcome the fuelwood shortage. In most countries there is a gradual shift away from fuelwood to alternatives such as oil and the same trend can be expected in Korea over the long term. If this does happen, investment in fuelwood plantations need not have been waste of resources, if species suitable for either fuelwood or pulpwood or sawlogs were used and silvicultural systens adopted which enable objectives of management to be changed at some future date. I/ The rural population is concentrated in the lower farming areas. Details of land area and population density are described in Annex 1. ANNEX 10 Page 5 15. The formulation of an indicative overall fuel and energy supply plan for the country is urgently needed. An evaluation of fuel consumption patterns and requirements of specific areas within the context of the plan would then indicate priorities for fuelwood establishment. The question of land availability for fuelwood establishment may be a problem in some areas where owners are reluctant to relinquish their land or where there are absentee owners who wish to keep their land 1/ as an easily saleable asset. In principle, the problem is similar to that for industrial plantations and the same strategy could be used for these areas. In formulating plans for the establishment of fuelwood blocks there is scope for integration with rural development projects. Competing Claims for Use of Forest Land 16. Other forms of land development, such as upland grazing, appear at this stage to show better i-inancial returns than forestry and competition for forest land is likely to become a major issue over the next 20 years. Preliminary calculation of land required for intensive forests indicates that there could be room for a transfer of some forest land to agriculture. This merits more detailed studies, and the question of the extent of the area and the selection of the locations for different uses will require coordination of the various proposals and an evaluation of the competing claims. Erosion Control and Watershed Management 17. The problem of instituting land management regimes over the forest lands which will satisfactorily maintain their catchment function is directly related to the provision of adequate fuel supplies and supplies of composting material. The extent to which the removal of compost material is aggravating the erosion problem needs evaluating. 18. The techniques of repair work being used at present are costly and the areas being covered are small in relation to the areas reported to be in need of treatment. The development of lower cost techniques should be given a high priority. An evaluation of the expenditure on erosion control, separating the areas where costs and benefits are quantifiable from those where qualitative judgements only can be expressed, is required in order to (a) justify the expenditures; (b) assess the full extent of the likely expendi- tures required for this work; and (c) provide a basis for a priority ordering of the work. 19. With the accelerated fuelwood establishment program which is planned, there would be an early expectation of a substantial reduc'tion in the practices causing erosion. This factor, together with the development of lower cost techniques, would enable an expanded program to be undertaken within the present resource allocations. This would require the introduction of such 1/ There is no limitation on the size of holding of forest land. ANNEX 1 0 Page 6 techniques over a wide area which may be more effectively implemented by a central authority, representing the water resources, agriculture and forestry disciplines. The same authority could undertake the formulation and adminis- tration of an overall policy of watershed management. The Future of the Plywood Industry 20. There are three main issues affecting the future of this industry: (a) Log supply. Current log imports are in the order of 2.8 mil- iion m3, 43% coming from Indonesia, 42% from Malaysia, and 15% from the Philippines. These imports are expected to increase to 3.5 million m3 by 1980. With the assistance of the Office of Forestry, three Korean companies have recently negotiated concessions in Indonesia amounting to some 600,000 ha with the objective of securing log supplies in the future; surpri- singly, none of the plywood manufacturers are involved in this development. Based on FAQ studies, estimates of plywood log availability in the Philippines indicate that the supply is limited to about 20 years at the present level of exploitations; Malaysia could maintain the present exploitation rate for more than 20 years and Indonesia could increase the present rate of exploitation, and still have sufficient to maintain the supply for more than 20 years. However future supplies will involve higher extraction costs, although part of this higher cost may be offset by lower concession charges. The Government maintains a forestry attache in Indonesia for the purpose of keeping the log supply from that source under review. The supply position of the other sources, and in particular, their price competitive- ness, is also important and justifies constant review. (b) Waste. The industry is generating a minimum of some 300,000 m3 of waste wood (of Lauan and Meranti logs) at the present time, of which only about 33% is planned for by-product manufacture into boards. This is a potentially valuable source of chip material to augment domestic supplies and justifies detailed study of the technical and economic problems of utilizing this material. (c) Markets. Almost 90% of Korea's exports go to the United States, with four importers accounting for 72% of the total. Korea needs to diversify its export market outlets. ANNEX 10 Page 7 II. MARKETS FOR FOREST PRODUCTS A. Dom.estic Consumption 21. Domestic demand for all forestry products has grown through the period 1960 to 1971. Pulp consumption increased from 46,000 m ton to 293,000 m ton; paper and paperboard from 89,000 m ton to 434,000 m ton; plywood from 69,000 m3 to 234,000 m3; particle and fibre boar d s from 60 m ton to 27,000 m ton; roundwood for sawn timber and mining fron 850,000 m3 to 2,430,000 m3. Deta ils of the production, imports and co ns umption of the major forest pr oducts are detailed in Appendix Tables 1 -6. 22. Expressed in terms of industrial roundwood equivalent , the estimated increase has been from 1.1 million m3 in 1960 to 3.7 million m3 in 1971, with average growth rates of 18% in pulp, 16 % in paper and paperboard, 12% in plywood, 400% in particle and fibre board, and 10% for saw and mining timber. B. External Trade -l Imorts 23. Forest based imports emounted to US$213 million in 1971, which was 8% of the total value of all imports. Of this amount pulp an d paper/paperboard imports accounted for US$49 million, plywood peeler logs US$ 122 million, and saw log imports US$39 million. The balance of US$3 million was composed of imports of bamboo, sleepers, sawn timber and wood waste. Exports 24. Forest based exports have increased from 6% of total value of exports in 1962 to 14% in 1971. Plywood is the dominant expor t accounting for US$139 million out of the total of US$150 million. The growth rate of exported plywood has been remarkable; an increase from around 400 m3 in 1960 to an expected 1.1 million m3 in 1972. Korea is at present the world's largest exporter of this product. A more recent development, in exports is the manufacture of finished joinery timber for door frames (which is inte- grated with plywood production) a3mounting to US$1 million in 1971, and also manufactures from locally grown poplar of chopsticks, ice-crea m spoons, toothpicks and other small items, the export value of which has risen to about US$4 million. Future Markets 25. Domestic market project:ions - indicate a co ntinued expansion of all products, with the exception of poles for house building, which are being 1/ Details of the items enterirng into imports and exports are given in Appendix Table 4. 2/ Based on price elasticity of demand and rate of growth of GNP. ANNEX 10 Page 8 displaced by more permanent materials. Paper and paperboard consumption is anticipated to increase from 356,000 m ton in 1970 to 900,000 m ton in 1980, an average growth rate of 10% compared with 16% in the previous decade; pulp consumption from 250,000 m ton to 890,000, with growth rate of 13% compared with 18% domestic consumption of plywood is expected to increase from 629 million to 1,000 million sq. ft. and for particle fibre board from 25,000 m ton to 45,000 m ton with average growth rates of 5% compared with 12% for plywood and 6% compared with 400% for the boards. Sawn lumber and mining timber is expected to increase from 2.2 million m3 to 3.6 million m3 with a growth rate of 5% compared with 10% in the decade 1960-70. 26. Export markets for plywood and dimension finished timber are expected to increase to 170% of the 1970 volume by 1980 and other manufactured wood products to increase by five times in volume. Exploratory marketing of furniture is currently being undertaken and this item is expected to increase to a value of US$5 million by 1975. The roundwood equivalent requirements to support these expansions are summarized in Appendix Table 5. Main Features of the Markets 27. (i) Compared with many developing countries, Korea has a high level of per capita consumption of forest products. The annual growth rate of domestic con- sumption of all forest products, excluding poles and fuel wood and expressed in roundwood equivalent, during the decade 1960 to 1970 averaged 11% and is anticipated to continue at 8% during the period 1970 to 1980. (ii) The forestry sub-sector constitutes a significant proportion of external trade - 14% of the value of all exports in 1971. (iii) Plywood exports are currently contributing 13% of the total value of exports. This industry is wholly dependent on imported logs and markets 88% of its exports to the USA. These matters are discussed in Sections 3 and 4. (iv) Imports of pulp and paper are a heavy drain on foreign exchange - US$ 50 million in 1972. This is expected to increase to an amount in excess of US$ 80 million by 1980. (v) The future prospects for reducing imports of pulp, paper and paperboard will depend on the extent to which the country can establish industrial pulpwood plantations. ANNEX 10 Page 9 III. - FOREST RESOURCES TO MEET MARKET DEMANDS A. Forest Area 28. The area classified as forests is 6.6 million ha (67% of the total land area). Of this, come 840,000 ha is managed by the Office of Forestry as National Forest 1/, 830,001) ha is managed by the provincial and town administrations, 120,000 ha is used for defense, road/rail reserves, etc. and 4.9 million ha is private. Of the 840,000 ha-of National Forests, preliminary estimates indicate that about 400,000 ha is suitable for conver- sion to industrial plantationis, but this is distributed over a wide area. 29. The private forest :Lands are held in small ownership pattern. There are some 1.5 million heads of households owning forest land; 54% of private forest land ownership is less than 1 ha and 94% is less than 10 ha. In addition to these 1.5 million owners, there are some one million bouse- holds, which form the balance of the rural population who do not own forest land but many of whom lhave developed the custom of gleaning over the forest areas for fuel gatheriTLg and collection of fodder and composting material. 30. Preliminary estimates made by the Office of Forestry indicate that of the total area of 6.6 aillion ha. some 1.5 million ha is uansuit- able for productive purposes (about 0.2 million ha of which is beiAz developed as National Parks); 0.8 million ha is too steep and remote for conversion to plantations and is to be managed as natural forest; the remaining 4.3 million ha has potential for development. In theory this land is fully usable for productive purposes and would greatly excee the country's requirements for land for the establishment of industrL&`- plantations. In practice, somre of the area is too steep, inaccessible or scattered for forest plantations. Furthermore, any expansion in agriculture and livestock will have to be accommodated within this area. The ownership pattern and a broad outline of planned use of the forest areas is summarized in Table 1. 31. Surveying of the total area is currently proceeding and inventory surveys of the Gangweon province area in the northeast (1.2 million ha) and an area of some 1.5 million ha in the southwest have been completed. Soil surveys have also been carried out in Gangweon province (25,000 ha) and over some 250,000 ha in watershed management areas. 11 The National Forest Areas are shown in Map IBRD 10380 in the General Report. These are demarcated areas legally set aside for state forests. ANNEX 10 Page 10 Table 1: OWNERSHIP AND OUTLINED PLANNED USE OF FOREST AREAS (million ha) 1. Ownership (a) National Forests 1.300 less .120 for defence, road/rail reserves, etc. .340 is small fragmented area under Provincial Forest Administrations .840 /1 (b) Provincial and Township Forests .490 plus N.F. administered .340 .830 (c) Private Forests 4.880 TOTAL 6.650 2. Outlined Planned Use (a) Protect:ion Forest Areas, including National Parks, not producing timber 1.100 (b) Rock outcrops, roads, rivers, dams, etc. .400 (c) Natural Forests to be managed on natural regeneration regime with low yield potential .800 2.300 (d) Industrial plantations /2 2.700 (e) Farm forests for fuelwood /2 1.000 (f) Areas of upland orchards pasture and cultivation /2 0.600 TOTAL 6.600 /1 It is estimated that 0.400 million ha is suitable for industrial plantations. /2 There is a wide scope for reclassification of land use within these groupings. Source: Office of Forestries, Forest Policy, 1972. ANNEX 10 Page 11 32. The National Forests are mainly situated in the north-east (the Gangweon province area) and are composed of fragmented blocks ranging rc,.. one hundred to several thousarnd hectares. These have the highest standing volume, estimated at 33 million m3 (average 30-40 m3/ha), composed of 30% conifers, 50% hardwoods and 20% mixed. The Provincial Township Forests are widely scattered and largely protection areas. The standing volume of the Private Forests is estimated sit 30 million m3 (average of 7 m3/ha), and over most of the area, the stocking is so poor as not to qualify for the description of forest in any productive sense. 33. The National Forests are currently contributing some 1.1 million m3 (30%) of the total domestic roundwood consumption equivalent (excluding poles but including pulp and paper) of 3.7 million m3, approximately 55% of which is softwood and 45% hardwood. The contribution drops to 20% if logs for plywood exports are included. Supply from these forests is of low- grade predominantly small dimension timber, suitable for poles, pitwood and pulp; 21% only is of saw-log size. About 60% of the supply is from the Gangweon province area. 34. There is little scope for increasing the production of the natural forests because of their generally poor quality with respect to species and provenances. A forward estimate of the supply of industrial wood likely to be available from the natural forests is in the order of 1.3 million m3 by 1980. The natural forests are therefore being systematically replaced by faster growing industrial plantations. B. Industrial Plantations 35. Plantations do not at present make any significant contribution to the supply. A serious attempt to establish plantations was begun in the early 1960's. Records indicate that some 500,000 ha of plantations in private and 100,000 ha in national forests have been planted between 1962 and 1971. The species planted are mainly softwoods of Larch (Larix), Pitch Pine (P. rigida), Korean White Pine (P. konaiensis), Red Pine (P. densiflora), with some hardwoods of Poplar and Alder. Areas have been computed by the method of the number of seedlings issued and some allowance has been made for failures. The areas planted are widely scattered and are not located in blocks suitable for industrial forest management. The earlier plantations have suffered damage from indiscriminate lopping of branches and removal of humus by litter raking for Euel supply. There are also,of poor genetic quality. The more recent plani:ations, which have been established on the basis of a wider selection of species, seedlings raised from selected seed sources and more attention given to post-planting maintenance, show good vigour and form and demonstrate the growth potential. An average growth rate of 8 m3 (mean annual increment) could be expected. 36. The work of plantation development in the private forests has been undertaken by the Provincial Forest Administrations with most of the finance being provided by the Office of Forestry in the form of subsidy payments AN-NEX 1 0 ?age ,2 .:- ..gS 'fc ..>rs. Lransport a_nd a proportion of .~ .,^r. : S. L a et-; j.. e assessment of the . . ''. .: i ..,. > . _."... ' . ns C ' ~Dex.ew eto make, but .-} . > - ˘1 . .- - * ..a - sr }7 anfat4ons will limit '-i - .. - -,, ,s .ee- w*iely scattered .. ~t.- '9 .... c that harvest- t-:.--.:s- :. _. m- - . ...... ,e .~if:;r.-< ve are likely ,. . ; r -.-. . - ~ g -r - s ...s currently . .. . t. .. o s. P cK )K. 2LtfL :r n3 by 1980. -- - - ;^e ieci>'e c4 estaDlishing -f _ s. t - Lm .. _ ..e c'-neepv- of selected . -..Ej.- _evRe o- .rine- . :o t<: ; these areas c. -es- La, an area too a o- . . . t. f e. - Z es aton_ .n these areas a' ar h .riaiin targets of -.:,--.. :.. th-e Govern- - : ..>. .. ; . .~,. ;-:.'.ide for the - .2 ., =c~ ..~.s e-.. .. J.. -.:. *'orest Development . ..- .- _ u-f, :,e it-.ce ef Forestry. ANNEX 1 0 Page 13 Table 2: THIRD FIVE YEAR PLAN Main TargetE; of the Forestry Program 1972 1973 1974 1975 1976 Total (000 ha) Reforestation: Industrial plantations /1 82.5 83.4 83.9 84.3 84.5 418.6 Poplar plantations 4.0 4.0 4.0 4.0 4.0 20.0 Planting of chestnuts, walnuts, etc. 7.0 7.4 7.5 8.0 8.8 38.7 Maintenance operations on existing plantations 330.0 350.0 340.0 340.0 334.0 1,694.0 Erosion Control: Hill side, new work 5.0 6.5 8.0 9.5 11.0 40.0 Hill side, report work 5.0 5.0 5.0 5.0 6.0 26.0 Sand dune stabilisation .1 .1 .1 .1 .1 .5 Grassland establishment 2.0 2.0 2.0 2.0 2.0 10.0 Stream channel improvement (Km) 400 400 400 400 400 2,000 Protection: Resettlement of forest families (Nos) 2,000 2,000 2,000 2,000 2,000 10,000 Control of pests/disease 360.0 360.0 360.0 360.0 360.0 1,800.0 /1 9,000 ha per year planned for National Forests. Source: OOF C. Resource Development and Potential 40. Despite the fact that the forest resource appears to be extensive, very little timber supply will be forthcoming to meet the expected growing demand up to 1980. The natural forests which do have a productive 'function are slow growing and the earl:Ler plantations will not make any significant contribution. An optimistic estimate is that the supRly from these forests will increase from the preseni: level of 1.1 million mJ to 1.8 million m3 by 1980. 41. The new legislation providing for the establishment of concentrated plantations in the 'Special Development Areas' will provide a sound basis for rational planning of planting areas with respect to the absolute size of the plantations required and their geographic location in relation to forest industries and markets. The mission fully endorses this new approach. ANNEX 10 Page 14 42. The area required for fast-growing pulpwood plantations alone is likely to be of the order of 500,000-600,000 ha with a similar area required for saw logs and mining timber and poles. 43. A major problem is likely to be that of securing land which is at p)resent under private ownership for inclusion in the 'Special Development Areas' or alternatively of devising an effective private forests program whi_h will bring t;ne private forest areas within the 'Special Development Areas' industrial plantations program. 44. Preliminary indications are that a rotation of about 25 years will be required to produce pulpwood; this compares with 10 to 15 years in tropical countries. This could pose problems in trying to bring private farmers within the 'Special Development Areas' scheme. 45. Small scale purchases of private forest land for addition to the area of National Forests have taken place over the past years. In 1971 the area purchased was some 2,000 ha at a cost of US$150 per ha. 1/ A unit cost of land of this order may be difficult to justify for forest plantations. 46. The new legislation, in addition to delineating the 'Special Devel- opment Areas' provides for a forest fund of US$5 million per year over a ten year period for the purpose of providing soft loans over 20 years to the Forest Development Corporation and the private sector for industrial planta- tions establishment. If this were used entirely for the purchase of private forest land and even assuming the high cost of US$150 per hectare, it would be sufficient for the acquisition of some 33,000 ha a year (330,000 ha over ten years) which would probably be more than would be required for establishing 5-600,000 ha of -ational forest pulpwood plantations. An alternative to outright purchase would be a leasing system with an option to sell. This is discussed further in Chapter VIII. 47. The plantation species presently being used provide a satisfactory basis for the establishment of industrial plantations. IV. ROUNDWOOD SUPPLY AND DEMAND BALANCE A. Overall Position 48. The estimated roundwood equivalent of domestically consumed forest products (excluding fuelwood and poles) increased from around 1.1 million m3 in 1960 to 3.4 million m3 in 1970 and is expected to increase to 7.3 million m3 in 1980. The roundwood equivalent of impor s to meet this demand over the same period are 0.69, 2.48 and 5.50 million m respectively (Table 3). 1/ This compares with reported costs of some US$4,000/ha for irrigated paddy, US$2,400/ha for rain:.ed paddy, US$1,300/ha for terraced upland suitable for barley, and US$300/ha for unconverted upland. ANNEX 10 Page 15 Table 3: SUMMARY OF RO1TDWOOD SUPPLY AND DEMAND BALANCE (million m3) 1960 1970 1980 1. Domestic roundwood consumption 1.1 3.4 7.3 2. Home production from indigenous forests 0.4 0.9 1.3 3. Home production from plantations - - 0.5 Deficit which is imported -0.7 -2.5 -5.5 49. If the estimated roundwood equivalent of plywood and s wn-timber exports were included, the import balance becomes 4.06 million m in 1970 and 8.31 million m3 in 1980. Plywood logs and pulpwood are major items in the deficiency. Further details are given in Appendix Table 5. B. Plywood Logs 50. The plywood industry specializes in the production of hardwood plywood and is wholly dependent on imported of Lauan and Meranti type species from Indonesia, Malaysia, and the Philippines. The present level of imports is around 2.8 million O3. There is no prospect of the local production of this class of hardwood log, and if the industry is to continue to expand in this type of plywood production iit will have to continue to rely on imported logs. 51. With this objective, thte Government has encouraged and provided loans to the private sector to secure logging concessions overseas. Three concession areas amounting to 590,000 ha were secured in Indonesia by 1971 (one in South Kalimantan and two in East Kalimantan) under c30ntracts negotiated with the Indonesian Government and some 400,000 m was supplied from these concessions in 1971. The Office of Forestry maintains a forestry attache at Jakarta to keep this development under constant review. None of the plywood mills are directly participating in this development. 52. The Korean Government has shown sound judgment in developing the plywood log supply in Indonesia. Estimates based on data available at FAO indicate that the forest resources in Indonesia are very extensive and sufficient to sustain the present level of exploitation for several decades; FAO reports there are some 50 million ha of merchantable dipterocarp forests. The costs of exploitation are bound to increase as the more remote areas are exploited, although some of these increased costs may be offset by a reduction in the intermediate concession administration charges. The government's policy of maintaining a continuous review of this log supply ANNEX 10 Page 16 is wise. At the same time, the supply position and price competitiveness of logs from the other sources should not be overlooked. 53. As a long term planning aid, the Forest Research Institute has imported equipment and is designing a work program for evaluating the suitability of locally grown timbers, particularly poplar and pines, for plywood manufacture. These species would result in a different quality of plywood to that now being produced and therefore a new market orientation. There is a need for a coordinated approach by FRI and the industry to the question of the long-term log supply and the feasibility of diversifying plywood production into other grades of plywoods in addition to the hardwood presently produced. 54. This industry is now generating some 300,000 m3 of wood waste annually of which only 100,000 m is planned for processing into particle and fibre board. The remainder is burned as fuel, except for a small quantity exported to Japan for pulping. Pulpwood 55. The roundwood equivalent of pulp and paper imports in 1972 is estimated at 1.3 million m3. The projected figure for 1980 is 2.7 million m3. 56. The volume of wood-waste (around 300,000 m3 annually) being generated by the plywood industry and to a lesser extent the sawmill industry, justifies investigation to determine whether this can be used to supplement domestic pulping material. The pulping problems associated with Lauan, which have been a deterrent to the Korean attempts so far made in this direction, are being overcome in the new Picop Bislig mill in the Philippines. There is, therefore, a strong case for reappraising any technical problems. 57. Emphasis should be given to the feasibility of rapid establishment of pulpwood plantations to reduce the dependency on imported pump. The species now being used in plantations will require to be evaluated further for their suitability for this purpose. V. FOREST INDUSTRIES -/ A. Plywood 58. There are about 30 plywood plants with a total capacity of some 1.64 million m3 finished plywood 2/. The eleven largest plants (all members of the Korean Plywood Industries Association), are situated at the ports of Busan (6) Incheon (2), and Gunsan (3). The capacities of these total 1.63 million m3. These are the export-oriented plants based on imported logs 1/ The location of the major forest industries is shown in Map IBRD 10380 in the General Report. 2/ Assuming conversion of 1,000 sq ft x 4 mm - 0.3719 m3. ANNEX 10 Page 17 and currently producing some 1.4 million m3 per annum, 82% of which is exported. Details of the capacities and products of these plants are given in Appendix Table 7. The remaining twenty plants have a joint capacity of around 18,000 m3 (1% of total). These obtain their raw material supply from the reject veneers of thet exporting mills and produce for the domestic market only. The annual production and exports of plywood over the past decade are summarized in Appendix Table 6. 59. All eleven export mills have intergrated sawmills which utilize reject peeler logs and cores. The two largest mills have in addition inte- grated particle board mills based on plymill/sawmill waste. Eight mills produce decorative plywoods using paper overlay, vinyl lamination and printing processes and four are producing simulated parquet floor plywoods. 60. The proportion of decorative plywoods has increased from around 20% by volume (22% by value) of total exports in 1967 to 26% by volume (30% by value) in 1971; this proportion is expected to further increase. Five of the mills have formalin and resin plants to supply their own requirements and those of the other plymills. 61. Mills are equipped with modern equipment (mainly West German and Japanese manufacture) and operate on 2 x 11 hour shifts. They have been sited so as to be able to use vrater transport from off-loading of logs ex-ship through sea water log ponds into the plymills.1/ The largest mill, Dongmyong has under construction a deep water jetty (30 m) which will facilitate discharge from vessels up to 20,000 dwt direct into log ponds. 62. The remarkable expansion of the hardwood plywood industry is attributable to the cost advantage it has been able to develop in the pro- duction of panelling plywoods for the special USA market. This cost advan- tage is mainly explained by the high level of management and its capacity for absorbing new technology, an industrious and intelligent labor force which has achieved significant physical productivity increases (see Chapter VIII), the location of the plants at sea-board which has facilitated the installation of low cost log-handling systems and dispatching of finished products and the integration of plants for the manufacture of glues, saw- mills and other by-product manufactures. 63. The industry is wholly owned and managed by Koreans and technical expertise in the formative years of production was augmented by employing expatriate exports on short-tern contracts and securing overseas training posts for Korean staff. Most of the capital requirements for the industry have been generated locally; overseas loans of about US$29 million 1/ were obtained between 1966 and 1970 on repayment terms of from three to seven years and interest rates of from 6-8.5%. 64. The government is currently operating three forms of financial assistance to the industry; all plywood logs for export plywood are exempt from the normal 10% import duty on logs; in addition, saw logs imported I/ There is no pre-steaming treatment. Inventories of around 4-6 weeks log supply are maintained in the log ponds. ANNEX 10 Page 18 by the export plymills for conversion in their own plants are subject to a 5% duty only; low interest roll-over loans are provided for financing inventories of logs and finished products. 65. A recent report -/ indicated that of the 88% of total exports marketed in the USA in 1970, some 44% was supplied to one importer and 72% to four importers. The imposition of a 10% surcharge on plywood by the U.S. Government in that year resulted in the Korean suppliers absorb- ing from 75-100% of the duty. This indicates a weakness in the present marketing outlets which can place a severe strain on the profitability of the industry and cut back the foreign exchange earnings. Production has been oriented to a specialized market for wall panelling and widening of both the product and geographic market will be necessary to achieve stronger market tenure. B. Sawmilling 66. There are about 1,900 registered sawmills with an estimated installed capacity of 4.6 million m3 per annum sawnwood output (one shift). With the exception of the Dongwha sawmill complex at Incheon (which is operated by the largest sawlog importing firm), with a capacity of some 345,000 m3 (15 x 23,000 m3 capacity identical units) and the integrated sawmills of the eleven major plywood plants with capacities ranging from 20,000-100,000 thousand m3, mill capacities are small, averaging about 2,000 m3 per annum. 67. The total installed capacity is about four times the present out- put of 1.1 million m3 and with the exceptions mentioned, most mills are operating for about half the year only. 68. The Dongwha mill and the integrated sawmills of the plymills operate on imported logs. These mills are equipped with machinery to handle large diameter logs and provide the bulk of the sawn timber from imported logs to the domestic market. 69. The smaller mills, which rely mainly on domestic supplies of small dimension roundwood, have been sited away from the areas of log supply as a deliberate measure to reduce the incidence of overcutting by illegal removals. These mills operate with a minimum of capital, using manual methods for all operations except the actual sawing. However, with the present low-grade and limited supply of logs, there is no justification for installing high cost capital equipment. 70. The excess capacity in sawmilling has arisen because of the over- exploitation of the indigenous forests in the 1950's and early 1960's, which could not be sustained and the new capacities which have subsequently been installed in the coastal towns based on imported logs. 1/ Survey of Korean Plywood Industry, USAID, Korea, 1972 (Hadley E. Smith). ANNEX 10 Page 19 71. With the rapid expansion of the plywood industry, there is danger that the integrated sawmill capacities of these sawmills could be expanded at a faster rate than the market for the product. This is the apparent position at the present time with the Dongwha complex operating only about half their capacity on a single shift. 72. The policy of licensing the small inland mills at some distance from the domestic raw material source, while understandable in the context of control over fellings, appreciably adds to costs and results in log down- grade consequent upon the delay of transporting logs from forest to mill. The issuing of sawmill licenses has been controlled by the Office of Forestry since 1969, and no new licenses have been issued since that date. The future objective should be to issue licenses for mill construction in relation to raw material supplies, with designed capacities to fully utilize the capital installed. 73. There is a need to institute some size standards for sawn timber, particularly for joinery products, which would enable mills to produce at lower unit cost and achieve better utilization. This would best be achieved by coordination between the construction and sawmilling industries. C. Part:Lcle and Fiber Board Particle Board 74. Production has increased from about 60 m ton in 1961 to 12,000 m ton in 1971. There are three plants currently operating, based on plymill and sawmill waste. Two of thiese plants are newly installed (1970/71) and are presently working up their production. The equipment is West German. Total installed capacity is now 65,000 m ton per annum. An earlier mill (Chungang) with a small capacity (7,000 m ton) situated in Seoul and based on purchased waste from sawmills, went out of production in 1966. Details of capacities, production and proposed expansions are described in Appendix Tables 7 and 8. 75. Up to the present time, all production has been for the domestic market. This is at present constrained by a 20% sales tax on domestic consumption. In addition, there is a transitory technical problem of brittleness of the board which renders it susceptible to fracture on nail- ing. This is considered by the manufacturers to be mainly associated with the qualities of the glues used, but may be related to over fracture of chips or insufficient consolidation of the material in the method of manu- facture. The surface finish of the boards produced is of a high quality. There is scope for a large expansion in domestic consumption of this product, particularly in building construction and the large-scale production of furniture which is now being commenced. ANNEX 10 Page 20 76. Attempts are now being made to export this product and decorative finishing equipment has been installed for some 15-20% of capacity to widen the market. 77. One of the new plants (Dongmyong) has been designed for further expansion. The present capacity of 23,000 m ton is from one production line and the factory has been constructed with sufficient space for a fur- ther three production lines of similar capacity. In addition, the Dongwha sawmill plant has obtained a license and is planning the early construction of a further plant of 36,000 m ton per annum to be integrated with the sawmill comp'e.x. Market studies into both domestic and export markets are needed before capacity is expanded further. Fiberboard 78. One plant exists which has operated since 1960 and has increased capacity to the present 24,000 m ton per annum (on three shifts). Decorative equipment has been installed for 10% of this capacity. Production has increased from 2,000 m ton in 1963 to 6,500 m ton in 1972 (see Appendix Table 9). The plant has been shut down for a year between August 1971 and September 1972 because of financial difficulties and is now under new management. Production this year will be around 2,000 m ton only, although the target for 1973 is 16,000 m ton. 79. The plant is situated at Anyang and operates on sawmill waste from Incheon (25 miles) and Seoul (20 miles). Delivered wood costs are about US$7/m3 solid wood equivalent, of which transport cost is around US$2.5. rhe location of the plant in relation to the raw material supply placed the firm in competition-with other users of waste, particularly for the limited quantity of softwood waste, with resultant comparatively high raw material costs. The low utilization of capacity has also increased production costs. The new management are developing their own direct sales organization to improve on past sales performance of this product. All production has been for the domestic market and a 20% tax is levied on sales, the same rate as on sales of particle board. Imports of both particle and fiberboard are prohibited. D. Furniture 80. Production of furniture has traditionally been a small-scale industry. Two new plants have recently been set up, one integrated with the Sungchang plymill at Incheon and the other integrated with a sawmill/ joinery plant operated by the timber importing firm of Borneo Trading Co. These are developing large-scale furniture production. Emphasis is being given to the export market and Łales of around US$350,000 have already been achieved this year. This type of product has a large potential in the domestic market, although no serious attempt has yet been made to evaluate this. ALNNEX 10 Page 21 E. Pulp and Paper 81. Details of the location and capacities of the major pulp and paper units are described in Appendix Table 10. Pulp 82. At the present time there are four groundwood pulp mills (3 x 15,000 and 1 x 40,000 m ton per annum), all operating and collectively producing around 80,000 m ton per annum; a semi-chemical mill with a capacity of 7,500 m ton and producing 5,000 m ton per annum and one rice straw and one de-inking mill, both of which are inoperative at present because of high production costs. These pulp mills appear to be too small to be economic. A pulp mill based on rice straw is not likely to be economic in a country that needs rice straw for livestock. There are no chemical pulp mills. The mills are situated in the west of the country in Seoul (3), Gunsan and Jeonju, using pulpwood supplies from over a wide area with road haulage distances of between 100 and 200 km. Production has increased from 20 m ton to 84,000 m ton between 1960 and 1971. Imports over the same period have risen from 36,000 to 209,000 m ton. 83. The four groundwood pulp mills are operating at full capacity. The scarcity of long fiber pulpwood prevents expansion of production. One of the mills (Daehan) has experimented with Lauan waste wood as part of the raw material base, but have fotmd that bleaching costs are increased by some US$14/ton for this material. All mills are integrated with paper manufacture. 84. Pulp imports at present are subject to a 5% duty; there is no tax on domestic production. 85. Proposals are presentLly being formulated for the construction of a chemical pulp mill of 130,000 m ton per annum based on imported raw material, a chemi-groundwood mill of 30,000 m ton per annum capacity, and the expansion of the semi-chemical mill capacity by 13,000 m ton per annum. Paper 86. There are 119 paper manufacturing firms with a total capacity of around 600,000 m ton per annum. Production in 1971 amounted to 390,000 m ton of which 320,000 mn ton was produced by the 21 largest producers, all members of the Korean Paper Manufacturers' Association. Production capacities range from 600 m ton to 50,000 m ton per annum. The oldest plant was con- structed in 1949 and most of the capacity has been established from 1965 onwards. Fourteen of the larger mills are situated in the area of Seoul and the nearby city of Anyang. The largest mill (50,000 m ton per annum) is at Jeonju. Total production has increased from 54,000 m ton to 393,000 m ton between 1960 and 1971; newsprint has increased from 27,000 to 105,000 m ton, cultural papers from 14,000 to 90,000 m ton and kraft and paperboard from 13,000 to 198,000 m ton. Total imports over the same period have increased from 35,000 m ton to 41,000 m ton only. ANNEX 10 Page 22 8X. The excess capacity of the industry is in the cultural and indus- trial papers. The four mills producing newsprint are working at full capacity; these are the mills with integrated groundwood pulp plants. De- spite the excess capacity in kraft and paperboard, imports of these in 1971 were the highest in paper products (27,000 m ton valued at US$11 million). This is partiy explairLed by the more rapid growth rate for this class of paper, which was some 52% of total paper consumption in 1971 compared with 47% in 1968, with domestic demand running further ahead than supply. 88. Excess capacity is expected to be fully utilized by 1973. There- after the intention is to expand capacity to meet the level of domestic demand. 89. Studies are required to evaluate: (a) an overall development plan for pulp and paper based on market studies for demand for these products; (b) the pulping possibilities of the large volumes of plymill/ sawmill wastes and the feasibility of using these to augment domestic supplies of raw materials; (c) the possibility of utilizing large quantities of domestically produced hardwood pulpwood, which may become available for an intensificatiorn of reforestation in Special Development Areas; (d) the technical and economic problems associated with the use of rice straw; and (e) the feasibility of the early construction of a chemical pulp mill based on imported raw material which may later be converted to home produced pulpwood. The possibility of making fuller use of the existing capacity of the kraft and paperboard plants merits attention. Other Forest Industries 1/ 90. There are some 200 small-scale wood using factories and 245 small- scale furniture workshops which, together, consume around 390,000 m3 round- wood annually. Thirty-seven match factories, 41 chopstick factories, 9 pen- cil factories and 3 toothpick factories are utilizing locally grown poplar. M1{usical instruments and sports goods industries, based on imported timbers, have also been developed. Exports of these products have grown from zero to US$4 million between 1965 and 1971, which indicates the vigorous innova- tion of these industries. 1/ Details of tie number of plants and types of products are described in Appendix Table 11. ANNEX 10 Page 23 VI. FULWOOD A.. Background 91. The temperature in Korea is low during the months of November to March with minimum levels of -13.5C in February. Heating is crucially important during this period. The traditional system of heating in rural houses is a combined cooking and heating installation with a sub-floor level hearth, (which can burn fibrous bulky material as well as logs and coal), above which is a cooking slab. The smoke and heat passes through under floor flues and is discharged on the opposite side of the house. 92. A study -/ carried olt in 1964 indicated that fuel consumption in the three colder months (January to March with average temperature of -2.8°) was 625 kg per month compared with 425 kg per month in the three hottest months (June to August with average temperature of 28. 3C). This would indicate that the traditional system is less efficient when used for cooking alone. However, there is a significant, but unquantified, amount of fuel use in cooking rice straw for feeding to native cattle, which may be a partial explanation. The cooking is carried out in order to improve the digestibility and is reported to be widespread. There are some 1.2 million heads of cattle kept by farm families which consumed an estimated 900,000 tons of farm byproducts in 1971, most of which was rice straw. The use of rice straw as cattle feed is reported to be declining with the increase of purchased concentrates, but is likely to remain as a significant absolute quantity for some years. 93. Fuelwood, branches, forest litter and farm residues such as grain straws, are the main sources of fuel for the rural population. Almost all urban households use coal with some using oil, electricity or bottled gas. Most fuel is gathered from the forest lands, farm residues providing from 5-30%. It is not a traded good, each family attending to its own fuel collection. Nonforest owners compete with owners for the limited supply and the scarcity of this materiial has led to denudation of hillsides in some areas with consequent eroslon and the widespread practice of indis- criminate lopping of branches of trees. 94. The Government initialted a large-scale fuelwood plantation program in the early 1960's with the objective of establishing village fuelwood blocks and eliminating the practice of gleaning the hillsides. Planting is carried out by the villagers who are encouraged to form themselves into Village Forestry Associations whiose function is to decide on the area to be planted, arrange for its maintenance and protection and be the agency for receiving subsidies provided by the Office of Forestry in the form of free seedlings and fertilizers. Subsidy payments in 1972 were some US$0.5 million. The VFAs are expected\to provide for those who do not own forest 1/ Research and Statistics Section, MAF, Korea, quoted in UN Korean Forest Survey Project (KOR 23), Timber Consumption Survey. ANNEX 1 0 Page 24 land and to supervise the arrangement of financial reward to the owners of the land used for the fuel blocks. The program has not achieved this ob- jective and a new plan has been formulated. 95. Aggregate estimates indicate that about 1 million ha of fuelwood blocks are required to meet the needs of the rural population for the next 10 to 20 years. Tnis area is based on yield estimates of 7 tons/ha/year on a 7-year rotation 1/. Some attempt has been made to quantify the growing substitution of coal and oil, which are expected to increase from the present level of 1.1 million m ton wood equivalent to 2.4 million m ton by 1981. 96. The consumption of forest fuel (Appendix Table 1) has risen from around 7 million m3 in 1960 to some 8 million m3 in 1970 and is expected to reach 9 million m3 by 1980. Up to the present time these volumes have largely been composed of small branchwood and gleanings. Under the new plan the fuel blocks and pruning and thinning material from plantations are expected to provide the whole of the volume by 1981. Present and estimated future fuel consumption patterns of rural households are detailed in Table 4. Table 4: ESTIMATED FUEL USAGE IN RURAL HOUSEHOLDS 1972 1981 Number of families to be supplied (million) 2.8 2.7 Total fuel required ('000 metric tons) /1 11.8 11.4 Consumption of coal, gas, oil ('000 m ton) /2 1.1 2.6 Consumption of straw and other farm by-products ('000 m ton) 2.9 0.3 Fuel from thinning and pruning of industrial plantation ('000 m ton) 0.9 1.3 Forest gleanings/litter ('000 m ton) 2.7 /3 - Fuelwood plantations ('000 m ton) 4.2 /3 7.2 TOTAL 11.8 11.4 /1 Dry wood equivalent assuming heat calorie value of 4,200 kcal/kg for fuel. /2 Dry wood equivalent assuming heat calorie value of 5,300 kcal/kg for coal briquettes. /3 Alternative source data from OOF yearbook 1971 indicates that fuel from gleanings provided over 95% of total fuel removals in 1970. Source: Office of Forestry. 1/ Species commonly used as Black Locust (Robinia pseudoacacia) and Alder (Alnus hirsuta). Both have alternative uses as timber. Black locust has many thorns which is a disadvantage and work is being carried out by the Genetics Institute to develop a stock (vegetatively) which is thornless. Bushclover (Lespedeza bicolor) has also been successfully used for fuel production and has the merit of yielding fuel after one year without impairing the vigor of the plant. ANNEX 10 Page 25 B. Accelerated Fuelwood Program 97. Office of Forestry records indicate that 800,000 ha of fuelwood blocks have been planted or reserved 1/, but require extensive repair work and enrichment. Under the newr plan a crash program is proposed to estab- lish a further 200,000 ha by 1976 and carry out repair work over the estimated 800,000 ha of existing blocks. The subsidy element for these operations is to be increased by financing half of the calculated labor cost. C. Urgency of the Problem and Possible Strategy 98. The provision of adequate fuel resources in the rural areas is a major problem. The lack of these has been a constraint on the development of the productive use of the land in many areas and led to erosion problems. 99. The Government's program to establish village fuelwood blocks to serve the whole community, including nonforest owners, through village organizations, is basically sound. At the present time any attempt to convert fuelwood into a marketed good would run into two difficulties, the inability of poorer families to pay and the deprivation of what has become a customary habit 2/ in many iareas. 100. There is an urgent need for an indicative overall fuel and energy supply plan specifying the probable developments over the next 20 years of coal, oil, gas and electricity and the areas in which these are likely to be available. 101. Fuelwood requirements would then be determined on an area basis taking account of population, likely impact of alternative fuels and the extent to which existing fuel resources can contribute. 102. The use of the species proposed, which have an alternative use as pulpwood or lumber, would insure against the possibility of creating large blocks of fuelwood plantations which may later become partly redundant. The introduction of some additional timber species (e.g., poplar) into the fuel blocks would be an added inducement to the owners of the land used. 103. The possibility of more intensive use of coal and oil for cooking, particularly in the summer months when heating is not required, and the extent to which fuel is required for preparation of cattle feed, merits further investigation. 1/ Some 50% of the area is classified as natural forest. 2/ It has been pointed out that there is no customary right in land arising from usage in Korea, but: this has not been verified for its general validity. ANNEX 10 Page 26 104. Fuelwood blocks are integral in rural development and could form part of a composite investment project. VII. SPECIAL TREE CROPS A. Generation of Cash Income 105. The development of the cultivation of chestnuts, walnuts, bamboo, paulownia, persimmon, oak and pine mushroom, and other orchard type crops is a responsibility of the Office of Forestry and is being encouraged to increase the direct income of farmers. Chestnuts, walnuts and bamboo are being given special emphasis; chestnuts and walnuts have an export potential in addition to a high domestic demand and bamboo is presently being imported for small handicraft industries. Imports of bamboo in 1971 were some US$1 million. Chestnut production is presently around 3-4,000 m ton and walnuts 200 m ton. 106. Records indicate that some 48,000 ha of chestnuts, 6,500 ha of walnuts and 11,000 ha of bamboo have been planted up to 1972, of which about 70% is estimated to be successful. Yields are now being obtained from the earlier plantings. All plantings have been established in the small private forests, with owners receiving subsidy to the extent of half the cost of seedlings and fertilizers and free extension advice. The subsidies and extension have been administered through the Provincial Forest Administra- tions. 107. Difficulties have been experienced with chestnut gall wasp and inhibited flowering in bamboo, and these problems are currently under inves- tigation by the research institutes. Progress has been made with the devel- opment of hybrid chestnuts resistant to gall wasp damage and Provincial Forest nurseries are now bulking up and distributing this material to the private sector. 108. Implicit in the approach up to recent times has been the assumption that such crops do not require much skill and expertise. The set-backs experienced by the widespread chestnut gall and bamboo flowering difficulties have demonstrated that sound management practices with complementary applied research support are essential for economic production. B. Future Development 109. An accelerated prograra of planting is now proposed which will establish a further 2O,000 ha o:- chestnuts, 5,000 ha of walnuts, and 5,000 ha of bamboo between '973 and 1977 in larger plantations, although the 3cosidy scher3e for small-scala -)lanting will still continue. The growing of these crops in more concentrated blocks would facilitate provision of disease control and intensive management aids. On the other hand, there ANNEX 10 Page 27 may be a difficulty of seasonal availability of labor if these crops are grown more intensively. These questions require further evaluation. 110. Export markets for chestnuts and walnuts will demand high quality standards, and it may be miore profitable to concentrate on a smaller area which can be intensively managed for a high quality crop rather than a large area of lower quality. I 11t. There could be an additional incentive in growing these crops as both chestnut and walnut have a timber value which would increase their profitability. 112. These crops are directly linked with the farm family activities and the future crop development will require evaluation in the context of the overall rural development program. Recent studies carried out by the Office of Forestry indicate potentially high returns 1/ for chestnuts and walnuts and the expansion of these crops justifies further study for possible inclusion in an integrated rirral development project. VIII. OT_ER FOREST ACTIVITIES A. Erosion Control and Watershed Management Relative Priority and Strategy 113. This area of forest activities receives a high priority; some 20% of the total of forestry expenditure and approximately 18% of all forest staff are directed to erosion control work. The hillside erosion and stream channel improvement work is carried out wholly in the private forests. 114. The work program -/ is executed through 36 erosion control stations, which operate under the provincial forest administrations. Proposals for the program are formulated by the Provinces with the Office of Forestry exercising a supervisory functiLon, approving expenditures within budget constraints and inspecting completed works.- 115. Field work is carried out by villagers who receive wage payments for this work. Seedlings, seecls, fertilizer and building materials for stream bank improvement are provided free. Expenditures on current operations are detailed in Table 5. 1/ Financial rates of return of around 20%. 2/ The main areas of operation are in the four major watersheds of the Han, Geum, Yeongsan, and Nagdong rivers which have a total area of 6.3 million ha. ANNEX 10 Page 28 Table 5: ESTIMATED EXPENDITURE ON EROSION CONTROL - 1972 Office of Forestry Expenditure Operation Target Area Expenditure % (million won) 1. Hillside erosion, foundation work and replanting 4,000 ha 463 39 2. Hillside erosion, repair work 2,200 ha 65 5 3. Grass seeding on less severe sites 340 ha 52 4 4. Stream channel improvement 265 km 556 48 5. Sand dune stabilization 145 ha 23 2 6. Roadside rehabilitation - 23 2 Total 1,182 100 Estimated Expenditure by Provinces 256 TOTAL 1,438 (approx. US$3.6 million) Source: Office of Forestry Methods 116. The watershed management component of the ongoing UN Forest Survey and Development Project (KOR 23) has contributed to techniques. One develop- ment, which is being used extensively on hillside erosion combines replanting of the area with a mixture of tree seedlings, (commonly P. rigida, Alder and Black locust), seeds of herbaceous plants (Arun dinella, Lespedeza and Black locust) and ground clovers and grasses in one operation using a straw matting for initial soil stabilization. The effect of the operation is to re-estab- lish a vegetative cover with a productive capacity, which is additional to the protective functions of increasing precipitation absorption and prevent- ing soil wash. Under controlled cutting, fuel yields of grasses and shrubs can be harvested from 2-3 years after treatment, and a sustained yield of fuelwood obtained from the seventh year onwards. Costs 117. Costs of hillside erosion control work are currently estimated at between 150,000 (US$375) to 180,000 won (US$450) per ha 1/. In a typical site, the foundation work is undertaken in the autumn and the area is planted and seeded in the following spring. Records indicate that about 40% of the area treated in the past has required repair work, which is estimated at some 30,00 won (US$75) per ha. The stream channel improvement includes a series of check dams and the walling of the banks. Present average costs are estimated at some 2,300,000 won (US$5,600) per km. Labor 1/ Office of Forestry data. Foundation work is around 100,000 won per ha and planting and seeding 50,000 won per ha. ANNEX 10 Page 29 costs account for some 87% of the total costs of hillside erosion control and 83% of stream channel improvement. The UNDP (KOR 23) 1/ costs for similar work being carried out in the Dongjin Gang watershed are substantially the same as those quoted. The UNDP costs estimates do not include management costs. Area Treated and Extent of Area of Existing Erosion 118. Records indicate that some 450,000 ha of hillside, 800 km of stream channel and 1,000 ha of sand dunes have been treated between 1961 and 1971; some of this work re!quires repair. At the beginning of 1972, the area of severely denuded and eroding land requiring treatment was estimated to be 70,000 ha 2/. A recent UNDP study 3/ carried out over 1.6. million ha of the Nagdong river basin evaluated the erosion position as follows: High (over 68% of surface area denuded and eroding) 30,000 ha 2% Medium (33-67% " " Fe I ) 117,000 ha 7% Low (15-33% " " " " " ) 196,000 ha 12% Not eroding (less than 15% of surface area denuded and eroding) 1,306,000 ha 79% TOTAL 1,649,000 ha 100% 119. The Nagdong Survey supports the overall estimate for the country of around 70,000 ha of severe erosion still existing. However, the survey indicates that the area of med:Lum rating should also receive control measures and assumes treatment costs would be the same for both high and medium areas. 120. Targets for completicon during the Third Five-Year Plan are 50,000 ha of hillside (40,000 ha to be re-established with forest cover and 10,000 ha with grasses), 2,000 km of streambank improvement and 500 ha of sand dunes. Land Use and Watershed Management 121. In general, the geology of the forest lands of Korea, gneiss and schists giving rise to sandy loams, is susceptible to erosion. At the same time, the rate of release of soil nutrients is high because of the rapid weathering of the parent material and eroded areas very quickly recover once sustained management regimes are instituted. The key to the problem is the introduction of land use activities which will ensure sustained management. In areas where erosion is not severe, it is technically feasible 4/ to 1/ Accomplishment of forest land rehabilitation works, Dongjingang Survey shed, 1968-72. 2/ By Office of Forestry. 3/ Foresty Survey and Development Project (KOR 23), Pre-Investment Survey of the Nagdong River Basin, 1971. 4/ Work carried out at the Alphine Experiment, Pyongchang-Gun, Gangweon Province. ANNEX 10 Page 30 institute alternative land use other than forestry, i.e., grazing and cul- tivation, on a sustained management basis which would not impair the catch- ments. To the extent that these productive functions can be shown to be economically viable, they have the merit of providing a direct incentive to the user to maintain the area at levels of fertility which could satisfac- torily maintain the catchments. Contributary Causes of Erosion 122. In addition to the removal of some 8 million m ton of raw material for fuel, a major cause of erosion, it is currently estimated that about 20 million m ton is removed for farm compost and 3 million m ton for green manure and forage. These removals are concentrated in the forest areas closest to villages. It is obviously difficult to measure and differentiate between removals for fuel and compost and it has not been possible to evaluate the accuracy of estimates of compost and forage materials. The comments in Chapter VI concerning the pattern of land ownership and user customs apply equally to the gathering of compost material. Cleaning and litter raking, which impair the efficiency of watersheds and carry a constant threat of erosion, reflect only the reality of the situation since villagers have had no alternative source of raw materials for their needs. Any attempt to effect repairs to the catchments and prevent further erosion by prohibitive legislation, which are not accompanied by an alternative source of raw material, is only partially successful. Failure to provide the alternatives has been a major reason for heavy expenditure which has been incurred on repair work. Feature Management 123. Management of the watersheds to provide maximum stream flow and reduce siltation is vital to the maintenance of agricultural activity in the lower areas. The basic need is the establishment of vegetative cover to improve absorption of precipitation and prevent soil wash. This does not preclude the use of part of the area for nonforestry purposes. The early cash flows which could be expected from livestock production, for example, could be a more attractive land use to farmers than the longer term benefits from reforestation and could be instrumental in inducing better land use practices among the rural population. 124. The provision of a sustained fuelwood supply would be a major step in removing a primary cause of erosion. The question of the extent and significance of removals of composting materials and forage requires further evaluation and a strategy developed to provide alternative sources where these removals can be shown to have a deleterious effect. 125. The present methods of treatment over comparatively small areas are absorbing a large proportion of the available resources. A total staff of 300 are employed, 360 of whom are professionals and 400 technicians. In average terms, this indicates a small territorial charge for actua'l erosion control work of around 10 ha of hillside and 3 km of stream channel per man, and the existing staff could prcbably handle a considerably enlarged program. The hillside techniques being emphasized are those which transform an eroded ANNEX 1 0 Page 31 site into a productive one, giving a yield of raw material in addition to the protective function. The average costs of this technique are high. The development of lower cost techniques for the establishment of vegetative cover only, which could be used in erosion areas where there are existing supplies or alternative means of producing fuel and compost for farm use at lower cost, would release funds for treating larger areas and speed up the programs. In some areas, simple closure is sufficient to achieve a satisfactory vegetative cover 1/. 126. There is some doubt as to the extent of the area requiring the expenditure of physical inputs and there is a danger that expensive repair methods may be used in areas where such costs are not justified. A broad distinction can be made beitween areas in which the disbenefits can be measured in relation to the damage being incurred and general protection areas where these are not quantifiable. With the former, cost/benefit analysis, within the range of available techniques, will indicate the areas justifying expenditure on t:his work. The latter areas are more difficult to evaluate in cost/benefil: terms because of the subjective estimates of the disbenefits, but this analytical approach would minimize the risk of uneconomic expenditures. The administration of this work is discussed in Chapter VIII. B. Forest Protection 127. Some 22% of the total forest staff and 10% of expenditure on forests are directed to protection. The main activities are the prevention of illegal cultivation and resettlement of scattered forest households, control of illicit cutting, pest control and fire prevention and control. Expenditure in 1972 is detailed in Table 6. Table 6: FOREST PROTECTION EXPENDITURE 1972 Million Won Administration 133 Resettlement of shifting cultivators 220 Control of forest pests, 243 Control of illegal cutting 50 Fire protection 24 Purchase of protection equipment 90 TOTAL 760/1 (US$1.9 Million) /1 Includes both Provincial and Office of Forestry Expenditures. 1/ Forest areas in the de-militarized zone in the north of the country provide a good example of thl;s. ANNEX 10 Page 32 Illegal Cultivation and Resettlement 128. It is estimated that there is currently about 46,000 ha of illegal cultivation; 16,000 ha in the national forests, 7,000 in provincial forests and 23,000 ha in private forests. This is shifting cultivation which formerly was commonly accompanied by the construction of homesteads in the proximity of the cultivation areas. There was a big upsurge in this practice follow- ing the inflow of refugees after the Korean War. 129. A positive policy was initiated in 1965 which was directed at providing alternative housing and permanent areas for cultivation for the scattered forest cultivators. Between 1965 and 1968, some 8,000 houses were constructed in villages and 10,000 ha of permanent farmland, mainly from the forest, made available for resettlement. For security reasons, the location of this development from 1969 has been specifically directed to village location of scattered forest homesteads in the northern part of the country. Between 1969 and 1972 a further 7,000 households and 4,000 ha of permanent cultivable land have been resettled. The administration of resettlement is jointly undertaken by the Ministries of Home Affairs, Agriculture, Health, Provincial Governments and Office of Forestry. Total expenditure in 1972 is estimated at 900 million won (US$2 million), of which 23% is being provided from Office of Forestry Funds. 130. There remain some 28,000 forest homesteads, requiring about 30,000 ha of permanent cultivable land, to be resettled in villages. The Third Five-Year Plan provides for 2,000 new homes a year up to 1976. 131. With some acceleration of the positive approach which has been pursued in dealing with shifting cultivation the problem can be solved. Besides the fund flows which have been required for the physical inputs, the transfer of forest dwellers to villages has entailed considerable effort in altering people's attitudes. At the present time, there are no full-time forest workers in the country; planting and tending operations are carried out by farm family labor on a casual basis, much of which is unpaid in the private forests 1/. The creation of the Special Development Areas and the Forest Corporation for the purpose of establishing large-scale plantations will require a full-time labor component of skilled workers. This develop- ment may be used for facilitating some of the resettlement of illegal cul- tivators. Forest Pests and Diseases 132. The problem of insect attack, particularly the pine caterpillar (Dendrolinus spectusolis) and the pine gall midge, has been widespread. Control measures, based upon the limited research which has been available from the research institutes, have included the use of ground and aerial spraying, and the construction of larvae traps over wide areas. There are also problems with blister rust on white pine and shoot blight in larch. 1/ Discussed further in section D, Chapter IX of this Annex. ANNEX 10 Page 33 133. Control measures are clifficult to implement because of the wide- spread location of the plantations and the problem of effective managen.nt in a fragmental ownership pattern. The technical problems associated with insect pests and disease require further evaluation. This is an area in which technical assistance can make a significant contribution, by the provision of foreign specialists in these fields. Fire Protection 134. This is becoming an increasingly important problem as more areas become planted and successful closure gives rise to vigorous growth of grasses and herbaceous cover. There is a critical period during plantation establishment before the canopy closes when the ground vegetation is thick and is capable of rapidly carrying fire over large areas. This hazard will be new to Korea forestry and requires careful evaluation. 135. In the past, access roads have been kept to a minimum in national forests to prevent illegal fellings. This policy will require modification to provide a road system integrated with the laying out of five breaks in new plantations. In the private forests, fire protection depends entirely on the vigilance of the local owners. This will require reinforcing with other aids. 136. This aspect of protection is at present under study to evaluate the requirements of different areas, and is another problem on which technical assistance provided by specialist advice would make a significant contribu- tion. IX. INSTITUTIONS A. Forest Administration 137. There are three linesi of forest administration: the Office of Forestry, Provincial Forestry Administrations and the Forestry Associations. In the line administration of the Private Forests, the Office of Forestry has the advantage of the very effective public relations and communications systems of Central Government amd the subsidy payments. These are, however, to some extent offset by the considerable degree of autonomy which the Provinces and Associations exercise in their forest activities. There are also problems of horizontal linkage between the three lines and a weakness in accountability in the system. A chart setting out the existing institu- tions of administration is included in Appendix Table 12. Office of Forestry 138. The Office of Forestry operates as a semi-autonomous department of government and is responsible for formulating national forest policy. The department is organized into a Planning and Coordination Office, which controls budgetary allocations, and three Bureaus dealing with Forest Administration, ANNEX 1 0 Page 34 Reforestation and Forest Management. The Bureaus have direct line management with three national forest stations which manage the 840,000 ha of National Forest, and direct linkage with the Provincial Forestry Administrations and the Forestry Associations. Besides the Bureaus, there are three research units, a general unit covering forestry and forest industries, a genetics unit and a forest resource and survey unit. The office also maintains the overseas forestry attache in Jakarta. A total of 940 staff are employed; 150 in Office of Forestry, 240 in the research institutions and 550 in the aational forests. The Office has no effective control over the staffing of the provinces and associations. 139. The subsidy payments are the main linkage in the coordination of the work programs of the provinces and associations for the Private Forests. The work proposals of the provinces and associations are submitted for approval and work schedules qualifying for subsidies are authorized by the Office of Forestry within the financial constraints of the annual budget. AD inspection procedure is in operation for erosion control payments but this has not been applied to the other forestry operations. 140. The Office of Forestry also issues directives to the provinces concerning the implementation of regulations for forest land use, felling permits, game laws, etc. In addition, it prescribes the prices of seedlings for sale by private nurserymen. In the production of minor forest products, the Office of Forestry initiates policy and provides subsidy inducements through the Forestry Associations. Provincial Forest Administrations 141. Each of the nine territorial provinces have their own forest admin- istration which operates as a department of the Provincial Government. The administrations have direct control of the erosion control stations within their territorial boundaries and the provincial forest stations managing the Provincial Forests. They also undertake management of some scattered areas of National Forests. They all operate research stations, which have a loose technical linkage only with the national research institutes. The Provincial Forestry Administrations exercise line administration of the Private Forests through sub-offices which are maintained on an administrative (Town and County) basis. In total, there are some 240 staff at provincial offices, 400 employed at erosion control stations, 180 at provincial forest stations, 100 at provincial experimental stations and 1,430 at Town and County level. Recruitment of provincial staff is decided by the province. 142. Th.le town and county staff administer the Private Forests for pur- poses of issuing felling permits, coordinating the reforestation work and arranging for the supply of tree seedlings with private nurseries 1/, and the subsidy payments for these, fertilizer issues, and labor costs. 1/ All seedlings for private f:orest plantations are supplied by private nurseries which raise stocks on contract at prices laid down by Office of Forestry. ANNEX 10 Page 35 143. In addition to the subsidy payments from Office of Forestry, the Provincial Forest Administrations have sources of funds from provincial budgets (which range from some 2-8% oE total Provinciai Government expenditure), the allocation of which is decided locally. These local funds are used for staff salaries and expenses, administering the Provincial Forests and research stations, and to augment the subsidies received from Office of Forestry for reforestation, erosion controL and protection. Forest Associations 144. These form the second line of administration between the Office of Forestry and the Private Forests. The three-tier organization is composed of the National Forestry Association, Town and County Forestry Associations and Village Forestry Associations. Originally the organization was formed to handle the production, collection and marketing of minor forest produce (oak and pine mushroom, cork, kudzu fiber for wallpaper, etc.), and encouraged to establish tree nurseries for self-supply and sale to the private sector. However, these nurseries do not supply any significant quantity of the seed- lings used in the subsidized plantations program. In 1968, the Office of Forestry subsidy payments towards fuelwood plantations establishment was transferred from the Provincial Forestry Administrations to the Forestry Associations. 145. The organization employs a total staff of some 1,250, thirty of whom are headquarters staff and 1,220 are employed in the provincial branch offices and the county associations. 146. The objective of the organization is that every village should have its own Village Forestry Association (VFA) in which all heads of house- holds are represented (both those with and without forest land) and whose function is to develop and protect the private forest lands for fuelwood, timber and minor forest products, with technical guidance being given by Provincial Forestry Association staffs. Each VFA elects a member of the County (Gun) Forestry Association which employs two or three trained foresters and an administrative staff to handle payment, collection and delivery of minor forest produce, receive subsidies and arrange inputs for fuelwood plantations establishment. The County Forestry Associations elect the President of the National Forestry Association. The National Forestry Association maintains a head office in Seoul and branch offices in each of the provinces. The President maintains direct communication with the Office of Forestry regarding policy issues concerning minor forest produce and fuelwood plantations establishment. 147. There are at present 21,500 Village Forestry Associations and 151 County Forestry Associations registered. However, a recent appraisal 1/ of the Forestry Associations indicates that about 50% of the County and 75% of the Village Association are ineffective. 1/ Forestry Policy and Major Works, 1972, OOF. ANNEX 10 Page 36 Proposed Forest Development Corporation 148. This proposed new institution under the legislation now being considered (para 38) would form an additional administrative chain. It would operate with its own management and funds in the proposed Special Development Areas. The President and executive staff would be appointed by the Office of Forestry. The Corporation's primary objective would be the establishment and management of industrial plantations; it would also administer the protection forests which form part of a Special Development Area. The Corporation would be directly accountable to the Office of Forestry for the efficiency of its work performance. 149. The new legislation envisages the separation of user rights from ownership rights for the private forests falling within "Special Development Areas," with the user right vesting in the Corporation for purposes of controlling the management of the area. Owners would receive a 10% share of the gross revenues from the plantations. Whilst this separation of user rights would be a significant change in land use patterns, the widespread custom of gleaning referred to in Chapter II(A) has to some extent conditioned owners for a development of this sort. There are however inherent difficult- ies, and the reforestation program would be continuously at risk, if the full cooperation of local owners were not secured. For this reason, alternative means of land requisition should be fully explored. These could include the outright purchase of land; a leasing system, in which the owner is paid a rental to be charged against his 10% share of gross revenue; a leasing system in which the owner is paid a rental but with an option to sell. Separation of Functions 150. The present institutional structure has three inherent disadvan- tages. There is the possibility of conflicting priorities arising from the autonomy of the provinces and associations. These may be pursuing forestry programs which are desirable in the context of local objectives but do not fit within a national strategy. There is also the risk of duplication in some of the work areas; this is particularly relevant to the research stations. 151. In addition, there is the lack of accountability in the system of subsidy payments. These are paid through the long chain of indirect res- ponsibility where wastages can easily occur, to recipients who are not under any enforceable contractual agreement to accept an obligation. Under the present system, should a forest owner fail to maintain a plantation for which he received .a subsidy, the VFA would be authorized by the Forestry Administration to undertake the maintenance work. The VFA could then bring sanctions against the forest owner and the VFA costs would be a charge against gross revenues from future sales of the owner's trees. This would be dif- ficult to implement for a number of reasons; the long period before benefits accrue, the problem of establishing effective VFAs in perpetuity and the further problem of protection of the plantations. This latter problem would probably be a growing function with the increase in the number of owners against whom sanctions were taken. ANNEX 10 Page 37 152. The proposed formation of a Forest Development Corporation would be a significant change in the administrative structure. This will make explicit the function of industrial plantation establishment and direct staff and fund flows to achieving this objective in areas which have been rationally selected with respect to future industrial locations. 153. The genesis of a similar development has already been introduced in erosion control work, with the setting up of a network of control stations. This could be further developed so as to bring responsibility for the manage- ment of erosion control into one authority whose function would be the evalua- tion of the competing claims foir work in different areas, development of a range of techniques with the obJective of minimizing costs, and direct control of and accountability for a national policy. This work spans the disciplines of water resources and agriculture as well as forestry, and the management of it would ideally be composed of an integration of these. 154. Both fuelwood blocks and nonwood tree crops (chestnuts, walnuts, etc.) are farm-forestry activities closely integrated with other farming activities. The network of comnmunications with the private forest owners which the Provincial Forestry Administrations have developed appear to be well suited to continue with the implementation of policy relating to these activities. There is some doubt as to whether the VFAs can be expected to undertake the function of exercising a management role in determining land use for fuelblocks and providing management continuity. It may be possible to strengthen VFAs by merging them with other local institutions which have a broader responsibility for rural development and can be expected to safeguard the investments in fuelwood blocks more effectively. 155. Any separation of the function along the lines discussed would entail a redistribution of responsibilities within the internal structure of the Office of Forestry and the division of responsibilities between Office of Forestry and provinces. It is expected that most of the staff for the proposed Forest Development Corporation would be recruited from existing staff (both Office of Forestry anid Provincial and Forestry Associations), and these redeployments would facilitate changes. B.. Research Emphases and Weaknesses 156. Very considerable effort has been put into forest research and the facilities of the three national institutes are well developed. Current Office of Forestry expenditure on t4ese is comparatively high, about 11% of the total expenditure, althougih some of this can be transposed to direct forest management. There is some overlapping of functions and improvements can be made in the orientation of the program. Closer links are needed between ongoing associated fieldwork and the forest industries. ANNEX 10 Page 38 Forest Research Institute, Seoul 157. The Institute employs 105 staff and operates sections dealing with (1) soils and soil chemistry (fertilizer trials, watershed management and erosion control); (2) protection (entomology, mycology and wild life); (3) reforestation (see production and storage, nursery practice and species trials); (4) utilization (wood technology and chemistry, suitability of species for industrial uses); (5) management (forest mensuration and thin- ning trials, and financial analysis of plantations and nonwood tree crops); and (6) minor forest products inspection. There are three branch stations, one in the northwest (Gwangnung) and two in the southeast (Jinju and Jinhae), which carry out nursery work, species trials and mensuration studies. 158. Mention has been made in Chapter VIII of the need for technical assistance to strengthen investigations into disease and pest problems. 159. The ongoing work of the UNDP (KOR 23) in three selected watersheds complements the work of the soils section. The exchange of information in this field has been disappointing and the project could be used to greater advantage in a critical analysis into erosion control methods and costs which is a priority area for study. 160. The utilization section has concentrated on the timber properties and possibilities of industrial use of local timbers. Tne important area of utilization of the large volumes of Lauan waste from the plywood industry has not yet been appraised and this justifies early investigation. A closer formal linkage with the forest industries and the Ministry of Commerce and Industry would provide a wider basis from which to identify the priority areas for investigation. 161. Important areas which are not being covered in the management section are methods study into basic reforestation operations; the develop- ment of the use of hand tools (a simple but widespread example is the apparent absence of any systematic pruning techniques); fire protection and forest roads. The yield tables which have been produced are based on men- suration studies in the scattered older stands which exist, which are not representative of potential yields which can be expected from intensively managed plantations, and can therefore be misleading 1/. The permanent sample plots now being established for Larix, P. koraiensis and P. rigida, would serve a wider purpose if they were expanded to enable study or differ- ent planting espacements, thinning and pruning regimes and other treatments. Permanent plots have yet to be established for the remaining timber and fuelwood plantation species, which are currently being planted. Plots should also be established in the species trials of exotics. Studies should include data to determine the volumes of merchantable timber (under bark to a 5 cm top diameter) as well as gross volume. 1/ Estimates of yield given in the UNDP (KOR 14) Interim Report are about double those quoted in the FRI Yield Tables for JApahese Larch, and P. densiflora and 30% higher for P. rigida, at rotation of 30 years. ANNEX 10 Page 39 162. There is an overlap with the Forest Genetics Institute in the work of the reforestation section in seed propagation and species trials and coordination of these is needed to prevent duplication, particularly as both institutes are operating three branch stations each. Institute of Forest Genetics, 'uwon 163. The Institute employEs 51 staff and operates three tree-breeding stations, situated in the northlwest, central and Jeju island. The institute has achieved international fame in the development of the species P. rigitaeda, which is a hybrid of P. rigida and P. taeda. 164. The principal activit:ies of the institute are the establishment of seed orchards for the nine main species of the reforestation program, devel- oping new hybrids by further back crossing of P. rigitaeda and crosses of upland and lowland poplars, development of a thornless variety of robina pecudoacacia (black locust) for fuelwood blocks, breeding of grasses for erosion control sites and establishment of species trials. Seed Orchards and Collection 165. The three breeding s:ations have been established (Jeju in 1967 and the others in 1970) for developing the seed orchards and species trials. Records indicate that some 485 ha of orchards have been established to date with a further 265 ha planned for establishment by 1974. These are expected to become yielding by 1980-82 and eventually to produce sufficient seed to sustain a 70,000 ha annual planiting program. 166. During the interim period until the seed orchards become productive, a system has been developed in recent years to restrict seed collection to some 1,200 ha of selected forest plantations in the National Forests and a similar area selected in the Provincial and Private Forests. The Institute has been involved in selection of the areas for tree qualities, but the collect- ion and distribution are administered by the National Forest staff in the National Forests and the Provincial Administration working through the Village Forestry Associations in the Private Forests. Because of the importance of provenances in plantation development and in view of the prevalence of undesirable seed sources and the financial incentives of the private nurseries to produce given quantities of seedlings against firm orders, there would be some merit in introducing an inspectorate operated either by the Genetics Institute or FRI to supervise seed collection and supply. Development of Hybrids 167. The results obtained so far with hybrids are very impressive; plant- ations of P. rigitaeda are indicating growth rates of some 200% higher than the P. rigida control plots, and those of hillside poplar (P. alba x P. gland- losa) some 500% higher than the P. alba control. Stocks from these new species are now becoming available for use in the plantations program and continuation of this work has a potentially high contribution. ANNEX 10 Page 40 Exotic Species Trials 168. Introduced hybrid poplar from Italy (I-214 and I-476) for lowland planting is indicating 250% growth rates over indigenous poplars and encourag- ing results have been obtained with direct importations of Japanese alders. Trials of exotic softwoods, with the exception of P. taeda, which has been found promising in the southern coastal area, have so far not shown any real promise of adaptation to commercial plantations. This area of the work justi- fies more rigorous study and would benefit from technical assistance in devising a strategy of species trials establishment. Forest Resource Survey Research Center 169. This center was set up in 1969 on the completion of the first phase of the UNDP study (KOR 14-23). It employs 83 staff and is now equipped to undertake systematic inventory and soil suitability surveys. 170. The center is now undertaking the survey of the whole forest area operating to work schedules directed by the Office of Forestry; the present targets are to complete detailed inventory surveys by 1976 and soil suitability surveys by 1981. 171. The function of the center has now changed from one of research orientation into a management aid, and the future work it carries out will be predominantly in the management field. There seems to be no reason why this center should not now form an integrated part of forest management. It will have an important role in determining the location of the Special Development Areas. Provincial Research Stations 172. Each of the provinces maintains its own research station. These stations also raise seedlings for the small planting programs in the Provin- cial Forests, bulk up supplies of grafting material of poplars and chestnut for the private nurseries and raise stocks of ornamental trees for amenity planting. In total, some 100 staff are employed at these stations. They maintain loose technical links with the FRI and Genetics Institute and cooperate in some field trials. The work programs of these stations are decided by the Provincial administrations and are not coordinated to any specific research problem areas. They are not making any significant con- tribution to the research problems associated with the forestry program and the questions of the need to operate all these stations and the work programs they should be undertaking justifies further clarification. C. Education and Training General Background 173. There are nine university colleges offering forestry degrees, six of which are state colleges and three private. The courses are usually of ANNEX 1-0 Page 41 four years, the first two years joint with agriculture and the second two years more specialized in forestry subjects. Entrance to university is commonly from agricultural hLgh school which teaches forestry subjects. A further stream of formal traiLning is provided by some of the agricultural junior colleges, which conduct 5-year courses for junior high school leavers, which are intended for junior staff training. 174. The major issue in education is the content of the courses. These are considered to be wholly academic and do not provide any technical train- ing in practical forestry. To fill this gap, it is proposed to establish a Forestry Training Center 1/, under the control of the Office of Forestry, which will operate practical field work courses for graduates and non-grad- uates. Consideration should be given to providing more practical training at existing forestry schools. 175. There is a further problem of the employment possibilities for students; about 220 university students and 50 junior college students are graduating annually. The rat.e of turnover of professional and technical staff is estimated to be 5% per year, which creates vacancies in the exist- ing posts of some 130 graduates and 20 college students. This situation could be eased by reducing the number of forestry faculties. Position of Existing Staff 176. The present staff have reached their various levels of seniority with this general lack of practical training in their formal educational background. Nor is there existing an area of reforestation and forest exploitation which could serve as a model for in-service training. This lack of adequate understanding of the practical issues of forestry is a serious constraint to the reforestation program with respect to planting, organization and implementation. For example, the plantations program so far developed has not taken account of the location of the forest industries and the models used for financial analysis have omitted costs of roads, fire protection, management and the related profitability of the projected forest industries. Provision of Technical Trainiin 177. The Forestry Training Center, which the Government is proposing to establish with external assistance, would provide intensive specialist courses for senior staff, intermediate courses for junior staff aud intro- ductory courses for new recru;Lts from both the universities and junior col- leges. The proposed location is at the Gwangnung Forest Research Branch Station (where there is some 2,400 ha of National Forest) situated 24 km northeast of Seoul. Accommodation for some 130 students is envisaged. 1/ The proposal is probably being put forward in the UNDP count-ry program for 1973 and is designed to provide staff and training facilities in the disciplines of plantation establishment, use of tools and equip- ment, logging, forest engineering and watershed management/erosion control. ANNEX 10 Page 42 178. The main arguments supporting the establishment of a new forest training institution rather than modifying the existing ones are: the structural changes which are required in the present curricula could not be implemented in the short-term because of the lack of suitable staff and equipment; there is the urgent need to provide intensive training courses to existing staff; there will be a continuing need to provide practical training to non-graduates. 179. The first argument is difficult to justify particularly as there is some concensus between university staff and the Office of Forestry on the need for changes in curricula. The problem of the provision of intensive training courses for existing staff and continuing courses for non-graduates are more readily associated with a separate training institution. There is in fact a requirement for both changes in the university courses, which will entail additional equipment and facilities and additional staff and the es- tablishment of a forestry school for non-graduate forestry training. 180. An alternative approach which could provide an interim solution and meet the three immediate requirements would be the joint management of the proposed training center by the Office of Forestry and say the Seoul National University, providing courses for the three streams of students. This would have the advantage of building on to an existing institution and so facilitate the absorption of the new school when the expatriate staff leave, and also be a forceful influence in hastening the desired re- orientation of university courses. It would also reduce the risk of adding to the present excess capacity. The mission recommends that this alternative be given serious study. Assessment of Training 181. A complementary question is the future staffing requirements and suitable training facilities to meet these. At the present time there is no non-professional forester grade in the staff organization and there is a gap between forest guard duties and professional duties which tends to be filled on an ad-hoc basis by an upward or downward adjustment in the employment roles of these grades or by temporary posts. With the intensive management of large plantation areas which is contemplated in the proposed Special Development Areas a substantial expansion of this forester grade can be expected. 182. A thorough study of the future staffing requirements to implement the forestry program will be necessary before the proposed training school capacities can be assessed. This would include work schedules for the different tasks associated with the targets set by the program and the staffing categories needed to mieet these. However, the preliminary forma- tion of the Forest Training Center, which is considered to be sound in principle, should not be held up for the completion of such a study. ANNEX 1 0 Page 43 D. Forest Employment Forestry Staff 183. The total number of full time staff employees in forestry is some 4,500; 2,500 of them have professional training, 400 are technical personnel, 600 are administrative and 1,000 are employed on protection duties. Details of the distribution of employment and type of posts are given in Appendix Table 13. With the exception of a few special posts in the Office of Forestry, Office of Forestry and provincial staff are paid in the Government scale Grades 3 to 5 the maxima of which are currently 21,400 won (US$54) monthly to 43,000 won (US$107) monthly. About 50% of staff are paid in the Grade 5 scale, 40% in Grade 4 and 8% in Grade 3. The salaries of the Forestry Association staff are reported to be higher than those of the Government. 184. There is virtually rLo mobility between provincial staff and between provinces and Office of Forestry, and this is attributable to the very low turnover rate in staff and also the absence of any unified staffing organi- zation, the provinces controlling their own staff requirements and composition. Because of the low turnover, t:he average age of staff tends to be clustered in the age groups 30-40 years, which accounts for some 65% of staff, 25% are in the age group 40-50 years amd only 10% in the under 30 group. 185. The unusually high proportion of professionally trained staff is mainly explained by the absence of a technical (synonymous with non-profes- sional) forester grade. 186. The fragmented areas in which staff are employed and the diversified nature of the tasks they undertake make it difficult to appraise the adequacy of the numbers of existing staff in relation to the actual forestry program. In overall terms, and assuming that there were free mobility of staff between different tasks and locations, the present numbers would be easily able to manage the targets of the present development plan. In plantations estab- lishment, for example, a team of some 60-70 foresters would be expected to undertake an annual program oi- 10,000 ha of concentrated blocks. Labor 187. With the exception of some nursery work, there is no full time employed forest labor, work being undertaken on a casual basis by farm families. About 60-70% of the labor input in forestry is paid labor, the rest being the contribution oE the owner (or member of the VFA for fuel blocks), as the quid pro que of the subsidy payments. For this reason, it is difficult to estimate the labor employment being generated by forestry. A rough estimate 1/ indicates tha,t the total number of paid man days in forestry employment in 1972 is in the order of 12 million, equal to some 40,000 man years. If the non-wage labor is included, this figure would 1/ Based on expenditures by Office of Forestry and Provincial Governments. ANNEX 1 0 Page 44 increase by some 30-40%. These estimates are expanded in Appendix Table 14. The daily wage rate is currently from 360 won to 430 won equal to about US$1.00. 188. The absence of a permanent labor force, even on a part year basis, is a constraint to the development of technical expertise in carrying out forest operations. The casual system of employment used is not conducive to developing the skills of trade and with the emphasis now being placed on creating large blocks of plantations, in which work schedules will require to be tightly controlled on a seasonal basis, the future labor employment pattern will need to be re-appraised. For example, the present task for planting of 200 seedlings per man day could probably be improved upon. The technical training being planned for forest staff will give a broader basis for the dissemination of improved techniques. 189. A related question is the seasonal availability of labor. With the present casual basis, where a situation of bunched labor demands arises, the farm family labor can be expected to give precedence to their farming needs which adversely affects seasonal forestry operations such as planting and weeding. Labor availability for off-farm employment varies considerably in different areas and this question requires evaluation in relation to specific reforestation project areas. 190. Staff and labor together (45,000 to 60,000 man year equivalent) represent about 1-1.5% of the total employment in the agricultural sector, which is estimated at 4.5 million 1/. Forest Industries 191. The total employment in forest industries is estimated at 77,000 persons. The plywood industry is the biggest single employer of labor with some 20,000 employed in the 11 major mills and around 1,000 in the remaining plymills. The pulp and paper industry is the next largest employer with an estimated 15,000 employees and sawmilling ranks third with some 14,000 em- ployees. The employment pattern is detailed in Table 7. 1/ Bank of Korea Monthly Economic Statistics, August 1972. ANNEX 1 0 Page 45 Table 7: ESTIMATED EMPLOYMENT IN FOREST INDUSTRIES Total employed ('000) Plywood 21.0 Pulp and,paper 15.0 Sawmills 14.0 Wood panels 0.5 Furniture 5.0 Matches 3.5 Kudzu fiber wallpaper 2.5 Bamboo 1.0 Toothpicks, chopsticks, pencils 4.5 Farm tools, wooden utens:Lls, cork, sports goods, boat building, etc. 10.0 TOTAL 77.0 192. The larger plymills operate their own training establishments and some provide accommodation and canteen facilities for their employees. The proportion of female employees in the plywood industry is around 40%, and it is a common practice that only unmarried women are employed, indicating an abundance of labor for this type of employment. Plants are commonly operated on a 2 x 11 hour shiit basis for a six-day week. The number of workers in this industry appears to have remained fairly constant over the last 3 years at around 21-22,000, whilst total production has increased in the same period by some 50%, which indicates significant increases in labor productivity. 193. Wage scales of forest industrial employees are reported to range from 10-15,000 won per month for unskilled workers, 25-35,000 won for skilled workers, and 30-100,000 won for technicians. 194. The employment generated by forest industries is some 5-6% of total employment in manufacturing 1 ' and some 4% of persons in regular paid employ- ment. X. FINANCIAL E'ESOURCES AND EXPENDITURES A. Source of Finance 195. Total expenditure in forestry 2/ in 1971 was some 7.5 billion won and is expected to be 8 millicin won (US$20 million) in 1972. Office of Forestry expenditure accounts for about 80%, Provincial Governments 16% 1/ Estimated at 1.3 million - BOK Monthly Eco. Statis. August 1972. 2/ This does not include the major forest industries. ANNEX 10 Page 46 and the private sector 4%. About 25% of Office of Forestry expenditure is financed from the revenue generated by the National Forests. Some of the provincial expenditures are financed from provincial sources, and the re- mainder is financed from their budget allocations from the Ministry of Home Affairs. 196. The NACF provides loans for private forestry -/ but these are limited to a ceiling of 50 million won a year (US$125,000) and have only been taken up to the extent of some 33% of this amount. 197. The sources of finance and expenditures on forestry are summarized in Table 8. Further details are given in Appendix Table 15. Table 8: SOURCES OF FINANCE AND EXPENDITURE IN FORESTRY Source 1971 1972' 1973 (committed) .......... .(million won). Office of Forestry (a) Revenue from National forests 1,641 1,575 1,530 (b) Central Government 4,226 4,833 5,519 Sub-total 5,867 6,408 7,049 Proyvincial G.ov.ernm.ents 1,395 1,283 1,719 Private (a) Own Fin,ance 194 295 295 (b) NACF Loans 16 16 16 Sub-total 210 311 311 TOTALS 7,472 8,002 9,079 198. The.revenue from National Forests is derived from sales of timber, which contribute about 40%, sales of miscellaneous items and rents 25% and the sale of isolated areas of National Forest Land, which have.provided the balance of, around 35%. The easily saleable land has been disposed of and it is becoming progressively more difficult to sustain revenue from this source. One of the objectives of these land sales has been to finance the purchase of private land to add to the larger blocks of Nat4onal Forests for which about 20% of the revenue from land sales in 1971 was used 2/. 1/ Repayable in ten years, with a 5 year grace period, at a current interest rate of 9X. 2/ The area sold was.521 ha and the area purchased was 2,010 ha. ANNEX 10 Page 47 B. Stumpage 199. Most timber sales are of standing timber and there is no scale of stumpage rates for these sales. Sales are commonly conducted by auction of specified felling areas and the price paid is a combination of the estimates of the standing volume, the costs of extraction and the transport costs to sawmill. Since all these cost elements vary considerably between felling areas, it is difficult to arrive at representative stumpage rates. Estimates based on the volumes of timber sold at the Southern National Forest Station are summarized in Table 9. Table 9: EST1IATED STUMPAGE VALUES AT SOUTHERN NATIONAL FOREST STATION Softwoods Hardwoods Estimated Estimat-eA Year Volume Total Value stumpage Volume Total Value stumpage ('000 m3) (million won) (wonm3) ('000 in (million won) Oo 1968 4.0 11.9 2,995 4.2 1.8 433 1969 4.1 11.9 2,930 15.9 7.2 454 1970 37.4 115.3 3,085 26.0 14.6 563 1971 38.2 134.2 3,517 13.7 7.8 567 1972 40.1 169.9 4,242 20.3 19.5 961 200. The increase in stumpage values is partly explained by the general price increase which has taken place during the period and partly by the increasing demand for timber. Sales of hardwoods are composed of small dimension timber much of which is used for mining. The current stumpage value for softwoods, e uivalent to US$10.5 per mJ is high and compares with values of US4,3-6 per ml in Australia for similar material which is mainly composed of small dimension logs. 201. There is little expectation of the volume of sales increasing much above present levels in the next decade or so (this is discussed in Section 2), and revenues from this source cannot be expected to contribute much more than they are doing at present 1/. 1/ An accelerated planting program in the National Forests would give a higher yield as areas were cleared for planting, but the possibly higher extraction and transport costs may limit the value of the stumpage. ANNEX 1 0 Page 48 C. Expenditures 202. Expenditure in forestry is-presently about 1% of the total of Central Government expenditure. Of the total current expenditure of the Office of Forestry of around 6.4 billion won (US$16 million), some 18% (US$3 million) is for management and overheads, 24% (US$3.9 million) is expended in the National Forests, 42% (US$6.6 million) is for subsidy pay- ments to the Provincial Forest administration for the private forests 11, 5% (US$0.8 million) is subsidy payments to the Forestry Association 2/, and 11% (US$1.7 million) is expended on research. 203. The present budgeted expenditure for 1973 provides for some small changes in the distribution of funds between these expenditures with some reduction in overheads and research. In addition there is an expectation of a further one billion won (US$2.5 million) for expenditure by the pro- posed Forest Development Corporation. 204. Expenditure in the National Forests is limited to the value of the revenue which they generate and the objective of this approach has been to induce self financed development of these forests. With the likelihood of revenues becoming more limited in the future, a reappraisal of this system will become necessary. 205. The provision of finance for industrial plantations establishment in the "Special Development Areas" will give rise to a review of the present flows into this work. Consideration should be given to reducing the overall size of the area to be planted annually from the present target figure of around 75,000 ha so as to concentrate resources in the "Special Development Areas". Some of these savings resulting from a smaller area being planted could be used for land acquisition purposes. 206. The present costing basis used for calculating plantation estab- lishment costs is inadequate for calculating the amount of finance required for large-scale plantation establishment, since they only include the prices paid for seedlings, fertilizers, transport and assumed labor costs. They do not provide for management and overhead costs of roads, fire control and maintenance. The present establishment costs are reported to be around US$60-68 per ha, but these are likely to be more in the order of US$140-150 per ha when all cost elements are included. 207. Assuming that future investment in industrial plantations were to be in the "Special Development Areas" a program of 40,000 ha a year would give a requirement in the order of US$6 million a year, with a further requirement for maintenance in subsequent years. This compares with a cur- rent level of expenditure in plantation establishment of some US$4 million. 1/ Of this amount, some US$3 million is for plantations establishment, US$3 million for erosion control and US$0.6 million for protection. 2/ Of which 0.5 million is from fuelwood plantations. ANNEX 10 Page 49 208. The present level of expenditure on fuelwood plantations is insuf- ficient to provide for the planned accelerated planting program and repair work to existing fuelwood blocks. 209. Establishment costs for fuelwood blocks could be expected to be less than those for industrial plantations because of the lower management and overhead costs. A figure of around US$75-80 may be a reasonable estimate. The proposed program of new fuelwood planting of around 50,000 ha a year will give a requirement of some US$3.75 million and the repair work to the exist- ing fuelwood areas is likely to be of the same order. 210. The expenditures on erosion control work are unlikely to be able to be reduced for some years and there is still a substantial commitment outstanding for the resettlement of illegal cultivators. 211. Even with a readjustment within the present allocation of funds, a substantial increase in total funds would still be required to meet these development expenditures. 212. The Government has prepared preliminary drafts of three projects for international financing. One is for plantations development linked with exploitation and forest industries in Gangweon province. Another is for fuelwood plantations establishment and repair. The third is for special tree crops development. The Government is also seeking financial assistance for the continuation of the present UNDP (23) watershed management project, the establishment of a forestry training school, a reinforcement of their technical staff and facilities in forest protection, and is presently negotiating with the West German Government for a plantations development project of some 10,000 ha in Selected Area Number 10. XI. RECOMMENDATIONS A. Policy Oriented Forest Land Ownership and Use 213. As mentioned earlier (para 10), recently enacted legislation provided for the establishment of a Forest Development Corporation which has responsibility for controlling the management of 'Special Forest Areas'. Private owners who have forest land in these areas would receive 10% of gross revenues. In view of the long periods required before trees can be harvested (20-30 years for pulp and up to 40-50 years for saw'timber) and the small-scale ownership pattern such an arrangement may be d'ifficult to admin- ister and not appeal to owners. The acquisition of large 'blocks of land for sustained industrial plantation development is likely to be a major problem. ANNEX 10 Page 50 214. The mission believes that other alternatives should be considered including (a) purchase of land to expand national forest plantations, (b) long-term leases under which owners would receive annual rental payments and thus would be encouraged to put land in the special forest areas for management by the Forest Corporation, and (c) increased support for improved management of private forest plantations. 2i5. It is believed that large blocks of contiguous forestland are required to establish improved management practices and to overcome problems of protection from incendiarism, illegal cutting, and gleaning which restricts growth of vegetative cover. However, Korea's record of establishing improved forests does not appear to be much better for public land than for private land. Consequently, it is recommended that consider- ation be given to providing increased technical and financial support for establishing better management practices on private as welL as on public forestland. It also will be desirable to expand the totalr.iforest area under public operation through purchase and long-term leases of private land. High priority should be placed on expanding fuelwood or alternative supplies of fuel for rural people to reduce destructive gleaning of both private and public forestland. Industrial Plantations Establishment 216.-. It is recommended that: (a) The present subsidy payments for private forest plantations be revised and emphasis be given to the provision of finance for concentrated plantations development under the management of the proposed Forest Development Corporation. (b) Future plantations be justified by reference to financial and economic appraisal for both the plantations and the related forest industries. Fuelwood 217. It is recommended that studies be undertaken to provide: (a) An indicative overall fuel and energy plan over the next 20-30 years. (b) Assessment of the impact of fuels, other than wood, in the rural areas, taking into consideration the difficulties of transportation. (c) An estimate.of the future fuelwood requirements for preparing rice straw for livestock feeding. (d) An area breakdown of fuelwood block requirements in relation to populat-ion densities and availability of alternative fuels. ANNEX 10 Page 51 (e) Assessment of the possibility of providing subsidized fuel in areas where there is severe shortage whilst fuelwood blocks are being established. Erosion Control and Watershed Management 218. The priorities in erosion control are the rapid completion of urgent works and a reduction in unit costs; there is also the longer term problem of establishing satisfactory management regimes over the wide areas of the watersheds which overlap into several provinces. It is recommended that this work be unified under a central authority which is representative of agricultural water resources and forestry interests. Research 219. It is recommended that: (a) The work of the provincial stations be reviewed with a view to reducing these and integrating their work with the FRI. (b) The Resource Survey unit and Management Studies section of FRI be incorporated in the planning section and management section of OOF. (c) More emphasis be given to species trials. (d) Mensuration studies be extended to all commercial species. (e) A formal consultative body be set up embracing the interests of the industries End related ministries and the OOF to formulate priority objectives and integrate the research program. Particle and Fiber Board 220. These products, which can have a contribution in achieving cost reductions in building construction and furniture manufacture, are based wholly on waste residues. The capacities of these industries are presently underutilized and the current: 20% sales tax is limiting demand. It is recommended this tax be lifted. The Plywood Industry 221. The estimates of roundwood availability of the forests of Malaysia, the Philippines and Indonesia which indicate volumes of plywood logs suffi- cient to sustain the plywood industry well into the future are encouraging. At the same time, it must be recognized that a change of policy by those countries which might limit round log exports, could cripple the Korean industry. ANNEX 10 Page 52 222. Korea needs to maintain a continual review of market information regarding the log supply and pricing situations in the log-exporting countries. The appointment of a forest attache in Indonesia has been a significant step in this direction. It is recommended that a unified market intelligence unit be set up to cover the supply sources of the whole region. 223. A complementary and equally important function of the unit would be the development of expertise in market information and trends for plywood and plywood manufactures. Estimates of demand for imported hardwood ply- wood in the USA 1/ indicate that this will continue to increase through 1985, and future prospects in this market are encouraging. However, the tolerance of this specialized market with respect to any price increases which may be forced onto the industry by rising log or freight costs require care- full study. The possibilities of widening the market outlets for the exist- ing types of products and developing production of other Aypes, such as marine and waterproof plywoods, which may have a higher profitab-ility, require fur- ther investigation. 224. At the present time there are obvious difficulties in coordinating the information and research which is being generated in different quarters by the individual producers, the KPIA 2/ the overseas logging concessionaires (who are not plywood manufactures) and the Office of Forestry. The KPIA could be strengthened with the addition of suitable marketing and technical person- nel to undertake the log supply and products marketing aspects discussed and coordinate the related research activities. A consultative body representing the industry, the log suppliers and government would then be able to use this information for developing strategy and initiating policy decisions. B. Investment Oriented 225. There are three main areas in which international financing would have an immediate impact on forestry development: (a) The Establishment of Industrial Plantations As indicated in Section I, a realistic first target for immediate establishment is in the order of 1 million ha. Detailed inventory and soil surveys have already been carried out in the Gangweon province area over some 250,000 ha and inventory surveys over a large area (1.5 million ha) in the southwest. In addition, a preliminary UNDP survey 3/ of the Nagdong river basin situated 1/ "Current and Prospective Trends in Imports of hardwood Timber Products into the U.S.A.," Dwight Hair, August 1969, Syracuse-University. 2/ Korean Plywood Industries Association. 3/ Pre-Investment Survey of the Nagdong River Basin, 1971, Forest Survey and Development Project (KOR 23). ANNEX 10 Page 53 in the central and south of the country, indicates an area of some 500,000 ha suiLtable for industrial plantations. It is recommended that two areas of around 120,000 ha each be selected from the areas referred to for concentrated plantations development and projects prepared for these for possible international participation. Preparation of the basic data is more advanced in the Gangweon province area, (discussed further below), and a possible phasing of investment would be 1975 for Gangweon province and 1977 for second project area. At establishment costs of around US$150 per ha (excluding land values), and assuming a 10% addition for contingencies, the total cost for each project would be around US$20 million, of which half could be from inter- national sources. This would include part of the local costs as well as the foreign exchange element. (b) The Development of Forest Industries Associated with the Additional Volumes of Indigenous Timber Arising from the Concentrated Plantations Program Estimates indicate that the standing volumes of timber in the proposed Gangweon province project area are around 40 m3 per ha of which about halE is softwood and half hardwood. With a planting program oiL 10,000 ha a year, this would generate annual volumes of some 350,000 m3 of existing merchantable timber over a twelve-year period. This timber could be used for a number of purposes including saw timber, parquet flooring, particle and fiber board and puLp. There is also the possibility of augmenting this supply with the large annual volume of plywood waste, (some 300,000 m3 of Lauan), for pulp production. This would largely depend upon the feasibility of establishing a pulpmill on the northeast coast which could be accessible for cheap sea transport of plymill waste and also be within the economic distance of the raw material supplies from the plantations when these become productive. The sawmills, flooring and boards factory, with the associated logging and roading is likely to require investment of a minimum of around US$10 million; a 100,000 TPA 1/ pulpmill complex using most of the combined supply of some 500,000 m3 timber and waste, would require investment of around US$60-80 million. These possibilities require further study before firm proposals can be made. Assuming a 50% international involvement in the sawmills an(i factory, there would be a minimum require- ment of around US$25 million; this could be phased for 1976. (c) The Establishment of Fuelwood Blocks The Government proposes to reserve 1.05 million ha for fuelwood blocks. Although ithe total area may be modified following an in-depth study of ithe likely fuel and energy resources of the country (discussed in Chapter VI), it is unlikely to be substan- Metric tons per annum. ANNEX 10 Page 54 tially reduced. Investment is required to upgrade the existing fuelwood areas, (estimated at around 800,000 ha) and to establish a further 200,000 ha. Establishment costs are likely to be in the order of US$80 per ha and upgrading costs may average about US$40 per ha, giving a total investment of around US$48 million, excluding the labor contribution provided by the villagers. The direct benefits from this investment would be a reliable fuel supply to the rural population, the release of a large area for other rural development, a reduction in erosion control expendi- tures and the improvement of the watersheds. There would also be the residual benefit of the timber value of the trees in future years. Fuelwood establishment is inter-related with other development activities of upland improvement for livestock and cropping and would form a sub-project of an integrated rural development,package. The benefits would be early maturing, with fuel yields becoming available in from 3-6 years, and contain a high social content (see Chapter VI): for these reasons, the Government could be expected to provide the greater share of the investment. An international contribution of about 30% of invest- ment costs would require some US$15 million 1/. 226. In addition to these investments, there are: (a) The Forestry Training School The Government, assisted by FAO, have prepared preliminary esti- mates of external financial assistance for this-amounting to some US$800,000. This could form a special fund project and be linked with FAO technical assistance to carry out a manpower and training requirements study for forestry and forest industries. (b) The Development of Special Tree Crops The potentially high profitability indicated by the studies carried out by the OOF in the cultivation of chestnuts and w4lnuts, with financial rates of return of around 20%, would give a high priority to these in upland development programs. Extension of the areas of these crops would form part of an integrated rural development package. The Government 2/ has prepared draft pre- liminary loan requests for the plantations and forest industries development in Gangweon province (para 228 (a) and (b) above) fuelwood blocks (para 228 (c) and Special Tree Crops). In addition, the mission was requested to consider a request 3/ for a Bank loan for the establishment of five straw-pulp factories; this is not considered to be a viable project because barley 1/ This could be supplemented by the provision of aid under the World Food Program. 2/ Prepared by OOF. 3/ Prepared by EPB. ANNEX 10 Page 55 straw, which would form a large part of the raw material base in the proposed project, is not considered suitable for pulping. These requests are summarized and commented on in Appendix 16. (c) Plantations and Forest Industries Development, Gangweon Province The Gangweon province area was the venue of the UNDP Forest Survey and Development Project (KOR 14 and 23); unfortunately the project did not complete a development plan, although this was considered to be its first priority, by the termination of the first phase 1/. The second phase, KOR 23, has concentrated on erosion control problems in other parts of the country with the consequent neglect of the industrial plantations issue. The present proposal is for the development of 120,000 ha of 1.2 million ha surveyed under the UNDP (KOR 14) project. Of the proposed 120,000 ha, 50,000 ha are expected to be in existing National Forests and 70,000 ha would be from Private Forest lands 2/. There is a presumption that the new legislation will be operative before the project commences and the proposed Forest Development Corporation would be constituted and become the executing agency for the Government. It is recommended that the proposed project be given a high priority for identification and preparation which could be undertaken by the FAO/IBRD Cooperative Program. A suitable team to undertake this work would be composed of a forest expert in large-scale plantations establishment, a logging, forest roads and sawmills expert, a forest industries expert with particular emphasis on pulp and production, and an economist. Suggested terms of reference for the team would include: (i) Evaluation of land availability and suitability for planta- tions establishment which would include an appraisal of the areas mentioned in the UNDP report (KOR 14) with the objective of establishing a priority ordering of the planta- tions development area. (ii) Market studies of future demand for all wood products. (iii) Volumes of indigenous timber for exploitation arising from an accelerated plantations scheme in concentrated areas. (iv) Expectation of yields and rotations for plantations species. (v) Evaluation of forest industries development and possible areas for expansion with respect to present and future raw material supplies, availability of water and energy, com- munications and consumption centers; the preparation of terms of referenace for feasibility studies for this 1/ Interim Report UNDP (KOR 14-23). 2/ A new national road, which will pass through the area, is planned for construction in 1973/75. ANNEX 10 Page 56 development, which would include commercial pulping tests of the indigenous and exotic species. (vi) Assessment of management and labor requirements for the project and whether any overseas staff would be needed to assist with implementation. (vii) Assessment of a feasible annual plantations program for the project. (viii) Economic and financial studies of plantations development and the associated forest industries. These would take account of the possibility of embracing re-settlement of illegal cultivators, improvement in watershed catchments and amenities for tourism, absorption of under-employed labor, effects on the commodity balance of trade and foreign exchange and secondary benefits arising from the improved road communications in the area. 227. These recommendations are summarized and tabulated in a suggested chronological order in Appendix Table 17. REPUBLIC OF KCREA AGRICULTURAL SECTOR SURVEY INDICATIVE TABLE OF DC!4ESTIC SUPPLY, IMPORTS AND CONSUMPTIN OF ROUNDWOOD (Unit 000 in) Domestic Sapply Imported Mining House Building Plywood Log 3/ Equi- Domestic Year Timber Pulpwood Sawlogs Scaffolding and Fuelwood Logs 2/ Sawlogs valent of ex- Consumption Telegraph Poles 1/ ported plywood (excl. pulp/paper) 1960 250 50 152 280 7,000 222 246 - 8,200 1961 100 30 100 280 7,000 88 228 32 7,794 1962 146 33 169 290 7,000 160 430 52 8,176 1964 281 36 177 310 8,000 308 256 208 9,160 1965 304 41 158 320 8,000 511 245 345 9,234 1966 313 83 383 330 8,000 707 391 496 9,711 1967 335 111 345 340 8,000 993 536 735 9,925 1968 367 158 275 350 8,000 1,259 751 877 10,283 1969 386 200 298 360 8,000 2,020 630 1,420 10,474 1970 450 206 189 370 8,000 2,280 875 1,579 10,791 1971 470 281 284 380 9,000 2,851 905 2,078 12,093 1972 (estimated) h70 274 284 380 9,000 2,800 1,006 2,166 12,062 4/ Projedtions to: 1975 -450 500 300 350 9,000 3,120 1,512 2,353 12,879 1980 500 1,000 300 300 9,000 3,530 2,056 2,805 13,881 1/ Estimated figures derived from Timber consumption survey (KOR 23). This category is omitted from Office of Forestry Records 2/ Includes approximately 16% of plywood log rejects which are used for saw timber (a further 10-20% of off-cuts and cores are also used for saw timber). 3/ Estimated on basis of 90% plywood log import adjusted for proportion of plywood exported. W Estimated roundwood equivalent of imported pulp and paper are 1.192 and .093; the total estimated domestic consumption including these categories is 13.347. Note: The totals of domestic supply and imports show wide variance in the different source materials. Sources: Office of Forestry Statistical Yearbooks. Basic Forest Development Plan. Forest Research Note 11/1972 Pulp and Paper in Korea. U. N. Korean Forest 3arvey and Development Project (KOR 23) Timber Consumption 3urvey. REPUBLIC OF KOREA AGRICUL-TURAL SECTOR SUtVEY PR(IUCTIQI, IMPORTS AND CCSU4PTICI OF PULP (Unit '000 Metric Tons) Production Imports Consumption Year GP SCP GP CP 3 GP SCP CP TOTAL 1960 20 7 19 27 19 46 1961 25 1 47 26 47 73 1962 19 8 46 27 46 73 1963 21 7 57 28 57 85 1964 21 5 64 26 64 90 1965 27 1 3 55 30 1 55 86 1966 36 1 9 78 45 1 78 124 1967 38 1 12 92 50 1 92 143 1968 42 3 16 132 58 3 132 193 1969 61 5 13 160 74 5 160 239 1970 75 5 14 156 89 5 156 250 1971 79 5 8 201 87 5 201 293 1972 (Estimated) 93 .8 9 234 102 8 234 344 1980 130 30/CP 130 100 490 230 30 620 880 1/ Groundwood Pulp 2/ Semi chemical Pulp 3/ Chemical Pulp Source: Ministry of Commerce and Industry - Office of Forestry for 1980 Projections _ _ REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY PRODUCTICN!, IMPORTS AND CCiSUMPTICN OF PAPER (Unit '000's metric tons) Production Imports Consumption Year 1/ 2// N/P - P/W - Other N/P P/h Other N/P P/W Other TOTAL 1960 27 14 13 18 - 17 45 14 30 89 1961 33 13 23 9 1 8 42 14 31 87 -2 38Q ' 9 5' 10 1 - 10 LL 20 61 125 1963 42 28 52 3 - 3 45 28 55 128 1964 42 30 57 o - 7 48 30 64 142 1965 45 31 63 2 - 3 47 31 66 144 1966 55 38 67 11 - 4 66 38 71 175 1967 58 48 79 14 - 4 72 48 83 203 1968 62 52 118 21 5 7 83 57 125 265 1969 79 62 140 12 1 11 91 63 151 305 1970 102 71 154 7 1 21 109 72 176 357 1971 105 90 198 13 1 27 118 91 225 434 1972 107 97 246 7 - 22 114 97 268 489 (estimated) 1975 167 137 431 167 137 431 735 1980 250 150 500 250 150 500 9oo 1/ Newsprint 2/ Printings and writings / Kraft and Paperboards Source: Ministry of Commerce and Industry. Office of Forestry for 1980 Projections. H HD REPUBLIC OF KOREA AORICULTURAL SECTCR SURVEY TABLE Cl? VALUE CF EXTE;AL IADE (At Current Prices) (Unit U$ Million) 1951 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 (Est.) IHPATS (CIF) -Savlogs ) 8.6 13.6 17.8 27.9 24.4 37.1 38.9 40.0 Veneer logs ) 1/ 17.4 24.6 37.0 46.5 75.5 88.4 122.1 122.0 Sawn timber ) 7.2 18.4 22.5 18.5 0.3 0.4 0.5 0.3 0.8 0.9 0.8 - Sleepers ) 0.1 0.5 1.3 2.1 2.4 o.6 0.4 - Bamboo, wood waste and other 1/ 0.2 0.2 0.8 1.0 1.0 1.5 1.5 1.5 Pulp 2/ 5.0 6.3 8.6 7.3 8.8 12.3 15.6 21.7 24.4 31.2 35.1 42.0 Paper 2/ 1.6 1.7 1.3 4.2 3.7 6.2 5.6 10.1 13.9 10.0 Total 12.2 26.7 32.7 27.5 36.7 55.8 76.7 105.7 134.1 169.8 212.7 215.5 Total value of Comaodity Inputs 404.4 463.4 T16.4 996.2 1,462.9 1,823.6 1,984.0 2,394.3 - Percentage of forestry sub-sector 7% 8% 8% 8% 7% 7% 9% . 8% EP(CPTS (FI) Plywood 1.9 3.0 6.8 12.6 19.1 30.7 41.4 67.4 81.8 102.4 138.7 147.0 Dimesion timber 0.1 0.1 0.2 0.3 0.9 1.3 Manufactured wood products 0.1 0.1 0.3 1.3 1.1 4.4 3.0 Kundzu Fibre Wallpaper 0.1 0.1 0.2 0.5 1.5 2.0 1.7 2.3 2.5 4.1 3.5 5.0 Oak Mushroom 0.4 O.4 0.3 0.5 0.3 0. O.4 o.6 0.9 1.4 1.7 2.0 Others 0-3 0.5 0.9 0.8 0.7 1.4 1.7 Total 2.4 3.5 7.3 13.6 20.9 33.4 44.3 71.6 87.5 110.0 150.6 160.0 Deficit ao commodity trade balance -9.8 -23.2 -25.4 -13.9 -15.8 -22.4 -32.4 -34.1 -46.6 -59.8 -62.1 -55.5 Total value of commodity oports 1?5.' 250.0 320.2 455.h 622.5 335.2 1,067.6 - Percentage of forestry sub-sector 12 13 14 15 14 13 14 1/ Data from Office of Forestry for 1965-1972; EPB for 1961-1964 2/ Data from Ministry of GCmnerce and Industry for 1963-1971 and 1972; EPB for 1961-1962 3/ Data from Office Li- Forestry REPUBLIC CF KOREA AGRICUTlURAL SECTOR SURVEY RWNDWOCD SUPPLY AND DEMAND BALANCE (Unit Million m3) Domestic Production Imports Exports-/ Net Deficit 1960 1970 1980 1960 1970 1980 1960 1970 1980 Sawlogs 0.15 0.19 0.30 0?.25 0.88 2.06 - - 0.20 0.25 0.88 1.86 Plywood logs - - - Mining timber 0.25 0.45 0.50 0.22 2.88 3.53 - 1.58 2.61 0.22 0.70 0.92 Building, scaffold, telegraph poles 0.28 0.37 0.30 - - - - - - Fuel wood 7.00 8.00 9.00 - - - Pulp: Mechanical (mn nTnt) (0.o2) (00oR) (0.13) (o01!) (t02) !0.Q) - = = _ _ _ Round log eq (m 3)x 2.5 0.05 0.19 0.33 0.02 0.04 0.26 - - - 0.02 0.04 0.26 Semi chemical (mn.mt.) - (0.01) (0,03) - - - - Round log eq. (m3) x 3.3 - 0.02 0.08 - - - - - - - - - Chemical (mn. mt.) - - (0.13) (0.02) (0.16) (0.49) - Round log eq. (m3) x 5.0 - - o.65 0.10 0.78 2.47 - - - 0.10 0.78 2.34 Paper: / Newspring (mn. mt.) (0.03) (0.10) (0.25) (0.02) (-.0 f Round log eq. (i3) x 2.8 2/ - - - (0.05) 0.02 - - - - 0.05 0.02 - Printing & writing (mn.mt) (3.01) (0.07) (0.15) - ( - )3/ Round log eq. (m3) x 3.5 2/ Kraft & Others (mn. mt.) - (0.01) (0.15) (0.50) (0.02) (0.02)3/ - - - - Round log eq. (m3) x 3.25 2/ - - - 0.06 0.07 - - - - 0.06 0.07 - Total 7.73 9.22 11.16 0.70 4.07 8.32 _ 1.58 2.81 0.70 2.49 5.38 Total Roundwood Equivalent 1960 1970 1980 Dormestic Consumption 8.43 11.71 16.66 1/ Roundwood equivalent of plywood and sawn timber ezports. 2/ Roundnood equivalent Included in pulp. 3/ Asswed that total domestic demand will be met from domestic productian in 1980* 0o CDo ANNEX 10 Appendix Table 6 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY ANNUAL PLYWOOD PRODUCTION. DCMESTIC SUPPLY AND PRODUCTICN (Unit Thousand m.3) Total 1/ Year Production Domestic &Spply Percent Exports Percent 1960 70 69 100 0.4 - 1961 62 38 61 18 39 1962 106 68 64 27 36 1963 125 55 44 70 56 1964 186 46 25 131 75 1965 271 67 25 213 75 1966 446 97 22 346 78 1967 554 145 26 421 74 1968 887 209 23 655 77 1969 2/ 821 181 22 572 78 1970 1,056 234 23 835 77 1971 1,239 234 19 993 81 1972 (estimated) 1,339 245 18 1,100 82 1/ Does no include the domestic production of some 20 small-scale plywood plants which is estimated at between 15-18 thousand m3 in 1972. 2/ Data before 1969 based on 1/8" thickness; 1969 onward on panel surface. Note: Figures do not add to total production because of carry-over stocks. A conversion of 1,000 sq ft x 4 mm thickness = 0.3719 m3 has been used. Source: Office of Forestry REPUBLIC 'F KOREA AGRICULTURAL SDCT SURVEY CAPACITIES AND PRCDUCTS OF MAJOR PLYWOCD PLANTS - 1972 Plant and Locaticn Main Products Other Products Number of Annual Caaci huDlorees OOOa.sQ Of Ioni Thickness 1. Tae Smg Lumber Ind. Plywood: Raw Panel, Prefinished, Formalin, Methanol 4,68o 911,000 Co. Ltd. Inchon Printed, Vinyl Laminated, DAP Printed, Paper overlaid. Particle Board. Lumber 2. TangHMyung Timber Co. Plywood: Raw Panel, Prefinished, Forcalin 4,285 1,103,000 Pusan taminad, Fancy. Particle Board, Lumber. 3. Bing Chang Enterprise Plywood: Raw Panel, Melamine, Formalin Co. Ltd. Pusan overlad, Prefinished, DAP over- Hi-pool adhesives 2,095 515,000 laid Printed, Fancy, Hi-color, -~ ~~~~~Msi iFl orixng DL--berz Ptunitk-r 4. Chung Koo Lumber Ind. Raw Panel Plywood. Lumber 850 140,000 Co. Ltd. Kunsan 5. Kwang ltung Lumber Co. Pi d: Raw Panel, Prefinished, Formalin 1,035 236,000 Ltd. Pusan L,umber 6. Korea Plywood Mfg. Co. m d: Raw Panel, Prefinished, Urea Resin. 2,030 428,000 Ltd. Kunsan M d. Lumber Formalin 7. Smin Heung Lumber Co. Plywood: Raw Panel. Prefinished 1,040 240,000 Ltd. Kunsaz Mosaic Flooring. Strip Flooring. Lumber. 8. Dae Myung Wood Indus- Plod: Raw Panel, Lumber 975 161,000 trial Co4Ltd. Pusan 9. Sun Chang Industrial Co. Plywood: Raw Panel. Lumber 780 91,000 Ltd. Inchcn 10. Tae Chang Wood Ihidus- Plywod: Raw Panel, Paper 1,140 280,000 trial Co. Ltd. Pusan erlay, Fancy Nosiac Flooring Lumber 11. Ban Do Lumber Co., Plvwood: Raw Panel, Paper 1,000 250,000 Pusan Overlay, Fancy, Mosiac Flooring Lumber TOTAL 20,000 4,355,000 1/ Canmenced Production in 1972. Source: Korean Plywood Industries Association a o REPUBLIC OF KOREA ACRIC'ULTURAL SECTOR SURVEY PART ICLE BOARD CAPACITY. PRODUCTON. PROPOSED EXPANSION AND ESTIMATED FUTURE PRODUCTION (Unit-Me.rlc Ton) Name of Plant Type of Annual Capaefty 1/ PRODUCTION ESTIMATES and Location Product (22-hr dav)m/t 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 Chung Whang, Seoul Raw P/B 7,000 70 70 80 Production not recorded after 1965 Tae Sung-A lnchean2 Raw F/B 18,000 1,300 5,660, 6,000 14,800 21,000 22,000 19,000 18,000 18,000 9.000 2/ 4j Tae Sung-B Incheon Raw P/B 24,000 - - - - - - - 3,000 12,000 Decorative 15% of Finish capacity 21 5/ Tong Myung Busan Raw P/B 23,850 necorariite 20% of Finish capacity -"I,0u TOTALS 1370 5.730 6.080 14,800 21,000 22,000 19,000 18,000 21 q00Q0 ZI 9. ESTIMATFD FUITURE PRODUCTION 1973 1974 1975 1976 Tae Sung-A) - 39,000 39,000 39,000 34,000 Tae Sung-B) luche6u Tong Myung Busan 20,000 20,000 20,000 20,000 Doongwha Raw -/B 36,000 - This plant is proposed for construction in 1973 Enter-rise 3! Incheon TOTALS 59,00_ 1/ Production in 1961 and 1962 was 60 metric tons 2/ These plants aft integrated with plywood mills, using launan waste from ply production. The Tae Sung plants are situated vithin the one industrial complex. 3/ This plant is planned to be iutegrated with the sawmill, using waste from that mill. 4/ Based on conversion of 50 sheets x 8' x 4' x 6mm 1 sIlt. 5/ Based on conversion of 70 sheets x 8' x 4' x 6 m = I m/ri t. "P REPBLIC OF KOREA AGRICULTURAL SECTOR SURVEY FIBRE BOARD CAPACITY AND PRODUCTICN (Metric Tons) Plant and Type of Annual Esti,Tate Location Product Can 2ity 1963 1965 1966 1967 1968 1979 1970 1971 1972 3/ 7m/t) (3-shift) Sam Yung. Raw hardboard 24,750 2,154 3,695 4,366 4,526 5,433 5,546 6,956 6,713 6,500 2,000 Anyang Decorative 2/ 2,500 / Capacity increased in 1968 and 1970 2/ Decorative plant installed in 1970 x 0 / Plant shut-down 1971/72. Estimated output in 1973 is 16,000 tons working 2-shifts. \0 REPUBLIC UF KOREA AGRICULTURAL SECTOR SURVEY LOCATICNS AND CAPACITIES OF THE MAJOR PULP AND PAPER PLANTS Location Name of Plant Nominal Nominal Type of Product Pul Capacity Paper Capacity 000's mton OOO's m/ton 1. Seoul Sampung Paper G.W. 15 20 N.P. 1/ 2.. Seoul Daehan Paper G.W. 15 20 N.P 3. Seoul Daehan Pulp Not producing 15 Boards and Corrugated h. Seoul Dongyang Paper 10 Boards and Corrugated 5. Seoul Sinyang Paper 5 Boards and Corrugated 6. Seoul Samyang PuJlp SCP 7.5 20 Boards and Corrugated 7. Seoul Poongkuk Paper 10 Boards 8. Seoul Mirim Paper 15 Woodfree PIW 2/ 9. Sihung (Panyang) Hankuk Paper 30 Woodfree PW - 10. Sihung " Sanduk Paper 15 Woodfree PIW Boards 11. Sihung Kyungnam Paper 13 Kraft 12. Daeduk Namhan Paper 10 Woodfree P/W Kraft 13. Pyungtaek Kyesung Paper 21 Woodfree P/W Kraft 14. Zinzyn Zinzyn Paper 5 Kraft - Tissues 15. Cunsan Korea Paper G.W. 15 50 N.P. 16. Gunsan Shinpoang Paper 20 Boards 17. Jeonju Jeonju Paper G.W, 40 50 N.P. Woodfree PAW 18. Osan Samhwa Paper 30 Kraft 19. Daejeon Daewon Paper 30 Kraft 20. Busan Suchul Pojang 6 Corrugated 21. Busan Dong-A Paper 5 Printing 92.5 400 1/ Newsprint 2/ Printing and writing Sources: Paper Manufacturers Association and OOF. Cr, ANNEX 10 Appendix Table 11 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY MINOR FOREST INDUSTRIES Type of Production Number of Main Timbers Used Estimated Annual P:lants Roundwood Requirements ('000 mi) Wood block flooring 3 Oak 12 Toothpicks 3 Aspen 6 1/ 2/ Pencils 9 Poplar 13 2/ Chopsticks 41 Poplar 4O 2/ Ice-cream spoons 1 Poplar 10 2/ Matches 37 Poplar 28 Bobbins 13 Hardwoods 5 Wooden ware 17 Hardwoods 2 Sports goods 12 Hardwoods 2 1/ 2/ Musical instruments 14 6 1/ 2/ Picture frames 1 Mixed 2 1/ Boat building 55 Cedar and Hardwoods 64 l/ Furniture 2< Hardwoods 200 1/ Total 44 390 I/ Large proportion of imported timber. 2/ Export markets are being deve].oped for these products. REPUBLIC OF KOREA AGRICUITURAL SECTOR SURVEY CBART OF FOREST ADMINISTRATION Office of Forestry __-- (Director General) Proposed Forest Office of Planning Bureau of Bureau of Bureau of Development and Coordination Administration Reforestation Management Corporation Overseas National Forest Provincial Federation of Attache Stations (3) Forest Forestry Special Administrations Associations Development l(9) | Areas For r - - _ ---,-j.I Provincial Large Scale Provincial Provincial City & County Offices Plantations Research Forest Offices Stations Stations I . _ . ff _ __________1 lCity & County Forest Forest Forest Foret;L Research Genetics Resource Myon Offices Associations Institute Institute Survey Erosion (151) Center Control l Stations Vilage (36) Private Forestry Forests Associations (21,500) Private Private g Forests Nurserymen Private Forest.S ANNEX 10 Appendix Table 13 REFUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY FULL TIME EMPLCOMT CF STAFF IN FORESTRY - 1972 Tyvpe of Post Adminis- Profes- Technical and Forest Enployer tration sional Research Te8porary Security TOTAL Office of Forestry HQ staff 74 65 - 12 - 151 Forest research institute 13 8 58 20 6 105 Forest genetics institute 6 - 37 6 1 50 Forest survey institute 3 - 20 5 - 28 Forest survey institute (a1 temporary) 3 - 15 37 - 55 National forest sTations 48 191 - 36 276 551 Sub-total 147 264 130 116 283 950 Provincial forests HQ staff 21 181 - 11 27 240 Erosion control stations 50 337 - 10 - 397 Research stations 13 16 47 25 - 101 Forest stations 18 128 - 33 - 179 Cities and counties 7 74 - 3 67 1,424 Sub-total 109 1,402 47 82 701 2,341 Forest Associations. 731 - 1,257 TOTAL 609 2,397 77 49538 ANNEX 10 Appendix Table 14 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY ESTIMATED PAID ENPLOYMENT IN FORESTRY - INDUSTRTAL WORKERS - 1972 000 man days Office of Forestry Funds Flows Paid Unpaid 9,000 ha plantations at 46 maW'/days/ha National Forests 414 Maintenance of plantations 116 million 400 p/day 290 - 64,000 ha private forest- atW/ 10 man days paid 640 ?,300 15,000 ha fuelwood " at 2 2 " 30 1,970 9,000 ha special tree " atJ. 10 " " " 90 360 Roads, boundaries and firelines in National Forests 138 Protection, all forests 100 - Working plans, all forests 31 - Nursery work " (assume 275 million seedlings at 7,000 man days per million) 1,952 - Seed collection 275,000,000 = 13,750 kg at 4 days 20.100/kgper kg 5 'Erosion control hillside and sand dune L 4,a00 ha x 200 m/days 820 Repair 2,200 ha x 60 m/days 132 Stream Channel 265 ha x 4,500 m/d 1,192 2,144 Miscellaneous duties and private wage payments add 10% 590 S,ub-total (2) 6,470 4,630 Add employment generation from provincial funds at 20% of above 1,300 Sub-total (2) 7,770 Felling extraction and transport of timber (assume 2 man days per m3) x 1.3 million 2,600 Yinor forest products harvesting and processing 1,400 Total 11,700 ] All paid labor. / Only 10 days paid. / Only 2 days paid. Based on UNDP (KOR 23) Vol. 8:7 for unit costs and labor breakdown and O.O.F. Estimates for subsidy payments. / Estimates of O.O.F. ANNEX 10 Appendix Table 15 Page 1 REPIBLIC OF KOREA AGRICULTURAL SECTOR SURVEY REVENUE AND EXPENDITUREMI OF OFFICE OF FORESTRY 1971-1973 (ndllion won) (Estimated) Budgeted for 1971 12_7 Expenditures 1. Office of Forestry H.Q.s: Management and overhead expen- ditures 1,078 1,156 (18%) 1,011 2. National Forests: Management 217 434 363 Nurseries 113 141 211 Plantation Establishment 180 228 233 "1 Maintenance 124 116 143 Protection 224 117 123 Roads Construction/Maintenance 52 76 45 Costs of Exploitation 77 113 100 Purchases of Land 120 162 135 Other 337 168 173 Sub-total 1,444 1,555 (24%) 1,526 3. Subsidies Paid to Provincial Forest Administrations for Private Forests: Plantations Establishment and Special Tree Crops 1,122 1,196 (,19%) 1,188 Erosive Control and Protection 1,378 1,459.(23%) 1,330 Sub-total 2,500 2,655 (42%) 2,518 4. Subsidies Paid to Village F'orest Associations: (a) Fuelwood blocks 233 218 ( 3%) 224 (b) Others 59 87 (2%) 134 (c) Forest By-Products 36 40 31 Sub-total 328 345 ( 5%) 389 / Approximately 1% of the total central government expenditures is expended on Forestry. / 1.2 million (equal to 19% of total) is expenditure on Erosion Control. ANNEX 10 Appendix Table 15 Page 2 (Estimated) Budgeted for 1971 (197 1973 5. Expenditure on Research: (a) For.-ist Research Institute 319 468 329 (b) Forest Genetics Institute 124 144 175 (c) Forest Resource Survey Institute 74 85 101 Sub-total 517 697 (11%) 605 6. Proposed Expenditure by New Forest Development Corp. - - 1,000 Totals 5,867 6,408 (100%) 7,o49 Revenues (All derived from National Forests) 1. Sales of Standing Timber 521 447 537 2. Sales of Logs 59 152 73 3. Sales of thinnings and miscellaneous items including rents 514 126 205 4- ales of Land 547 850 715 Totals 1,641 1,575 1,530 ANNEX 1 0 Appendix Table 16 Page 1 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY DRAFT PREL;[MINARY LOAN REQUESTS Gangweon Province Forest Development (a) Object (i) To establish large-scale industrial plantations of around 120,000 ha. (ii) To develop more intensive use of the existing forest. (iii) To develop forest industries based: (a) The immediLate yields from the existing forest, which can be expected to increase with the introduction of an intensive plantations establishment program; (b) The longer-term yields from the plantations. (b) Cost Estimates (US$ million) These are given as Capital Costs 36 lMaintenance Costs 118 Total 154 Over a twenty-year disbursement period. (c) Method The project wouLd be implemented by the Office of Forestry; the Forest Corporation proposed under the new legislation would be the executing agency. (d) Comments (i) The Gangweon province area was the venue of the UNDP Forest Survey and Deveilopment Project (KOR 23). The area has been surveyed for irnventory and soil suitability and type maps are available. ANNEX 10 Appendix Table 16 Page 2 (ii) of the 120,000 ha proposed for plantations, 50,000 ha are expected to be available in existing National Forest areas and 70,000 ha would be from Private Forest lands which would be taken over for management by the Forest Corporation as part of the Special Development Areas. (iii) Preliminary indications are that Gangweon province would be a suitable area for large-scale plantations development. However, there are some alternative areas, (e.g. The Nagdong basin and an area in Yeongsangang county in the East of the country), which should be evaluated before finally ordering priorities of areas to be dealt with. (iv) The rate of plantations establishment could be increased; this would bring forward the years of harvesting benefits. Since the production of pulpwood would almost certainly be a primary objective, the quicker this could be made available, the earlier would be the benefits of an expanded pulp/paper industry and savings in foreign exchange. (v) The costs of the project require to be analyzed and justified by reference to the constituent costs of the various elements. Stumpage values for the plantations will require to be calculated. (vi) The forest industries which are proposed, (sawmills, particle board and floor-block factories and a pulpmill), will require to be justified on a profitability analysis. Such an exercise would form part of a larger study into forest industries development for the country and the industrial plantations required to support these. 2. Fuelwood Blocks (a) objective To achieve sustained annual production of 7.2 million m ton of woodfuel from fuelwood blocks distributed throughout the whole rural area. This production target is based upon projections of total rural demand for fuel and the extent to which this may be expected to be met by the substitute fuels of coal, kerosene and gas. ANNEX 10 Appendix Table 16 Page 3 Demand and Composition of Fuels for Rural Population 1971 and 1981 1972 1981 Number of families to be supplied (million) 2.8 2.7 Total fuel required ('000 m ton) 11.8 11.4 1. Consumption of coal, gas, oil ('000 m tons) 1.1 2.6 2. Consumption of straw and other farm byproducts ( " " " ) 2.9 0.3 3. Fuel from thinning and ) pruning of industrial) ( " " ' ) 0.9 1.3 plantation ) 4. Forest gleanings/litter ( " " " ) 2.7 - 5. Fuelwood plantations ( " " " ) 4.2 7.2 Total 11.8 11.4 (b) Method Improvement of the existing fuelwood blocks, which are estimated to be 845,000 ha in extent, and establishment of a further 205,000 ha, making a total area of 1.05 million ha of fuelwood blocks. (c) Cost estimates Total project cost of US$80 million, of which US$58 million would be contributed by Government and expended in: 50% of cost of labor 100% of cost of seedlings 100% of cost of fertilizers 100% of cost of transport and US$22 million is the estimated cost of 50% of the labor input to be provided by VFA members. ANNEX 10 Appendix Table 16 Page 4 Project Area, Costs and Period Total costs Period Area Government Private ('000 ha) (US$ million) 1. Fuelwood plantation 1973-76 205 13 5 esiablishment 2. Tending operations over existing fuel- wood blocks 1973-81 845 16 12 3. Fertilizer application over entire area 1973-82 1,050 29 5 Total 58 22 (d) Comments (i) The area proposed for fuel-block establishment, 1.05 mil- lion ha, is a large part of the land area available for upland development (about 25%). (ii) Before committing capital flows of this magnitude into permanent fuelwood blocks, a rigorous study of the future development of other energy sources is needed so as to produce an indicative overall fuel and energy supply plan. Ministry of Commerce and Industries have projections of supply and demand for household consumption of coal and oil up to 1976 only. This is not sufficiently ahead. Furthermore, these do not differentiate between urban and rural demand. (iii) There is some indication that coal production could be increased beyond the levels forecast if Government (which mines about 30% of coal production) took over some of the private mining concessions which are at present not being worked, because of lack of capital. The off-shore drilling now taking place will have a probability rating and may alter the longer term oil consumption pattern. The further development of hydro power and the proposed rural electrification project may also alter the picture. (iv) The fuel requirements of specific areas could then be deter- mined in relation to the availability of alternative fuels and from this analysis a total fuelwood area compiled. (v) The costs of the project require to be justified by reference to the constituent elements. ANNEX 10 Appendix Table 16 Page 5 (vi) The expectation of fuelwood yields require further elaboration; these are assumed to be 7 m ton/ha per year in the proposal which compares with only six quoted in the UNDP (KOR 23) references. (vii) The project represents a subsidy payment to the rural popula- tion in exchange for freeing the upland area for alternative development. Fuelwood establishment costs can then be a measurement of the opportunity cost of that land for other uses. (viii) The project is part of the rural development package and could form one of the elements of a composite project. 3. Special Cash-Crop Trees (Chestnuts, Walnut and Bamboo) (a) Object The establishment oE 30,000 ha of these tree species in large production units; 20,000 ha of chestnut, 5,000 ha of walnut, 5,000 ha of bamboo, the areas beiiig distributed throughout the provinces. (b) Method Planting of the area over a five-year period, 1973 to 1977, with further maintenance of the area up to 1983. Private participation of farmers is envisaged although the manner of this is not elaborated. (c) Cost Estimates (US$ million) Costs of establishment: Nurseries 1.75 Plantations 7.75 Post planting aftercare 7.5 Total 17.0 Over 10 year disbursement period Sources of Funds: Government 12 Private 5 17 (d) Comments (i) Preliminary market studies undertaken by OOF indicate that there are favorable prospects for expansion in both domestic ANNEX 10 Appendix Table 16 Page 6 and export markets. These studies should be further evaluated by a marketing authority, e.g., NACF and AFDC and checked for export markets. (ii) The size of the production units proposed and the method of achieving management over the units requires further explanation. (iii) OOF calculations indicate financial rates of return of around 20% for these crops. These require to be expanded to take account of management and overhead costs and an economic analysis undertaken to take account of the opportunity cost of land, employment effects and foreign exchange effects. (iv) The project is inter-related with farm development and could form part of an integrated rural development package. 4. Straw Pulp Factories (a) Object - To construct 5 factories of 6,000 m ton/year capacity to produce straw pulp and hand-board paper from barley and rice straw 1/. (b) Costs of Project - (US$ million) Per Factory Total Cost of buildings .19 " Iplant .45 "I "i utilities .04 SI " vehicles .07 Fixed Capital .75 x 5 3.75 Working Capital .50 x 5 2.50 Total 6.25 (c) Funding Loan Funds 4.50 Domestic Funds 1.25 Total 5.75 (d) Location - Mills to be established in the provinces of Chung Nam, Jeon Bug, Gyeong Nam and Jeon Nam (2). 1/ The proposal emphasizes the use of barley straw. ANNEX 1 0 Appendix Table 16 Page 7 (e) Comments: (i) There are technical difficulties associated with the use of barley straw which are connected with the greater pro- portion of leafy material found in this, compared with other grain straws. (ii) A recent study carried out by FAO (now under preparation for the IBRD Pulp and Paper Industry Sub-Sector Study) in- dicates that barley straw is unsuitable for pulping because of poor drainage and strength of the pulp. (iii) Another recent study carried out of the Malaysian Pulp and Paper Industry (Sandwell) indicates that the cost per ton of bleached chemical pulp manufactured from rice straw was some 55% higher than that produced from Bagasse, 100% higher than that produced from indigeneous hardwood and 320% higher than pulp produced from-sawmill waste wood. Rice straw pulp costs are higher because of the higher transport and manufacturing costs associated with this raw material. (iv) At the present time in Korea, the rice straw mill which already exists is not operative because of excesive costs in bleaching and transport (Korean Paper Manufacturer Association. (v) The size of the mills proposed will be too small to achieve benefits of scale. (vi) The capital cost estimates are considered to be too low and would probably be upwards of 50% more than those given. (vii) The question of a strategy for developing the future pulp and paper capacities of Korea is integral to the question of forest and forest industries development, which is being further examined. Straw may be able to make a valid con- tribution to the raw material base particularly on admixture with other fibers. (viii) The proposal has not attempted to evaluate whether the removal of the straw would result in any loss of productivity in farming. In some areas, this is an important question with respect to soil absorption and rate of precipitation runoff, and is discussed in Section VIII (A). ANNEX 1 0 Appendix Table 17 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY SUGGESTED PROGRAMME OF IMPLEMENTATION OF POLICY Possible Assisting Agency 1973 Policy decision on land acquisition for industrial plantations and fuelblocks FAD Formulation of long-term indicative fuel and UN or energy plan Bi-lateral Establishment of centralized Erosion Control and FAO or watershed management authority Bi-lateral Coordination of research and review of priorities in consultation with industrial sector FAO Abolition of sales tax on particle and fiber board Establishment of plywood market research unit Establishment of Forest Training Center and FAO or evaluation of manpower requirements Bi-lateral Technical assistance for pests and diseases FAO or Bi-lateral Identification and preparation of plantation and FAO/IBRD forest industries project, Gangweon province Co-op Programme Preparation of fuelwood block sub-project FAO/IBRD CP 1974 Feasibility studies for Gangweon province project Consultants Preparation of loan request for Gangweon province project FAD/IBRD CP Identification of Special Tree Crops sub-project FAD/IBRD CP 1975 Implement Gangweon province project and fuel wood project Preparation of second industrial plantations project FAO/IBRD CP 1976 Feasibility studies for second industrial plantation project Consultants 1977 Implement second plantation project REPUBILIC OF KOREA AGRICULTURAL SECTOR SURVEY ANNEX 11 . FISHERIES ARiEX 11 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY FISHERIES TABLE OF CONTENTS Page No. I. SUMbMARY AND RECOMMENDATIONS ..... ............... 1 II. BACKGROUND ...................................... 3 A. Major Features ................. ............ 3 B. Coastal Fishing ...... ..................... 6 C. Aquiculture ....... ........................ 7 D. Off-Shore FishirLg .8....... . . . . . . . . . . . . . . . . 8 E. Fresh Water Fishing ..... .................. 10 F. Deep-Sea Fishing ...... .................... 10 Tuna Long Line Fishing ..... .......... 11 Trawl Fishing ....... ................. 13 G. Marketing and Prices ..... ................. 14 III. INSTITUTIONAL SERVICES AND POLICIES ............ 15 A. Government Agencies ........................ 15 B. Sources of Finance ..... .................... 17 C. Trade and Price Policies .... .............. 18 IV. PLANS AND PROSPECTS ............................ 18 A. Development Plans 18 B. Major Factors Affecting Future Growth 21 Markets .............................. 21 Coastal Fislheries ..... ................ 21 Off-Shore Fisheries .... .............. 21 Aquiculture .......................... 21 Inland Fisheries ..... ................ 22 Deep-Sea Fisheries .... ............... 22 Page No. V. PROJECT PPROPOSALS .............................. 25 A. Tuna Long Line Replacement .... ............ 26 B. Skipjack Construction Program ............. . 26 C. "arketing Facilitie., ..... ................. 27 D. Eel Culture ............................... 27 E. Fishmeal Factory Ship .... ................. 28 F. Prosperous Fishing Villages .... ........... 28 APPENDIX TABLES 1. Coastal Fisheries Production and Equipment 2. Financial Position for a 300 Gross Ton Tuna Long Liner Operated from an Atlantic Base 3. Comparison of Tuna Long Liner Operations, Per Year and Vessel, Japan and Korea 4. Exports of Sea Products 5. Production and prices of Major Fishes 6. Price Stabilization Fund Purchases, Central Federation of Fisheries Cooperatives 7. A Long-Range Plan for Export of Sea Products S. Investment Plan for Fishery Development, 1972-76 9. Projected Tuna Consumption 10. Alaska Pollock, US Block Prices ANNEX 11 Page 1 REPUELIC OF KOREA AGRICULTURAL SECTOR SURVEY EISHERIES I. SUMMARY AND RECOMMENDATIONS 1. Total production of the fisheries industry in 1971 was over one million tons, more than double the production in 1961. During the same period, marine products became a major source of foreign exchange earnings with exports rising from US$7 million to US$107 million. The performance of the fisheries sub-sector during the last decade highlights Korea's remarkable capacity to utilize new economic opportunities with technical assistance and investments from abroad. Total fishery production increased to 1.3 million m tons in 1972 and total value of exports to US$187 million. 2. Traditional coastal fishing which supplies the domestic market still produces about half of the total catch. Product:Lon from middle-distance, off-shore fishing has been increasing annually and now accounts for about 25% of total production. Aquiculture of oysters, hard clams and seaweed (particularly laver) contributes about 15% of total production, primarily for export. Fresh water catch has rarely exceeded 1,000 m ton. By far the most significant growth in the sector has come from deep sea fishing by the expanding tuna long line fleet and deep sea trawling of Alaska pollock. Begun in 1965, deep sea fishing produced 224,000 m ton in 1972 compared to 27,000 m ton in 1966. 3. The Office of Fisheries (OOF) in the Ministry of Agriculture and Fisheries is responsible for fisheries administration. Research and development is undertaken by its Fisheries Research and Development Agency. Education and training, carried out through the Pusan Fisheries College, the UNDP/FAO assisted Deep Sea Training Center and Coastal Fisheries Training Center, has provided well-trained fisheries personnel to man the country's expanding fleets. The Central Federation of Fisheries Cooperatives (CFFC) provides banking and insurance services, purchases fisheries products for price support purposes and makes loans to fishermen. 4. Marketing of the products of the coastal, off-shore and fresh water fisheries is generally on an auction basis at or near, landing points. Secondary wholesale auctions take place at central interior points from where distribution is made through wholesalers and retailers. In attempts to simplify the system, reduce marketing costs and improve sanitation, CFFC has built a secondary market and ice-making facility at Taegu and initiated a pilot distribution chain in Inchon-Seoul. Almost all exports have gone to Japan and US although Europe has recently become a significant market. ANNEX 1 1 Page 2 5. Rapid advances were made in fisheries during the Second Five-Year Plan period, 1967-71. Production rose from 0.7 million m ton to over 1 million m ton and export values more than doubled from US$42 million to US$100 million. The Third Five-Year Plan (TFYP) (1972-76) calls for an increase of 36% in total output in 1976 (1.46 million m ton) compared to 1971. Total investment during the TFYP is projected as 107 billion won, compared to 55 billion won in SFYP, about 45% of which would come from central and local governments. 6. TFYP projections for coastal fisheries production estimate that output will rise by about 3% annually. The 1976 target was almost reached in 1972 when coastal fishery production rose to 663,000 m tons and will be greatly exceeded in 1973 when production is expected to rise to 770,000 m tons. Government policies for promotion of coastal fisheries include measures to establish spawning grounds, protection of fishing grounds, and motorization of fishing vessels. 7. The catch of the off-shore fisheries is expected to rise by about 4.8% annually to 233,000 m ton. The off-shore fleet fishing in the Yellow and China Seas has grown at the same time as the Japanese fleet fishing the same waters has declined. Although the waters being fished have limited resources, some additional replacement by the lower labor cost Korean vessels can be expected. The projected TFYP growth rate appears modest since targets set for 1973 were exceeded in 1970. 8. There is a great potential for expansion of aquiculture although prospects for the future growth of laver exports to Japan are not favorable. They will depend mainly on Japanese demand and production. However, the recent Korean/US agreement on exports of frozen oysters to the US should provide a growing market for this product. Aquiculture output is expected to rise by over 15% annually. 9. Inland fishery output is expected to rise to 10,000 m ton in 1976. Expansion of eel production to supply Japanese markets can become a major source of export earnings but substantial investments will be required. A potential source of inland fishing production could come from a more intensive use of ponds, reservoirs and rivers for fish culture. 10. About 45% of total investment under the TFYP would be for deep sea fisheries and production is expected to increase by about 19% annually to 320,000 m ton in 1976. Tuna long line and Alaska pollock fishing are oceanic fisheries not seriously affected so far by the extension of seaward dominion. However, they are affected by multinational movements towards conservation and as stocks approach or pass their maximum sustainable yields further protective measures, unilateral, bilateral or international, can be expected. 11. World demand for tuna is expected to rise and export market prospects are excellent. However, most tuna species are being extensively fished and most of the increased output is expected to come from the surface swimming specie, skipjack, available to live bait and purse seine methods rather than long line. Training in skipjack pole and line fishing and development work ANNEX 1 1 Page 3 on carrying bait from Korea to f:Lshing grounds are underway. While agreeir.g with the priority given to this :Labor-intensive method of tuna fishing, the mission emphasizes the need for accelerating development of bilateral agree- ments with countries with resources in excess of their domestic needs. Purse seining of tuna should also be considered for priority development. Although more technically demanding and capital intensive, its high productivity can add another viable element to the industry and entry into this field will become more difficult in future. 12. The remarkable growth of the deep sea trawler fleet was a result of high catch rates of North Atlantic Alaska pollock and initial high domestic prices. Prices have declined with increased catch to the point where small local water producers are seriously affected. Future growth will depend upon pollock stocks which are believed to be reaching maximum sustainable yield and finding alternative markets. The shortage of frozen cod block supplies in the US which is expected to continue may provide an opportunity to export frozen pollock blocks. Japanese exports to the US in 1972 are exp,ected to be about 12,000-14,000 m ton although potential exports could be much greater. A comparison of costs shows that Korean exports would be viable but there are constraints. Korean fishermen are 2-3 days furirher from the fishing grounds than Japanese and are thus handicapped more than the Japanese in supplying "fresh fish" (the catch taken on the last day or two of the voyage) to shore plants. Unsuccessful attempts to fully process blocks at sea have been made, requiring large quantities of labor at 2-1/2 times shore cost. The export to North America of minced fish blocks has not yet been successful. Fish meal production has not yet provern viable. 13. Domestic demand for marine products will continue to rise with population and income growth. Fishery products are a low cost source of animal protein compared to livestock products and consumption of seafood will continue to increase unless prices rise greatly. Export markets are also favorable. The future growth of the industry will, therefore, depend upon overcoming constraints to expanding output. 14. Government project proposals for international financing, set out in Chapter V, require further study and preparation, although, in many cases, the mission agrees with the priority given to them. II. BACKGROUND A. Major Features 15. Korean coastal waters havre traditionally been fished by means of gillnets, straw nets, beach seines, boat seines, long lines, set nets and angling. The major species are corvena, hairtail, mackerel, horse mackerel, anchovy and Alaska polloc:k. The shallow waters-produce numerous seaweeds, molluscs and crustacea. Off-shore fishing is carried out by a ANNEX 11 Page 4 fleet of intermediate-range, powered vessels operating in the Yellow and South China Seas. Over the last ten years, the fleet has been improving in size, range, power and effectiveness. Fresh-water fishing is a minor source of production. The coastal, off-shore and fresh-water fisheries serve primarily the domestic market. The culturing of seaweeds, molluscs and crustacea has long been practiced but recently achieved export signif- icance based on sales of laver (a seaweed) and hard clams to Japan and oysters to the US and other countries. 16. The most spectacular segment of the industry, however, is the deep-sea fishing element. Beginning with the introduction of tuna long lining in 1965, it has expanded to world significance and now includes distant-water trawling. Plans are now underway to introduce pole and line skipjack fishing on a substantial scale. 17. The fisheries industry produces about two-thirds of total animal protein consumed by the population. Per capita consumption of meat, for example, more than doubled during 1962-1970 to 6.4 kg; during the same period per capita consumption of seafood rose from 14.6 kg to 22.1 kg. 18. Total production of fish and seafood was over 1 million m ton in 1971, more than double the production of 1961. Most of the growth has been in the off-shore, deep-sea and aquiculture segments of the industry (Table 1). Fishery output rose to over 1.3 million tons in 1972. Table 1: PRODUCTION OF FISH AND SEAFOOD BY SUB-SECTORS ('000 M ton) 1961 1966 1968 1970 1971 1972 Coastal Fisheries 377 481 552 525 505 663 Off-shore Fisheries 58 103 136 201 261 295 Deep-sea Fisheries - 27 50 90 159 224 Aquiculture 12 91 113 119 147 160 Inland Fisheries - - 1 - 1 1 Total 447 702 852 935 1,073 1,344 Source: Office of Fisheries. 19. Marine products have become a major source of foreign exchange earnings, growing from US$7 million in 1961 to US$107 million in 1971. The fisheries industry accounted for 7.6% of total value added to gross national product by the agricultural sector in 1971 compared with 3.3% in 1961. Value added by the fisheries sub-sector has grown at an annual rate of 13.3% since 1961. 20. Total numbers of fishing households, fishermen, and fishing population increased during the early 1960s, reached a peak in 1967, and has declined since then (Table 2). The population of fishing households now accounts for about 3.5% of the national total. However, fishing is ANNEX '.< Page 5 the sole source of income of less than one-third of all fishery households and fishermen. Statistics on national employment show that the number employed in fishing declined from 220,000 in 1968 to 112,000 in 1971. 21. A large share of population classified as engaged in fishing are coastal fishermen's families employed in preparing gear, catching, curing, and selling fish as a family unit. Of the 367,000 fishermen (broadly defined) active in 1970, only about 50,000 were occupied full-time in catching fish, 104,000 were mainly but not wholly occupied in fishing and the remainder were part-time fishermen mainly employed in other work. Coastal fishing provides much nxre employment than does off-shore or deep-sea fishing. Only about 8,,000 fishermen are engaged in off-shore fishing and about 7,000 in deep--sea fishing. Table 2: FISHING HOUSEHOLDS, FISHERMEN AND FISHING POPULATION ('000) 1962 1966 1968 1969 1970 Fishing households Operators, total 153 186 173 175 149 Sole income 39 63 52 61 23 Side job 114 123 121 114 116 Employees, total 42 50 46 48 46 Sole income - - - - 15 Side job - - - - 31 Total 194 236 220 223 194 Fisherman Operators, total 376 464 445 408 307 Sole income 90 144 122 136 51 Side income 286 320 323 272 256 Employees, total 86 112 96 102 60 Sole income - - - 34 23 Side income - - - 68 37 Total 462 576 541 510 367 Fishing Population Operators, households 885 1,141 1,064 1,052 913 Employees' households 209 301 282 272 252 Total 1,094 1,442 1,346 1,326 1,165 Source: Yearbook of Fishers Statistics, Office of Fisheries, 1971. 22. In addition to the fishing population described above, there were 64,000 people in 10,400 households classified as fishery processor ANNEX 1 1 Page 6 households in 1970 compared with 44,700 people in 7,600 fishery processor households in 1962. 23. The fishing fleet at the end of 1972 was approximately as follows: Coastal vessels Unpowered 547270 totalling 90,183GT -owered 13,500 Off-shore vessels Trawlers 450 50 to 120 GT Purse seiners 26 each plus service Small trawlers 120 vessels about Shrimp trawlers 25 60GT each Deep-sea vessels Tuna long liners 350 100 to 400GT each Skipjack vessels 2 200GT each (commer- 2 cial Government- owned Stern trawlers North Atlantic 44 300-3500GT each Atlantic, based at Canary Islands 15 300-1500GT each New entrants 15 Shrimp trawlers 5 (Atlantic) B. Coastal Fishing 24. Coastal fishing remains the most important supply source for the domestic market and the most important employer of fishing and processing labor. Although almost everything which swims or grows is utilized, about a dozen species comprise the bulk of volume and value. Many types of gear and boats are employed (Appendix Table 1). 25. Although production declined from 1968 to 1971, it increased to 663,,000 m tons in 1972 and is expected to total 770,000 m tons in 1973. Coastal fishery production varies widely from one year to the next because a number of species, such as macherel, anchovy and squil, typically demonstrate wide annual fluctuations in abundance. Total production may not increase greatly in the future since the regime, although rich, is being harvested extensively and has been so for some time. The Office of Fisheries very wisely places a high priority on conservation of stocks as provender for future generations. ANNEX 1 1 Page 7 26. Coastal fishing is car ried out by many small family enterprises with small capital investments for boats and equipment. Although the number and tonnage of fishing bc,ats with motors has tripled in the last decade, most coastal fishing boats still do not have motors (Table 3). Table 3: NUMBER AND TONNAGE OF FISHING BOATS ('000) Number of Boats Tonnage of Boats Year Total Motor Non-Motor Total Motor Non-Motor 1960 34 4 30 107 58 49 1965 51 8 43 203 120 83 1970 68 14 54 358 268 90 source: Major Economic Indicators, 1961-1971, EPB, 1972. 27. The Central Federation of Fishing Cooperatives (CFFC) has been concerned with improving productivity and incomes of coastal fishermen by supplying credit to help finance the purchase of better fishing equipment, providing technical assistance, and improving marketing facilities. How- ever, it is reported that loans for gear, vessels, and operating expenses often are difficult to collect. The CFFC feels that it requires additional funds to raise productivity and incomes of coastal fishermen, but economic returns from additional investments in this subsector of the fisheries industry are quite uncertain. 28. The statistics referred to earlier show large reductions for 1970 in number of fishing households and fishermen dependent solely on fishing as a source of income. li'he total fishing population decreased 20% from 1966 to 1970. Many fishermen apparently have moved to other occupations. Although coastal fishery production was 5% less in 1970 than the record high in 1968, it increased about 10% from 1966 to 1970 so coastal fishery output per member of the fishing population was about 25% higher in 1970 than in 1966. If the fishing population continues to decline, additional capital investments for coastal fisheries will be required to expand total output and raise output per fisherman. C. Aquiculture 29. Aquiculture of laver (a seaweed), oysters and hard clams, although modest in quantity compared with coastal fisheries, has grown remarkably in recent years (Table 4). Korean waters are extremely favorable for these species and productivity is high. In addition, these activities are labor- intensive and both of these factors give Korea a production cost advantage in export markets. ANNEX 1 1 Page 8 Table 4: AQUICULTURE PRODUCTION (m tons) Projected 1969 1970 1971 1972 Oysters (In snell) 26,814 36,981 45,663 71,000 Laver 16,204 35,782 34,801 30,000 Hard Clams (in shell) 2,199 5,602 8,521 11,300 Others 40,379 40,846 58,236 34,800 30. Laver, hard clams and oysters are primarily for export. In recent years, export prices of laver to Japan, the principal market, have shown declines. In 1969, the price was about 42,000 won/m ton; in 1971 the price was about 39,000 won/m ton and 1972 proJections estimated a price of about 32,000 won/m ton. These declines are a result of increases in Japanese domestic production. Future growth in laver exports will depend upon annual market growth and producl:ion in Japan as well as the seasonal growth characteristics in Korea. Government has had to use price stabilization funds in recent years and the limited market has made growers aware of the need to emphasize quality in future. 31. The value of oyster exports rose from US$150,000 in 1970 to US$1.5 million in 1971. Most exports were canned boiled and canned smoked oysters to the US. However, in 1972 about 300 tons of frozen oysters were exported to Japan. In November 1972, agreement was reached between Korea and the US, which will permit export of frozen oysters to the US, making Korea the third country to so qualify (after Canada and Japan). The US market consumed about 100 million pounds of fresh oyster meat at the turn of the century, but due to adverse conditions in the growing areas and rising production costs, consumption has fallen to about 60 million pounds. Thus, the agteement, which requries that US imports meet stringent sanitary conditions (both in growing areas and processing plants), will open up a substantial potential market for frozen oyster meat. 32. HIard clam exports to Japan are growing, based on their high prices in that market and the inherent productivity and cost characteristics of the Korean environment. 33. Other marine molluscs, crustacea and fishes may be candidates for aquiculture (such as blue crabs and scallops) but further development work is necessary. The limitation for aquiculture growth, particularly for export, is the market; supply constraints are thus far insignificant. D. Off-Shore Fishiln 34. Off-shore fisheries output has increased annually over the last decade (Table 5). It now accounts for 25% of total production and is the second largest source of domestic supply. The area harvested by the middle- distance fleet is off the south, east and west coasts and into the Yellow ANNEX 1 1 Page 9 and China Seas. The area continues to expand with the improvement and expansion of the fleet which now includes about 450 trawlers (50-120 gross tons) and 26 seine trawlers. These vessels account for 70% of the catch while 120 small trawlers (belor 50GT) and 25 shrimp trawlers account for the remainder. The 80-120 GT trawlers are the most significant component. Production of off-shore trawlers in Korea has increased each year since 1966. Table 5: OFF-SHORE FISHERIES AND TRAWLER PRODUCTION (000 m tons) 1966 1967 1968 1969 1970 Off-Shore Fisheries Production 102.6 121.8 135.8 179.4 200.8 Off-Shore Trawler Production 38.7 76.8 83.8 93.6 114.4 Number of Off-Shore Trawlers 346 320 411 444 457 35. In 1970, trawler vessel size and age were as follows: Vessel Size Number Vessel Age Number 5OGT 68 Under 5 years 64 6OGT 27 5-10 years 88 7OGT 77 10-15 years 181 8OGT 104 15-20 years 71 9OGT 144 Over 20 years 53 100GT 37 457 457 36. The fleet 5 privately owned and has grown with little foreign or governmental financial assistance. Financing has been through personal equity buttressed to a minor degree (about 30%) in some cases by domestic bank loans. The growth of the flpet fishing the Yellow and China Seas has been accompanied by a decline in the Japanese fleet fishing the same waters from 900 to 600 vessels. Thus, tn'is is a displacement phenomenon and the growth in output does not represenat an increased capture of stock but rather a diversion of catch from Japan to Korea. The trend is based on the relatively lower Korean labor costs and, although production may continue to grow in accord with this cost advantage and an increase in power, size and range of Korean vessels, it will ultimately be circumscribed by the limits of econ- omic range of the vessels and the marine productivity of the area. The government now feels that the fleet should expand numerically to about 500 vessels, but that unit productivity should be improved by upgrading vessel size, power and equipment. This view is shared by the mission. ANNEX 1 1 Page 10 E. Fresh Water Fishing 37. Fresh water fishery production is small amounting to less than 1,000 m tons annually in most years according to official estimates. Be- cause of Korea's long coastline and concentration of population in lowland areas along the coasts, inland fishery development has not received much attention until recently. 38. Chum and cohoe salmon eggs have been imported from the US in an attempt to induce a sufficient stock but returns are thus far modest. The outlook is not particularly promising because of the difficulty of intro- ducing a stock which will be self-perpetuating. Trout farming, based on eggs imported from Japan and the US, is now commercially successful but production is thus far insufficient to supply other than special domestic customers such as tourist hotels and US military forces. Prospects for growth and export are good, depending on feed costs relative to Japan, and suitable water supplies. 39. Eel culture, based on the capture of wild seed of anguilla japonica, and growing them in ponds to 150-200 gram size for export to Japan produced the following export values: 1971 15 m ton US$0.928 million (Japan) 1972 29 m ton US$1.931 million (Japan and Taiwan) Eighteen hectares are now utilized as eel ponds and 85 additional hectares of ponds are planned at a cost of US$10 million. Projected total income over 5 years is US$24 million. The Japanese market is substantial and this sub-sector justifies encouragement through improved research, extension services and credit. F. Deep Sea Fishing 40. The emergence of Korea's deep-sea fishing fleet is one of the more spectacular aspects of the fisheries development. Beginning in 1956, with the acquisition of a tuna long liner, financed by a US bank and gua- ranteed by a tuna purchaser, fishing was begun in the South Pacific and the vessel was subsequently successful. By 1962, the fleet consisted of about five vassels. In the same year, the government established the Korean Marine Industry Development Corporation (IOfIDC) to stimulate growth of the deep sea sector. 41. IMIDC, assisted by an Italian-French loan of US$35 million, landed its first catch in 1965. By October, some 70 vessels, trawlers, long liners, and service craft were in operation. In 1970, KMIDC acquired the assets of the Sam Yang Co. consisting of 14 small stern trawlers, a factory ship and two refrigerated transporters. A joint venture agreement was signed with the Government of El Salvador in 1971. The government is now negotia- ting to turn KMIDC over to private enterprise. ANNEX 1 1 Page 11 42. In addition to KMIDC, maore than 50 corporations operate vessels in the deep sea sector. In 1971, the 350 vessels which they operated accounted for 15% of total fisheries production and 55% of foreign exchange earnings. Although KMIDC initiaLly had financial problems arising from the size, design, cost and financing of its fleet and management difficulties concerned with bringing a large fleet into operation in a short time, and one private firm had similar problems on a smaller scale for essentially the same reasons, only one small firm in the sector has failed. The debt repayment record is good and expansion had been extraordinary. Tuna Long Line Fishing 43. The tuna long liner fleet now stands at about 400 vessels, almost all imported from Japan and the fleet is the backbone of the deep sea fisheries. Japan has restricted the export of used vessels over 6 years old, and, in 1972, Korea implemented regulations restricting, but not prohibiting, imports. At the present time there are an additional 70 tuna long liners under construction or in various stages of planning. Most of these are of 380-400 gross tons. 44. Almost all tuna are exported. Exports increased to 90,000 m tons in 1970 and value of exports to US$38 million (Table 6). Table 6: EXPORTS OF TUNA 1963 1964 1965 1966 1967 1968 1969 1970 Quantity (000 m ton) 2.3 1.3 6.4 28.9 36.2 50.0 80.8 89.6 Value (US$ mil.) .6 .3 2.4 8.0 12.0 15.6 24.1 37.7 Source: Office of Fisheries. 45. Although world population since 1950 has grown at an annual rate of 2%, fish production has grown at an average annual rate of about 7% but now appears to be slackening. Tuna production, however, has increased at an average annual rate of 8% and recently, despite a period of re- adjustment due to world concern over mercury in tuna, demand has been grow- ing more rapidly. As a result, price levels in the last two years have risen dramatically. Six major species comprise 90% of the world catch, yellow fin (thunnus albacares), skipjack (katsuwonus pelamis), albacove (thunnus alalunga), bigeye (thunnus obesus), northern bluefin (thunnus thynnus) and southern bluefin (thunnus maccoyi). They are found throughout the world's major temperate and tropical oceans, generally between 35°N and 30°S latitudes. 46. Long line fishing, which tends to catch the deeper, mature fish, accounts for about 50% of all tuna catch. Japan, Korea, and the Republic of China account for almost all world catch by this method. Live bait fishing is next in importance and Japan is the leader in the field; next is purse seining, a technique in which the US is dominant. Prior to World War II, the world catch was about 300,000 m ton annually. By 1952, it had ANNEX 11 Page 12 reached 450,000 m ton and rose steadily due to the expansion in number and area of influence of the Japanese fleet until 1961 when it levelled off at about 900,000 tons a year. In 1969, it rose to 1.1 million m ton and gains since then have been insignificant. 47. Japanese and US fleets took 65% of the total world catch of major s,ecies in 1970. In 1969, these two countries accounted for about 70% of wc':ld consumDtion and about the same proportion of production of major spe-cies. Japan caught 50%, but utilized only 30%, while the US caught 20% anG uLi z '!Led 40%. Western Europe consumed about 20% of the catch and the rest of the world, 10%. 48. In 1970, Korea with about 9% of world tuna boat tonnage produced about 8% of the catch. From 1965-1970, however, its rate of fleet growth and output growth were the highest among major producers. Japan retained almost constant fleet tonnage. The US tuna fleet increased by about 50%, that of the Republic of China by about 420%, while the Korean fleet increased by about 500%. 49. The major reasons for this spectacular growth are the adaptability of the industrious Korean fishermen to the deep sea environment, the avail- ability and quality of training, and the availability of capital which flowed to initial high returns and relatively low costs of labor. Labor cost is a significant element in tuna long line fishing. Appendix Table 2 shows that crew costs were about 19% of gross sales, exclusive of food and iusurance. The annual return on gross investment was about 11% and the investmient pay-back period 4-1/2 years. Tuna sales prices used in the claculations are below current market levels. S0. Recent studies indicate that Korea has significant cost advantage over Japan in long line tuna fishing. Appendix Table 3 shows cost estimates for a Japanese vessel for 1968 and for a Korean vessel for 1972. Tuna prices were significantly different at these times. The important fact is that the Japanese vessel returned 35% of gross proceeds to the crew whereas the Koreans returned 17.6%. Thus, if the catch rates and days at sea are similar for both vessels, the Korean has a significant cost advantage. 51. It ls expected that most increases in world tuna supply will come from catches of the skipjack specie 1/. The skipjack is a surface swimming specie available to live bait and purse seine fishing methods rather than to long lining. Past experience of deep sea fishing demonstrates the competence oL Korea-: fishermen and there a-opears to be no insurmountable technological barrier to prevent entry into skipjack fishing. Four pole and line skipjack vessels are presently in the country, two small units engaged in a Japanese- Korean joint venture in the Atlantic and two more for training purposes. Eight skipjack vessels are planaed under a recent ADB loan and another seven under joint ventures and corporate arrangements. 1/ Economic Pro>c-tions of World Demand and Supply of Tuna, 1970-1990, Frederick W. Bell, US Bureau of commercial Fisheries, 1969. ANNEX 11 Page 13 52. A start has also been made at purse seining by one company which purchased two old US vessels for: operation in the Eastern Tropical Pacific from a base in Panama. KMIDC has a joint venture purse seine agreement wwith the Goverment of El Salvaidor and others with two US fishing companies, none of which has thus far commenced operations. Korean purse seine crew members have been trained aboardi US ships under a KMIDC arrangement with a US fishing company. Trawl Fishing 53. Deep sea trawling was initiated by KMIDC when, in 1966, it acquired two 1472GT stern trawlers which it assigned to the Atlantic base at Las Palmas. In 1969, private operators addedl a 1574GT and an 824GT vessel assigned to fish Alaska pollock in the North Pacific for the domestic market. These vessels were very successful and 4 additional vessels, each more than 400GT, were imported in 1970 and 5 more in the same category in 1971. Simultaneous- ly, a number of smaller vessels were imported from Japan, and at the end of 1971, 85 vessels had been imported, totalling 30,021GT, and representing an investment of about US$32 millon. 54. At December 31, 1971, the deep sea segment of the trawler fleet consisted of 33 vessels, totalling 19,174GT based at Pusan, 15 vessels toalling 6,578GT based at Las Palmas and 5 small shrimp vessels based at Paramaribo. Catch of this fleet: increased to over 75,000 m tons in 1971 and export value to US$3.5 million (Table 7). Table 7: DEEP SEA TRAWLERS: NUMBER, CATCH, AND EXPORT VALUE 1966 1967 1968 1969 1970 1971 No. of vessels, total 8 26 27 28 27 60 Catch ('000 m ton) 1.4 2.0 6.6 16.1 18.3 75.5 Export ($'000) 3 238 584 109 1,855 3,533 Source: Deep Sea Fisheries Association. 55. In 1971, the Atlantic fleet produced octopus and cuttlefish for the Japanese and European markets and bream and fin fish primarily for the European market. The North Pacific fleet produced Alaska pollock for the domestic market. Number of vessels and catch of the North Pacific fleet increased greatly from 1970 to 1971 (Table 8). Table 8: DEEP SEA TRAWLERS BY REGIONS Number of Vessels Catch ('000 ton) Exports (US$ mil) 1970 1971 1970 1971 1970 1971 North Pacific 10 33 12.7 73.0 - - Atlantic 17 20 5.6 7.3 1.9 3.5 Source: Deep Sea Fisheries Association. ANNEX 1 1 Page 1t 56. Ten additional trawlers ranging from 300-3,500 GT were to be added to the fleet in 1972, plus an additional three smaller units and plan- ning is well developed for an additional 6 vessels totalling 11,000 tons, ranging from 1,500-3,OOOGT each. The 1972 catch target in the Atlantic is 19,135 m ton and in the North Pacific, 135,883 m ton. Exports are planned to reach about US$8 million. G. Marketing and Prices 57. Ma-rketing of products of the off-shore, coastal, and freshwater fisheries is generally on an auction basis at or near the landing, with primary major market at Pusan and Inchon and many smaller markets around the coast. Secondary wtholesale auctions take place at central interior points, most notably Seoul and Taegu, from where distribution is made through wholesalers and retailers to consumers. In order to simplify the distribu- tion system, improve sanitation and decrease distribution costs CFFC has built a secondary market and ice-making facility at Taegu and initiated a pilot distribution chain in Inchon-Seoul, both of which are now in operation. 58. Almost all exports have historically gone to Japan and US although Europe has recently become a significant market. Volume and value of ex- ports doubled from 1968 to 1971 (Table 9). The gross value of exports was expected to total US$155 million for 1972. Table 9: EXPORTS OF SEA PRODUCTS 1967 1968 1969 1970 1971 Quantity ('000 m ton) 66.4 76.4 108.7 134.9 146.4 Value (USi million) 57.5 7.: 7..9 9 J.1 . 115.0 Ctitcv * Appenvfx Ta¶eTI A&. 59. Domestic demand for marine products has grown greatly in the last decade with population and income growth. Wholesale prices for marine pro- ducts increased nearly five-fold during 1961-71, about the same as those for livestock products and much more than those for all agricultural foods and all products (Table 10). Fishery products continue to be a low cost source of high protein food compared with livestock products. ANNEX 11 Page 15 Table 10: INDEX NU ERS OF WHOLESALE PRICES i1970 = 100) Marine Livestock All Agricultural All Products products products products 1961 20.7 22.2 27.6 35.1 1966 57.2 52.5 61.5 74.6 1971 117.7 123.3 121.9 108.6 1971/1961 5.7 5.5 4.4 3.1 Source: Economic Statistic.s Yearbook, 1972, Bank of Korea. 60. Prices of different kinds of fish have fluctuated widely from one year to the next in recent years, depending upon production (Appendix Table 5). The most notable recent change is 50% drop in the prices of Alaska pollock, with a tripling of supplies since 1970, resulting from the newly operational freezer stern trawler fleet in the North Pacific. III. INSTITUTIONAL SERVICES AND POLICIES A. Government Agencies 61. The Office of Fisheries (OOF) in the Ministry of Agriculture and Fisheries is responsible for fislieries administration. Its functions are to establish policy and develop plans, manage facilities and equipment, guide vessel and port facility construction, provide extension services, administer subsidies and loans anid guide training, research and development. OOF was organized in 1945 and reorganized in 1966 at the beginning of the Second Five Year Plan. 62. The Fisheries Research and Development Agency (FRDA), subordinate to OOF, had an operating budget of about 446 million won for 1972. It has primary facilities at Pusan, several secondary facilities and a substantial fleet, which was provided from the post-World War II of Japanese-Korean Properties and Claims Fund. FRDA has carried out work on development pro- grams for aquiculture products, cceanographic studies, stock assessment in the marine environment, patrol duties, skipjack bait assessment and, more recently, a joint Indonesian-Korean scientific investigation of fisheries potential in Indonesian Waters. 63. The cooperative movement among fishermen dates to 1937. The present Central Federation of Fisheries Cooperatives (CFFC) was established in 1962 and was associated with OOF in 1966. CFFC is concerned with both social and economic aspects of fishermen's activities and is a principal channel for governmental support to the industry. Although its activities primarily concern the coastal and aquiculture segments, some impact has been made on deep sea fishing and domestic mar]eting. CFFC has 121,000 member cooperatives ANNEX 11 Page 16 organized under 9 branches; 2,244 "kye" fishing villages or groups of villages are gathered into regional cooperatives. 64. Through its member cooperatives, CFFC provides banking and insurance services, makes sales of fishing equipment, purchases fishing products for price support purposes, and makes loans to fishermen. Business activities planned for 1972 amounted to US$163 million, approximately US$150 per member of the fishing population. (Table 11). Table 11: CENTRAL FEDERATION OF FISHERIES COOPERATIVE, BUSINESS ACTIVITIES PLANNED FOR 1972 (US$'000) Business Activity Amount % of total Banking services 65,658 40.0 General, total (29,063) (18.0) Sales 24,063 14.7 Procurement 5,388 3.0 Utilization and processing 480 .3 Mutual insurance 55,553 34.0 Foreign loan operations 11,948 8.0 (ROK-Japan Fishery Cooperation) Total 163,090 100.0 Note: Exchange rate - US$1.00 = 400 won. Source: Central Federation 'z Fisheries Cooperative. 65. Education and training in fisheries is well developed in Korea. Tle Pusan Fisheries college has for sometime been graduating highly trained administrators, captains and scientists. A large number of sea-going senior personnel graduated from this institution. The Deep Sea Training Center, supported by UNDP/FAO, was established in 1964 and by December, 1971, had graduated 657 trainees, almost all of whom are active in the deep sea fishing fleet, many serving as masters, chief engineers and mates. The Coastal Fisheries Training Center, also assisted by UNDP/FAO, was opened in 1968 and graduated about 400 trainees up to December 1971. Many graduates are employed in deep sea operations as well as in coastal fishing. A govern- ment sponsored training program for processing and supplementary activities is also in operation. The Fisheries training program is one of the most successfuti of its kind and has had a significant role in fulfilling the country's need for trained fisheries personnel. 66. In addition to the government-owned Korea Marine Industry Develop- ment Corporation in the deep sea sector, another government-owned corporation, the Agricultural and Fisheries Development Corporation (AFDC) is engaged in a number of pilot commercial enterprises. These include hard clam culturing for the Japanese market and oyster culture development in hitherto underdeveloped areas of West and South coasts. AFDC owns the Korea Cold Storage Company, wnose substantial faiclities in Pusan, Seoul, Mok Po, and ANNEX 11 Page 17 Muk Ho are part of the fish processing and distribution appratus. The AFDC also acts through the Korean Aquiculture Company Ltd. (a pilot plant operator which has laver, hard clams, and oyster culturing facilities), the Metro- politan Marketing Center (a large but presently underutilized urban market), and the Food Processing Institute (a technological development organization in its formative'stages). B. Sources of Finance 67. Korea has relied heavily upon finance from abroad to expand its fisheries industry. Major foreign loans and other assistance are as follows: (a) French-Italian Loan - US$40 million to the Korea Marine Industry Corporation for establishment of its fleet. The loan was made in January 1963 and by 1967 had been expended. The loan had been repald except for a balance of US$4.5 mil- lion by the end of June 1972. (b) Japan Properties and CLaim Fund - Japan made US$100 million available for support services, subsidies, research, and development. (c) Japan Cooperative Loan - US$90 million for coastal and deep sea fishing beginning iLn 1967. Originally US$40 million was allocated for coast:al fishing but later was reduced to US$30 million, of which US$14 million has been loaned through CFFC for boats, equipment and facilities purchased in Japan. Originally US$50 millicin was allocated for the deep sea sector but it later was increased to US$60 million. of which USS51 million has been loaned. (d) Asian Development Bank Loans - In 1970 the ADB made a loan of US$7 million for construction of cold storage plants. In 1972 it,made a loan of US$13.3 million for construction of 8 skipjack boats and the supply of engines and trawler equipment. (e) Development Finance Corporation IBRD - US$10 million through Korea Development Finance Corporation to September 1972 for construction of deep ses. tuna long liners and some trawlers. (f) US Operations Mission and USAID - US$750,000 for construction of Pusan fish market and for assistance in culture development. 68. In addition, private banks and trading companies have supplied amounts of funds for development of private fishing corporations in Korea. ANNEX 11 Page 18 C. Trade and Price Policies 69. The government has encouraged exports of fisheries products by granting the following reductions: 50% in corporate tax, 50% in income tax, 100% in business tax, 100% in excise tax, and 100% in tariffs on imports required to produce exports. These reductions are on that portion of business and profits related to exports. In addition, an exporter is entitled to a preferential monetary conversion rate and short-term credit at 6% a year. 70. Price stabilization of distressed fisheries commodities is provided through CFFC. In 1970 CFFC made purchases amounting to nearly 600 million won for lavgr, dried squid, and pickled shrimp in order to sup- port market prices (Appendix Table 6). In 1971 its purchases of dried Alaska pollock amounted to 118 million won. Purchase targets for dried squid and canned saury amounted to 5.5 million won for 1972. IV. PLANS AND PROSPECTS A. Development Plans 71. Rapid advances were made in fisheries during the Second Five Year Plan for 1967-71 (SFYP). Approximately 59 billion won, 3 billion more than planned, was invested in the sector. Production rose from 700,000 m ton in 1967, to more than 1 million m ton, and exports grew from US$42 million to more than US$100 million. 72. The Third Five Year Plan for 1972-76 (TFYP) calls for an increase in total fishery production to 1.46 million m ton in 1976, an increase of 36% over output in 1971 (Table 12). Coastal fishery is projected to rise 3.1% annually, off-shore fishing 4.8%, deep-sea 18.8%, and aquiculture 1.54%. Inland fishery output is expected to rise to 10,000 m tons in 1976 compared with less than 1,000 m ton annually In recent years. ANNEX 1_1 Page 19 Table 12: FISHERY PRODUCTION TARGETS ('000 X ton) 1972 1973 1974 1975 1976 Coastal fishery 588 605 625 645 665 Off-shore 1923 201 212 222 233 Deep-Sea 173 226 277 302 320 Aquiculture 144 175 211 206 229 Inland - 4 6 9 10 Total 1,096D 1,211 1,331 1,384 1,457 Fishes 724 801 877 927 969 Shell fish 129) 158 193 188 210 Sea weed 117 122 126 131 135 /1 Less than 1,000 m ton.. Source: Office of Fisheries. 73. The TFYP calls for exports to rise from US$109 million in 1972 to US$200 million in 1976 (appelLdix Table 7). However, the Office of Fisheries reports that gross value of fishery exports was over US$150 million 1972 and is projected to rise to US$325 million in 1976. 74. Total investment in thte fisheries sector is projected to rise from 55 billion won in the SFYP to 107 billion in the TFYP (Table 13). About 55% of the total would be from private sources and 45% from central and local governments. It is estimated that US$190 million of foreign capital will be required. Investment for deep-sea fishing facilities accounts for 45% of the total; nearly all of it, US$155 million, would be foreign capital supplied by private enterprises (Appendix Table 8). Other foreign capital requirements are: US$13 million for coastal fisheries, US$15 million for off-shore fisheries and US$6 million for marketing and processing facilities. 75. The overall program is subject to revision year by year in the light of changing circumstances. The 1972 deep-sea fishery programs called for the following: 20 - 350GT tuna long liners 20 - 50OGT tuna long liners 2 - 50OOT tuna purse seiners 23 - SOOGT stern trawlers 5 - 5OGT shrimp trawlers 3 - 1600GT carriers 2 - 100OGT carriers 1 - 3000GT carriers ANNEX 1 1 Page 20 Table 13: INVESTMENT PLANS FOR FISHERIES (1970 prices) A. Targets 1970 1976 % increase Fishery production (000 m ton) 935 1,457 55.8 Exports (US$ million) 90.1 200 121.9 Fishing Vessels (000 GT) 358 572 59.7 B. Investments and Loans 1967-71 1972-76 % increase Domestic capital (mil. won) 26,821 (49) 48,307 (45) 80 Foreign capital (000 US$) 100,131 (51) 189,935 (55) 90 Central government (mil. won) 29,493 (53) 45,129 (42) 52 Local government (mil. won) - 2,612 ( 3) _ Private enterprise (mil. won) 25,695 (47) 59,565 (55) 141 Total (mil. won) 55,188 (100) 107,306 (100) 94 C. Investments by categories, 1972-76 Mil. won % Port facilities 14,212 13 Fishing facilities Coastal 12,671 12 Off--shore 8,572 8 Deep-sea 48,453 45 Equipment improvement 708 1 Aquiculture Tideland development 5,875 5 Inland water development 863 1 Marketing and processing facilities 3,457 3 Development of fishery techniques 2,767 3 Miscellaneous 9,828 9 Total 107,306 100 Source: Office of Fisheries. 76. Plans for 1973 are similar to those for 1972, except that three 250GT and two CT skipjack vessels are included. In fact, the skipjack vessel program is being accelerated and the purse seine program delayed. The interest of the private sector is illustrated by the fact that 86 tuna vessels are planned or in construction late in 1972 in addition to the large trawler program described elsewhere in this report. ANNEX 11 Page 21 B. Major Factors Affecting Future Growth Markets 77. Domestic demand for fishery products will continue to rise with population and income growth. As noted earlier, wholesale prices of fishery products have increased as much as those of other foods, despite a rise in per capita consumption of fishery products of about 50% during the last decade. Fishery products are a low cost source of animal protein food, compared with livestock products, and consumption of fishery products will continue to rise unless prices rise greatly. Export markets also are favorable. Future growth of the fisheries industry therefore depends heavily upon overcoming contrain.ts to expanding output. Coastal Fisheries 78. The projected growth in coastal fisheries production from a little over 500,000 m tons in 1970 and 1971 to 665,000 m tons in 1976 should easily be possible since production rose to 663,000 m tons in 1972. Additional capital investments for motor boats, other modern equipment, and improved processing and other marketing facilities will be required to raise efficiency. As the population dependent upon fisheries for a livelihood declines, there will be opportunities to raise productivity and incomes of fishery households by increased mechanization and other modernization. Off-Shore Fisheries 79. In view of the very rapid growth in off-shore or middle distance fishing in the last decade, the projected growth in production of 4.8% annually by this sub-sector appears modest. The target set for 1973 was exceeded in 1970. As pointed out: earlier, harvesting off the east, south, and west coasts into the China and Yellow Seas is a replacement of fishing by the Japanese and the waters being fished have limited fishery resources. However, additional replacement can be expected. Aquiculture 80. Korea has large potentials for expanding output of the aquiculture sub-sector. The KCorean-US agreement, concerning exports of frozen oyster meat to the US, should provide a growing market for this product. Japanese markets for a wide variety of aquiculture products also are expanding. How- ever, prospects for future growth of laver exports are not favorable. They will depend mainly upon future demand and production in Japan. ANNEX 1 1 Page 22 Inland Fisheries 81. Expansion of eel production to supply Japanese markets can become a major source of export earnings, although large investments will be required. There also are potentials from increasing inland fishery production by utilizing ponds, reservoirs, and rivers more fully for fish culture. Deep Sea Fishing 82. Future growth of Korea's deep sea fishing industry will be in- fluenced by its ability to develop skipjack and purse seining fishing for tuna and further growth of trawler fishing. 83. Tuna. Export market prospects for tuna are excellent. A recent study of the relationship between tuna consumption, prices and per capita income in nine countries concluded that, with projected population and income changes, consumption would rise to 5 million m ton annually by 1990 cormpared with 1.3 million m ton in 1966. If, however, the maximum sustain- able yield on a world-wide basis is 2.6 million m ton and most of the increases in output will be skipjack, costs and prices will rise and demand will be less than 5 million m ton. The study concludes that world con- sumption of tuna would expand to about 2.1 million m ton, at an ex-vessel price of 38$ price per pound (US$850 per ton), if production is increased to this level by 1990 (Appendix Table 9). 84. The continuous move of many riparian nations to extend their seaward dominion is a constraint upon all countries whose fleets range far from home, such as those of Korea. For the tuna long line and Alaska pollock fisheries, however, this is not presently a serious factor since they are oceanic fisheries carried out well beyond the most imaginative boundaries yet conceived. These fisheries will, however, be affected by multinational movements towards systems of conservation. The International Commission for the Conservation of Atlantic Tuna is currently considering the establishment of a system of national tuna quotas in its region. Similarly, the Inter-American Tropical Tuna Commission is deliberating ways and means of controlling the fishing effort in its area. The International Commission for North Atlantic Fisheries (ICNAF) has recently set national quotas. As more and more stocks approach or pass their maximum sustainable yield, additional protective measures, unilateral, bilateral or international, can be expected. 85. Since most increases in tuna catch are expected to come from skipjack, the mission agrees with the present move of Korea into this field. It considers that the present pace of the program is realistic and balanced. 86. Since skipjack tend to congregate around or near tropical land masses, it will be necessary to accelerate the development of bilateral f'shing agreements with various countries, which have resources available in excess of their domestic needs, such as Indonesia, the Pacific Trust Territories, etc. Some agreements, which should enable Korean Fishermen to harvest, in due course, stocks within the national boundaries of other ANNEX 11 Page 23 countries have already been made. An Indonesian-Korean survey has been implemented, funded by Korea wiith scientists of both countries using a Korean vessel, to survey Indonesian fisheries resources. It is intended to precede the entry of Korean commercial fishing companies into the region. Korea has also established a bi:Lateral fisheries relationship with Spain on an official basis and with Sri Lanka unofficially. An arrangement with Uruguay is under discussion. 87. Tuna Seining. Tuna purse seining requires substantial capital commitment and is a technically demanding technique. Although it is more capital intensive than long lining and the Korean labor cost advantage, therefore, less striking, the high productivity of this method can add another viable element to the Korean program. Despite the higher priorities which should be given to skipjack development, It is in the interest of the country to press for early development of the tuna seining program which has been slow in starting. Entry into this type of fishing will become more difficult as time goes by. 88. Tuna Long Line Sharp F'reezer Vessels. More than 20 of the 300 Korean long liners are equipped as extra low temperature vessels. Although the Japanese market pays premium prices for their products, an unlimited expansion of this element of the fleet may bring repercussions from the Japanese industry. Future construction programs should be based on a care- ful evaluation of this potential hazard. 89. Trawl Fisheries. The remarkable growth of the deep sea trawl fleet has been based on high catch rates of North Pacific Alaska pollock and initial high domestic prices. The price has now declined under pres- sure of increasing volumes of catch and current price levels are causing distress among the small domestic local water producers of Alaska pollock. Therefore, it is useful to consider the question of Alaska pollock stocks in the North Pacific and alternative markets for the product. 90. Japan is the dominant ielement in Alaska pollock fishing. Japanese catch of this specie has risen from 1.9 million m ton in 1969 to 2.7 million m ton in 1971. In 1970, mothership operations in the Bering Sea accounted for nearly half of Japanese catch. (Table 14). 91. Although the Japanese fishery originally produced fish meal from factory ships, the bulk of the caitch is now converted to surimi (minced fish), production of which, in 1971, amounted to 321,000 m ton. The remainder was either dried, shipped to kamaboko (fish cake or sausage) manufacturers in the chilled form, or made into meal. Fillet-block production for export to the US f'rom Japan began in 1967-68 and has since been stimulated by the growing shortage of cod blocks in the US market. About 60 Japanese plants are potential producers and in 1972, the 6 leading producers are expected to export 12,000-14,000 m ton of product, or 25-28 million pounds. The production of fillets, assuming favorable prices and product acceptability, is projected to increase to over 50 million pounds in 1975. ANNEX 1 1 Page 24 Table 14: JAPANESE POLLOCK CATCH BY SOURCES, 1970 ('000 m ton) Source Catch % of Total Small-scale operations in Japanese coastal areas (particularly Hokkaido) 368 16 Small-scale and trawler operations in Ckhotz and Kamchatka areas 713 31 Trawler operations in Bering Sea 184 8 Mothership operations in Bering Sea 1,035 45 Total 2,300 100 Source: Alaska Pollock, Environment Canada Fisheries Service. 92. The f.o.b. plant cost of Japanese production is estimated at 27-28k per lb, with c.i.f. prices of 354 per lb in Los Angeles and 37i per lb in Gloucester. Although accurate cost figures are not available it would appear that Alaska pollock blocks with a round fish cost Japan of about US$100/m ton, a plant cost of 27-284/lb. and a Los Angeles price of 354/lb is a viable industry. US imports of cod frozen blocks have remained steady at a little under 200 million pounds annually in the last few years because cod supplies have not increased but imports of other frozen blocks, in- cluding Alaska-Pollock, have increased from about 75 million pounds in the late 1960s to nearly 150 million pounds in 1972. Prices for Alaska-Pollock in US markets increased from 22 cents per pound in 1969 and 1970 to 33 cents in 1972 (Appendix Table 10). 93. The growth in the US market stems from the increase in per capita consumption of seafood products based on fish blocks. Cod block supplies are unlikely to increase and may, in fact, decrease if recently instituted conservation measures in the North Atlantic are unsuccessful in maintaining stocks. 94. There are numerous constraints for the Korean pollock producer contemplating entry into this market. Japanese scientists believe that the North Pacific pollock stock is reaching its maximum sustainable yield. Japan is taking 2.7 million m ton annually, the USSR more than 0.5 million m ton, and Kdrea less than 200,000 m ton. Japanese pollock fillets are generally made from "fresh fish" (the catch taken on the last day or two of the voyage) and iced and boxed separately for conversion in shore plants. The quantity available is thus limited and attempts to fully process blocks at sea, requiring large quantities of labor at about 2-1/2 times sliore cost, have so far been unsuccessful. The export to North America of factory ship produced minced fIsh blocks has not yet been successful. ANNEX 11 Page 25 95. Korean vessels are 2-3 days further from the fishing grounds than Japanese vessels and are thus even more handicapped in the supply of "fresh fish" for shore plant operation. To offset the distance penalty, one company has commissioned a factoiry ship, which will receive fish from 4 smaller trawlers (300-400GT) and head, gut, skin, mechanically fillet and freeze the catch in blocks. It Ls planned that the blocks will be thawed at a shore plant in Ulsan, trimmed, canned, packed and refrozen for ship- ment abroad. Although tests indicate that the quality of product handled in this fashion, i.e. thawed and refrozen, is satisfactory, the operation has not proceeded long enough to be certain of commercial acceptance. Two other firms have plans for similar operations and a second plant is under construction at Masan. 96. It would appear that the larger Korean vessels in the13000 GT class, two of which caught 10,483 m ton and 16,636 m ton (90% pollock), respectively, in 1971, were profitable using a fillet market price of US$100/m ton for round fish landed value. Their gross value of landing per vessel would be about US$1 million annually and the round fish price of US$100/m tons is slightly lower than the current domestic price oZ about 50 won/kg. The foregoing cost figures are estimates and only demonstrate that US market prospects at current price levels are not likely to be the source of extraordinary earnings although the program may be viable. 97. The Japanese surimi market is expanding at about 10% annually and Japanese demand, generally, at a higher rate. This would provide an alternative outlet for Korean production if Japanese import restrictions are relaxed. 98. The growth of the trawler fleet, at a rate similar to that enjoyed in the recent past, will be dependent upon solving the quality and cost problems related to harvesting Alaska pollock for markets other than the domestic market or finding alternative fisheries as rewarding as polloclc fishing was in 1969-70 prior to flooding the domestic market. Substantial alternative markets, such as the growing US fillet block market, have not yet proven commercially viable, although development work is proceeding swiftly. Fish meal production has not yet proven viable. V. PROJECT PROPOSALS 99. In furtherance of the development plan the Director General of Fisheries and the Office of Fisheries requested that consideration be given to several project proposals for international financing. They are summarized below with mission comments. ANNEX 1 1 Page 26 A. Tuna Long Line Development 100. This project would involve an investment estimated at US$12.5 million for 58 vessels of 120-250GT. This proposal requires additional preparation. Several points, some made earlier in this report, are germane: - Construction of tuna longliner vessels is mainly to replace existing old vessels and to expand the fishing fleet. It was estimated in August 1973 that about 100 of the 400 vessels need to be replaced. - Tuna supply from long line methods of capture is unlikely to increase in total but increasing demand is causing tuna prices to increase. - Costs and returns, compared with Japan, the leading producer, are good and historically proven. - The number of sharp freezer type long liners should be expanded only after careful consideration of its effect on total supply of sharp frozen tuna on the Japanese market and an evaluation of the possibility of market repercussions. 101. On balance, the proposal is meritorious and, in the opinion of the mission, deserves consideration. Identification of the project, how- ever, would require extensive discussions with the Korean Government, re- garding its policies of development of this sector, and with the enter- prises active in the field on lending channels and procedures. The coor- dinating role of government must be defined. B. Skipjack Vessel Construction 102. This project would involve construction of 10 vessels a year, over three years, at a unit cost of US$800,000 for a total investment of US$24 million. It estimates that production per vessel would average 1,427 m tons and export earnings US$522,000 annually. Operating costs are estimated at US$323,000 annually and net returns to capital investment at US$199,000, giving a rate of return of 38.1%. The proposal is not prepared in sufficient detail to enable specific evaluation. The following observ- ations, also made elsewhere in this report, are relevant: - Korea has two shipjack vessels now operating in the Atlantic Ocean but it will be necessary to gain additional experience and technology from other countries such as Japan. - Proven Korean skipjack crews are not yet available but training presently is taking place. ANNEX 1 1 Page 27 - Bait development work Ihas been carried out and Korean fishery experts report that live bait now can be carried to South Pacific fishing grounds on a commercial scale. Formerly, live bait could be carried only a short distance from Korea and a supply of bait near fishing areas was essential. - The world skipjack population is underexploited and is the only major tuna stock in this condition. However, Korea will need to make certain it has access to waters for skipjack fishing, which often are claimed by nearby countries. - By the time the proposed project is ready for final decision many unknowns such as catch rates and bait problems will be removed. 103. The mission believes thte proposal has much merit and warrants further development and scrutiny. But as in the case of the long line proposal, additional project preparation will be required. Extensive discussions will need to be held with the Korean Government regarding its policies for development of this sector and with the enterprises active in this field on lending channels and procedures before it will be possible to evaluate the project proposal. C. Marketing Facilities 104. The Office of Fisheries, the CCFC, and MAF place high priority on program to improve the quality and efficiency of the domestic market distribution system. It is proposed to build 6 fish markets, at a cost of US$6 million, 40 direct sales markets at a cost of US$1 million, and 8 refrigerated fishery warehouses for US$790,000; altogether project costs are estimated at US$7.79 million. The benefits potentially available, through an improved distribution chain would be substantial, but the organ- ization and operation of the proposed program were insufficiently detailed to enable preliminary evaluation. D. Eel Culture 105. This proposal involves expanding the present 18 ha devoted to eel culture by 85 ha over a five year period, at a cost of US$3.9 million for construction, and US$6.3 million for operation, for a total of US$10.2 million. It is estimated that exp3rts of eel would rise to 2,000 m ton annually and,have an export value of US$24 million. Most of the conditions for success of such a project are present. They include seed stock (which may limit growth rate of the industry), the labor force, the prospect of ANNEX 11 Page 28 intensive use of available water, and the amenability of the type of develop- ment to be organized in numerous small enterprises. However, availability of feed for eels may be a constraint to growth of the industry, as about 7 pounds of fish are required to produce 1 pound of eels. Eels are very high priced and can be marketed readily in Japan. This proposal merits more detailed technical and economic study by the Office of Fisheries. E. Fishmeal Factory Ship 106. It is proposed to build two 5,500 GT factory trawler fish meal vessels in foreign yards for total investment of US$15.4 million. They would produce both fishmeal for domestic use in feeding livestock and fillets for export. Imp*ortant consideration are: - The Korean demand for fishmeal is large and expanding. More than 50% is imported and import value was about US$10 million in 1972. The quality of domestically produced meal is poor because of processing methods and not because of the inherent characteristics of the coastal fish used for its production. - The stock of North Pacific pollack, which is the proposed basis of operation, is about 16 million m tons compared with current catch of about 6 million m tons. - Korea has a fish meal factory capable of producing 5,500 m tons annually whichi will be supplied by seven ships under construction. 107. The proposal does not include sufficient data on costs and returns to judge its economic viability. In order to evaluate the proposal it would be necessary to know what would be the annual costs of operation, what the likely catch rates would be based on experience of other similar ships now in operation, and what markets there would be for fillets in North America and for surimi in Japan. Large fishmeal factory ships are highly capital intensive. Consequently, Korea would not have as great an advantage in this type of enterprise as it does in the case of other fishery industries because of its high-quality and low-cost labor supply. The mission recommends that this proposal be given lower priority than the others. F. Prosperous Fishing Villages 108. This is a comprehensive program for strengthening all segments of coastal, off-shore, and aquiculture fishing industries under direction of the CFFC. It proposes investments and expenditures of 57.9 billion won (about tS$145 million) for construction and import of fishing vessels, ANNEX .a Page 29 motorization of fishing boats, replacement of equipment, improvement of marketing facilities, and breakwater and other port facilities. The program is very large and general and it is not possible to say what aspects merit high priority from the information contained in the broad proposal. Some aspects such as those related to expanding aquiculture of hard clams, oysters, shellfish, laver, and dulce undoubtedly justify investment. Other parts of the proposal are concerned chiefly with improving the social welfare of fishermen's households. REPUBLIC OF KOREA AaRICULTURAL SECTOiR SRVEY COASTAL FISHERIES PRODUCTION BY TYPES OF EQUIPMIENT (Unit: Metric tons) 1262 1966 1967 1268 1969 1970 1971 Production 387,318 1481,372 490,074 552,284 513,320 525,t412 504,931 (100.0) (124) (127) (143) (133) (136) (130) First Class Boat Seines 32,253 30,160 26,913 25,363 55,030 21,789 27,01i4 Non-Powered trawls 5,635 9,1469 11,996 10J,145 10S061 17,539 17,026 Staw Nets 36,206 82,535 109,837 96,060 78,436 99,455 103,562 Anglings 40.,734 76,760 42,393. 88 j,941 61,756 72,397 35,984 Long Lines 34,,973 32,162 27,825 41,132 21,139 30,356 19,797 Gill Nets 61,223 105,305 106,269 119,164 133,1427 113,138 125,047 Diving 4,381 11,025 15,292 11,194 9,118 28,582 29,040 Set nets 32,517 30,654 23s812 15,832 15,560 5,896 6,351 First Category Public Fisheries 25,782 62,731 69,396 89,382 77,875 89,.636 90,953 Second Category Public Fisheries 6i697 7s048 8,620 6,630 8},749 12,510 12,487 Third Category Public Fisheries 25,652 12,460 16,816 17,359 19,414 8,3514 10,436 Other Fisheries 81,265 21,063 30,905 31,082 22,755 25,760 27,234 Source: Office of Fisheries CD H ANNEX 11 AppenDdix Table 2 Paze1 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY FINANCIAL PROJECTICN FOR A 300 GROSS TON TUNA LONG LINER OPERATEDi FROM AN ATLANTIC BASE Operation Plan (a) Trip Schedule 2 days Pusan 4o days Panama 10 days Fishing Ground_ (Fishing - 100 days (Moving - 14 days 7 days /'FSom 2nd to 6th Trip 7 days\ 10 days Base/ 10 daZ2 Fishing Ground Base \ (Fishing - 100 days (Moving - 14 days 45 days for main docking and crew replacement Pusan (b) Fishing Plan Days Required Days Required for for 1st Trip 2nd to 6th Trip Sailing 40 Fishing 100 500 Moving 14 70 Trips between base and fishing ground 20 100 Staying in Ports 9 28 Temporary Docking 12 Main docking and crew replacefftent Total 183 755 Total for one fishing period: 938 days Estimated catches per fishing day: 2.0 metric tons Total Fishing days: 600 days Estimated total catches: 1,200 metric tons ANNEX 11 Appendix Table 2 Page 2 Rejection: 10 metric tons Saleable quantity: 1,190 metric tons Price estimation: $660/metric ton Total Sales Amount: $785, 400 II. Co0rO03ition of Fish Species and Price Species Composition Price per M/T Amount Albacore 40% $800 $320 Yellowfin 35% $720 $252 Bigeye 15% $380 $ 57 Others 10% $310 p 31 Total 100% $660 III. Income and Outgo Plan 1. Income: 1,190 M/T x $660 $785,4oo Total: $785,_00 2. Outgo: A. Direct Expense (a) Fuel Cost $77,934 (i) F.O. 600 fishing days x 1.8KL x $35 $37,800 244 sailing days x 3KL x $35 = $25,620 50 days (in ports) x .5KL x $35 = $875 (ii) L.O. 1,837KL x 2% x $350 = $12,859 (iii)R.O. 2 D/M x 6 trips x $65 = $780 AN=e 21 A=endix Table 2 Page 3 (b) Bait $86,400 24 c/s x 600 fishing days x $6/cas of 10 kg. = $86,400 (c) Ecpendable Fishing Gear $ 3,600 $600 x 6 trips = $3,600 (d) Foodstuff $24,388 26 men x 938 days x $1 (e) Vessel Maintenance $18,000 Main docking: $10,000 Temporary docking: (Company share: $10S500) $2,500 x 2 = $ 5,000 (Company and Crew Share: $ 7,500) TeLmporary repair: $500 x 6 trips = $3,000 (f) Expendable Supplies $ 5,400 $900 x 6 trips $5,400 (g) Crew Expense $ 600 $io0 x 6 trips = $ 600 (h) Yedical Spplies $ 300 $50 x 6 trips = $ 300 (i) Port charges, etc. $ 3,500 $500 x 7 times = $3,500 (;) Communication Expenses $ 300 $50 x 6 trips - $ 300 (k) Air ticket fares for crew's retarn trip $8554 $329 x 26 = $8,554 Sub-total $228,976 B. Crew Share $131,063 $785,400 -($785,400 x 8% + $218,476) x 26% = $131,063 Sub-total 31.,o063 C. Crew Bonus $17,475 '$131,063 x_4 - $17,475 Sub-total ANNEX 11 Appendlx Table 2 Page 4 D. Indirect Expense (a) Basic Fishing Gear $15,000 (b) Crew insurance $ 1,612 26 men x $2 x 31 months = $1,612 (c) Vessel insurance $42,625 $500,000 x I10% x 3% x 31 = $42,625 12 (d) Overhead cost $62,000 $2,000 x 31 months = $62,000 Other (e) Interest on running Sail-out Loan: 9 Loans capital $50,000 x x = $3,000 1T7- (Sailout loan) $10,000 $40,000 x 8% x L = $1,333 $ 800 12 $30,000 x 8% x L =$1,000 $ 600 12 $20,000 x 8% x L = $ 667 $ 400 12 $10,000 x 8% x L = $ 333 $ 367 12 (f') Depreciation $1l~132 $45o0,ooo x 8 x 31 *$145,312 Sub-Total $266,549 Total Outgo: $644.063 Net Profit $785.,400 (Total Income) - $644,o63 (Total Oatgo) = 11337 (i) Annual Return on Investment: "$JJl,337 . $500,000 x 12 11% (ii) Years required to pay back of equity invertment: $500S000 r u45,3t2 o 141,377) x 112 tars Source: Private industry communication ANNEX 11 A2penzWx Table 3 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY OOMPARISION OF TUNA LONG LINER OPERATIONS PER YEAR AND VESSEL Japan Korea Vessel Scale 320 G/T 300 G/T Number of Crew 28 26 Operating days 304 254 Fish Catch 450 ton 457 ton Fish Proceeds $213,247 $332,239 Operating Expenses: Crew Salaries $ 74,640 $ 58,743 Vessel Expenses $ 20,000 $ 29,225 Fael and Oil $ 21,669 $ 31,112 Depreciation $ 25,805 $ 54,000 Miscellaneous Expense $ 36,872 $ 81,399 Total $178,986 $254,479 Operating Income $ 34,261 $ 77,760 Exchange Rate: $1 = 360 $1 - W 400 Sources: Japan - Japanese Fishery Almanac for 1968 Korea - Private Firms AccomTlishment for 1972 REPBLIC OF KO-EA AGRICULTURAL SECTOR SJRVEY EXK)T OF SEu FIICTS (lnt: Tbns, 11,5OOO7 1967 1968 1969 1.970 1971. Obmodity AsuAwt 4u8ntitY AMount Ana-ntity Amunt Quantitr mt 1970y A71t Total 66,425 57,499 76,439 57,323 108,695 73,916 134,862 90,052 146,434 114,981 Alive Fish 13,307 6,721 13,877 7,232 11,884 6,764 14,805 11,353 24,458 18,217 Yrozen 4,518 6,084 3,679 4,653 4,581 4,556 8,394 5,994 U,528 8,001 Sqnid 14,678 4,630 1,780 1,970 3,616 4,156 6,325 10,335 4,377 9,361 Pickled 1,724 1,730 866 1,217 854 1,224 479 1,566 1,247 2,629 mnned 665 519 1,846 2,221 2,053 2,184 377 375 991 1,885 Agar-Agar 804 5,800 415 1,851 425 1,780 322 1,227 342 1,171 Sea-weed 3,055 929 1,855 588 3,100 998 2,939 1,525 4,085 2,678 lover 672 114,371 1,243 17,054 969 21,721 5,813 *1,592 1,257 4,749 Tha 36,200 U,969 50,074 15,559 80,800 24,072 89,621 37,663 90,725 55,103 Others 802 635 804 732 413 492 834 1,i09 1,429 2,074 Fish-net - 4,1lu - 4,9246 - 5,969 4,953 7,313 5,995 9,113 SDurce: Offioe of Fisheries 10 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY PRODUCTION AND PRICES OF MAJOR FISHES (Unit: Production metric tous) Price won per kilo) 1965 1966 1967 1968 1969 1970 1971 1972 Species Amount Amount Amount Price Amount Price Amount Price Amount Price Amount Price Amount Price Alaska Pollock . . 26,696 21,021 17,506 3Q,030 58 17,934 78 26,492 110. 71,327 60 113,291 55 saury . 32,281 39,404 27,858 55 29,893 58 29,478 78 25,036 110 30,592 60 38,242 53 Squid 68,398 75,473 38,945 42 84,864 33 59,898 38 72,142 54 37,825 77 88,701 82 Corvenia 42,465 54,422 37,521 - 53,846 37 43,398 120 55,173 144 43,784 173 57,442 191 Hair Tail 37,683 45,384 48,713 - 18,592 76 47,922 75 69,082 71 82,868 79 54,072 62 K!ekerel 7,399 2,078 2,772 - 10,482 69 42,103 54 38,256 66 60,599 62 37,823 46 Horse Mackerel 26,496 10,058 5,280 - 2,543 99 2,042 96 883. 122 8,904 61 4,383 62 Anchovy Hair Tail 56,761 66.349 78,538 - 63,127 19 115,056 14 54,047 18 66,904 20 82,872 23 Bastard Halibut 2,117 2,625 3,897 - 3,738 - 2,510 126 3,123 132 4,336 138 3,400 162 Croaker 3.163 2,840 2,150 - 2,526 136 1,142 154 1,597 188 967 231 2,796 199 Pomfret 4,974 7,852 6,196 - 6,077 - 1,432 102 4,727 111 4,492 107 6,172 104 Swellfish 6,262 3,105 4,241 - 5,229 - 5,691 - 4,096 69 3,127 85 6,718 96 King Mackerel 3,608 7,590 7,581 - 5,126 - 3,367 86 5,276 94 6,584 110 6,700 90 Yellow Tail 1,136 1,331 1,654 - 2,942 - 2,247 123 1,718 235 761 137 2,233 291 Red Sea Bream 1,706 2,033 2,984 - 3,722 104 1,768 150 1,874 189 2,010 212 4,570 219 Eel 3,757 5,364 6,381 - 8,377 - 7,113 - 8,184 75 6,732 76 5,955 77 Shriap 3,181 2,478 4,378 - 3,308 - 1,261 149 1,063 198 1,172 172 2,483 314 Laver 11,642 7,638 14,574 18 16,400 23 7,771 42 19,750 37 14,831 39 12,754 32 Source: Office of Fisheries ANNEX 11 Apperdix Table 6 REPUBLIC OF KOREA AGRICULTJRAL SECTOR SURVEY CENTRAL FEDERATION OF FISHERIES COOPERATIVES PRICE STABILIZATI.l FUND - PURCHASING BUSINESS BY YEAR (Unit: 1,000 won) Year Kind Quantity Amount 1970 Laver 2,042 - 1,000 bundle 559,524 Dried Squid 32,670 - chook* 18,958 Pickled shrimp 358 - D/M 17,384 Total 595,866 1971 Dried Alaska 3,117 - JJack** 118,466 Pollock 1972 Tarzet Dried Squid 350,000 - chook* 315,000 Canned Saury 150,000 - C/S 200,000 Total 515, 000 * Chook: a unit or bundle camprising 20 pieces of squid ** JJack: a unit or bundle comprising 20 pieces of dried Alaska Pollock Source: Office of Fisheries REPUBLIC OF KMWEA AGRICIJLIVRAL SECUMR SURVEY A 1IB-RANGE PLAN FOR EXPORT OF SEA PROXXJCTS: 1972-1976 (Unit: US $,OO°) y OCmdity97 1973 2A 17 17 Alive and Fresh Fish 11,80 13,300 15,300 17,300 29,000 (214,000) (28,000) (30,000) (32,000) (37,000) Frozen 5,700 6,000 6,400 6,700 7,000 (8,500) (9,700) (10,000) (11,000) 014,O0) qLuid 4,200a 4,400 4,600 4,Bo 5,000 (10,000) (12,000) (12,000) (12,500) o14,000) salted and Preserved 1,600 1,700 1,800 1,900 2,000 (4,000) 4,B8oo) (5,ooo) (5,500) (7,000) (Xnned 1,600 2,200 2.800 I.1kn) 14,0n0 (5,500) (6,000) (7;000) (7,500) (9,000) Agar-Agar 3,000 3,000 3,000 3,000 3,000 (2,000) (2,200) (2,500) (3,000) (4,000) Ssaweeds 1,300 1,500 1,600 1,800 2,000 (3,000) (3,600) (4,000) Q4,200) (5,000) laver 25,000 27,000 28,500 35,00O 35,000 (3,500) (5,000) (5,500) (5,800) (8,000) Tmna 45,500 65,600 85,000 99,000 106,0o0 (80,000) (96,000) (128,000) (165,00o) (2oo,ooo) Other Fishery Products 2,400 3,400 3,900 4,600 5,ooo (4,000) (4,800) (5,00O) (5,500) (7,00O) Fish Net 6,900 7,900 9,100 10,500 12,O00 (L0.500) (13.00) (35.000) AL°°) (20.000) Total 109,000 136,000 162,000 , B&r00 200,000 (15,000) (385,ooo) (224,000) (269,000) (325,000) Ratio copared the previous 134.7 119.3 121.0 120.0 year / FLgures in parenthesefrom Office Of Fisheries Plan. Other figures from Government Plan. Soarce: Office of Fisheries REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY INVESTMENT PLAN FOR FISHERY DEVELOPMENT, 1972-76 (1970 prices; foreign capital in US$ 1,000 and domestic in million won) Domestic Foreign Centrpl Local Private Project Quantity Capital Capital Total Gov't Gov't Enterprise Total 48,307 189,953 107,306 45,129 2,612 59,565 Fishing Port Facilities 14,212 - 14,212 11,633 2,579 - 1. Fundamental Facilities 29,800 m 13,201 13,201 10,622 2,579 2. Functional Facilities 137 Place 1,011 - 1,011 1,011 - - Fishing Facilities 13,191 183,880 70,404 13,213 - 57,191 1. Coastal Fishery 30,000 G/T 8,533 13,000 12,671 10,053 - 2,618 (1,000 unit) 2. Off-shore Fishery 90,000 HP 3,860 15,170 8,572 2,202 - 6,370 18,600 G/T (155 unit) 3. Deep-Sea Fishery 131,950 G/T 267 155,140 48,453 250 - 48,203 (271 unit) 10 Place 4. Equipment Improvement 1,750 sets 531 570 708 708 - _ Aquiculture 6,738 _ 6,738 5,119 33 1,586 1. Tideland Development 22,700 sets 5,875 _ 5,875 4,426 _ 1,449 7,918 ha 2. Inland Water Development 63 Place 863 - 863 693 33 137 Marketing and Processing Facilities 3,747 sets * 21 place 1,574 6,073 3,457 2,569 - 888 Development of Fishery Technique 2,767 _ 2,767 2,767 - _ Miscellaneous 9,828 - 9,828 9,828 - - (D Source: office of Fisheries m ANNEX 11 APpendix Table 9 RE,PUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY PROJECTED TUNA CONSUMPTION (1,000C MT) Actual Projected 1966 1990 USA Can 382.8 565.o Japan Raw 353.0 433.0 Can 25.8 2.0 Total 378.0 J435.0 E.E.C. Can 159.0 305.0 Spain Raw 31.8 66.0 Can 37.8 13.0 Total =9. 79.0 Peru Raw 50.2 167.0 China (Taiwan) Raw 38.0 39.0 Can 6.8 143.0 Total W . 182.0 Turkey Raw 16.0 0.4 Canada Can 9.7 14.0 U.K, Can 7.6 2.6 Total - Selected Countries 1, 118.5 I1,750,0 Grand Total * 1,320.0 2,100.0 * Projected at 120 percent of total for selected countries. Source: "Economic Projections of the,World Demand and Supply of Tuna, 1970-1990" by F.W. Bell, U.S. Bureau of Cbmmercial Fisheries, 1969 ANNEX 11 Appendix Table 10 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY US BLOCK PRICES OF ALASKA POLLOCK (huit: U$/lb.) Jan. Jan. Jan. Jan. Jan. 1966 1969 1970 1971 1972 Cod blocks 29.5 21.5 26.5 40.0 46.5 Haddock blocks 36.5 34.O 36.5 41.5 47.0 Ocean Perch blocks 27.0 25.5 30.5 38.5 38.5 Flounder blocks 31.0 31.5 42.5 39.5 43.5 Atlantic Pollock blocks 22.5 18.5 19.5 29.5 32.5 Whiting blocks 23.7 22.0 22.5 29.0 33.0 Source: "Alaska Pollock", Fisheries Service, Department of the Environment, March 1972 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY ANNEX 12. STATISTICAL ANNEX ANNEX 12 REP_BLIC OF KOREA AGRICTWL7fJRAL SECTOR SURVEY STATISTICAL ANNEX TABLE OF CONTENTS SECTION I POPULATION AND EMPLOYMENT Table 1.1 Population of the Republic of Korea Table 1.2 Population of the Republic of Korea 1920-70 Table 1.3 Regional Population Distribution and Changes Table 1.4 Labor Fcrce and Employment Table 1.5 Employment by Sectors Table 1.6 Projections of Population and Employment (Third Five-Year Plan) Table 1.7 Population Distribution by Settlement Group, 1960 and 1971 and Projections for 1986 SECTION II NATIONAL INCOME ACCOUNTS AND FISCAL DATA Table 2.1 Major Economic Indicators Table 2.2 Industri,al Origin of GNP at Current Prices Table 2.3 Industrial Origin of GNP at 1965 Constant Prices Table 2.4 Contribution of Agriculture to GNP and Growth Rates Table 2.5 Value Adled in Agriculture, Forestry and Fishery at Current Market Prices Table 2.6 Central Oovernment Loans and Investiments by Industry Table 2.7 Interest Rates on Deposits of Banking Institutions Table 2.8 Interest Rates on Loans and Discounts of Banking Instituttions SECTION III STRUCTURAL ORGANIZATION AND RESOURQE USE Table 3.1 Farm Households, Population and Cultivated Land Area Table 3.2 Number of Farm Households and Cultivated Land Area by Sizet of Farm Table 3.3 Fisheries Households, Families, and Fishermen Table 3.4 Number of Farm Households Classified by Type of Farm Table 3.5 Cultivated Land Area and Planted Land Area by Crops Table 3.6 Fertilizer Consumption by Nutrient Components Table 3.7 Farm Chemical Consumption by Types Table 3.8 Major Agricultural Machinery Owned by Farmers ANNEX 12 Table 3.9 Number of Power Tillers in Japan, Taiwan, and Korea Table 3.10 Domestic Production of Major Farm Machines Table 3.11 Labor Input Per Hectare by Crops in 1969 and Percentage Distribution in 1965 SECTION IV AGRICULTURAL PRODUCTION Table 4.1 Index Numbers of Gross Agricultural Production and Growth Rates 1961-71 Table 4.2 Livestock Product Output Table 4.3 Total Numbers of Livestock and Poultry Table 4.4 Planted Area of Food Crops Table 4.5 Planted. Area of Vegetables Table 4.6 Planted Area of Fruits Table 4.7 Planted Area of industrial Crops Table 4.8 Planted Area of Mulberries and Tobacco 1955-1971 Table 4.9 Yields Per Tanbo of Food Crops Table 4.10 Yields Per Tanbo of Vegetable.Crops Table 4.11 Yields Per Tanbo of Fruit Crops Table 4.12 Yields Per Tanbo of Industrial Crops Table 4.13 Production of Food Crops Table 4.14 Production of Vegetable Crops Table 4.15 Production of Fruit Crops Table 4.16 Production of Industrial Crops SECTION V INTERNATIONAL TRADE Table 5.1 Summary of Exports and Imports Table 5.2 Export Structure Table 5.3 Value of Agricultural Exports Table 5.4 Volume of Principal Agricultural Imports Table 5.5 Value of Principal Agricultural Imports Table 5.6 Imports and Exports of Food, Beverages, and Agri- cultural Raw Materials Table 5.7 Imported and Domestically Produced Feed Supplies SECTION VI PRICES, INCOME, AND CONSUMPTION Table 6.1 Index Numbers of Prices Received and Paid by Farmers Table 6.2 Producer Prices of Farm Products Table 6.3 Index Numbers of Producer Prices of Farm Products Table 6.4 Prices Paid by Farmers for Fertilizer Table 6.5 Indicies Farm Wage Rates, Prices Paid for Farm Household Goods, and Real Farm Wage Rates Table 6.6 Comparison of Per Capita Incomes of Farm and Nonfarm Households Table 6.7 Food Balance Sheet SECTION I: P)PUIATION AND EMPLYMT ANNEX 12 Table I. REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 1.1: POPULATION OF THE REPUBLIC OF KOREA (000) Increase over Density End of Mid-year Previous year Number per Year Year Estimates Number% sq. km Estimate 1961 25,402 707 2.9 256 25,700 1962 26,125 723 2.8 263 26,432 1963 26,868 743 2.8 271 27,184 1964 27,631 763 2.8 278 27,958 1965 28,377 746 2.7 286 28,754 1966 29,086 709 2.5 295 29,375 1967 29,784 698 2.2 303 30,067 1968 30,469 685 2.0 309 30,747 1969 31,139 670 1.9 316 31,410 1970 31,317 554 1.8 318 32,056 1971 31,849 532 1.7 323 32,743 1972 32,359 510 1.6 329 Source: Economic Planning Board ANNEX 12 Table 1.2 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 1.2: POPULATION OF THE REPUBLIC OF KOREA 1920-1970 Rate of Growth Population (per five-year period) Census Entire Republic of Entire Republic of Date Country Korea Country Korea ----(000) -% 1920 (Oct. 1) 17,264 - - 1925 (Oct. 1) 19,020 - 10.2 1.9 1930 (Oct. 1) 20,438 - 7.5 1.4 1935 (Oct. 1) 22,208 - 8.7 1.7 1940 (Oct. 1) 23,547 - 6.0 1.2 1944 (Oct. 1) 25,120 25,120 6.7 1.8 1949 (May 1) 29,907 20,167 19.1 - 1955 (Sept. 1) 30,532 21,502 2.1 1.0 1960 (Dec. 1) 35,024 24,989 14.1 2.9 1966 - 29,193 2.7 1970 (Mid-year) - 31,469 - 1.9 Source: World Population Prosnects as Assessed in 1963, New York, United Nations, 1966, p. 61; Yearbook of Agriculture and Forestry Sta- tistics, 1970, Seoul, Korea; and Mimeographed Fact Sheet, Korean Facts at a Glance. Data through 1960 are from the United Nations publication and the 1970 figure in an estimate, subject to refinement. ANNEX 12 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 1.3: REGIONA.L POPULATION DISTRIBUTION AND CHANGES 1970 Density Changes City and Distribution Persons 1966-70 Province 000 _ Per km2 -000 _ Seoul 5,536 17.6 9,031 1,733 45.6 Busan 1,881 6.0 5,039 451 31.5 Gyeonggi 3,358 10.7 307 250 8.1 Gangweon 1,867 5.9 112 34 1.9 Chung Bug 1,482 4.7 194 -68 -4.4 Chung Nam 2,861 9.1 329 -44 1.5 Jeon Bug 2,435 7.7 302 -78 -3.5 Jeon Nam 4,006 12.7 332 -44 -1.1 Gyeong Bug 4,560 14.5 230 83 1.9 Gyeong Nam 3,119 9.9 201 57 -1.8 Jeju 366 1.2 200 29 8.4 Total 31,469 100.0 318 - 7.8 Source: Major Statistics :Ln Charts, Economic Planning Board, p. 17. REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 1.4: LABOR FORCE AND EMPLOYMENT (000) Labor (A) (C) Partici- Employ- Unemploy- Population (B) Non Labor (D) (E) pation ment ment of 14 Years Labor Force Population Force Employed Unemployed Rate Rate Rate Year Old and Over Total Male Female Population Total Male Female Total Male Female (B/A) (D/B) (E/B) - ~~~~~~~~~~~~~~~~(Total) ---------------- - - - - - - - - - - - - - - - - I - - - - - - - - - - - (oa) --------------- - - - - - - - - - - - - - 1965 16,591 9,199 6,001 3,198 7,392 8,522 5,499 3,023 677 502 175 55.4 92.6 7.2 1966 16,840 9,325 6,130 3,195 7,515 8,659 5,634 3,025 666 496 170 55.4 92.9 7.1 1967 17,169 9,504 6,173 3,331 7,665 8,914 5,763 3,151 590 410 180 55.4 93.8 6.4 1968 17,433 9,757 6,216 3,541 7,676 9,261 5,867 3,394 496 349 147 56.0 94.9 5.' 1969 17,579 9,818 6,318 3,500 7,761 9,347 5,998 3,349 471 320 151 55.9 95.2 4.8 1970 17,936 10,020 6,394 3,626 7,916 9,574 6,052 3,522 446 342 104 55.9 95.5 4.5 1971 18.369 10.165 6,431 3,734 8,204 9,708 6,095 3,613 457 336 121 55.3 95.5 4.5 1972 18,764 10,500 6,682 3,818 8,264 10,026 6,304 3,722 474 378 96 56.0 95.5 4.5 (Farm Household) 1965 9,353 5,437 3,440 1,997 3,916 5,270 3,308 1,962 168 131 37 58.1 96.9 3.1 1966 9,266 5,426 3,408 2,018 3,840 5,258 3,274 1,984 168 134 34 58.6 96.9 3.1 1967 9,057 5,315 3,276 2,039 3,742 5,191 3,189 2,002 124 87 37 59.7 97.7 2.3 1968 8,874 5,323 3,174 2,149 3,551 5,223 3,108 2,115 100 66 34 60.0 98.1 1.9 1969 8,572 5,228 3,146 2,032 3,344 5,115 3,065 2,050 113 81 32 61.0 97.8 2.2 1970 8,393 5,109 2,964 2,145 3,284 5,029 2,912 2,117 80 52 28 60.9 98.4 1.6 1971 8,015 4,918 2,871 2,047 3,097 4,846 2,823 2,023 72 48 24 61.4 98.5 1.5 1972 8,035 5,137 2,936 2,201 2,898 5,068 2,888 2,180 69 48 21 63.9 98.7 1.3 (Nonfarm Household) 1965 7,238 3,762 2,561 1,201 3,476 3,252 2,191 1,061 509 371 138 51.9 86.4 13.6 1966 3,574 3,899 2,722 1,177 3,675 3,401 2,360 1,041 498 362 136 51.5 87.2 12.8 1967 8,112 4,189 2,897 1,292 3,923 3,723 2,574 1,149 466 323 143 51.6 88.9 11.1 1968 8,559 4,434 3,042 1,392 4,125 4,033 2,759 1,279 396 283 113 51.8 91.1 8.9 1969 9,007 4,590 3,172 1,418 4,417 4,232 2,933 1,299 358 239 119 51.0 92.2 7.8 1970 9,543 4,911 3,430 1,481 4,632 4,545 3,140 1,405 366 290 76 51.5 92.5 7.5 1971 10,354 5,247 3,560 1,687 5,107 4,862 3,272 1,590 385 288 97 50.7 92.7 7.3 1972 10,729 5,363 3,746 1,617 5,366 4,958 3,416 1,542 405 330 75 50.0 92.4 7.6 Source: Economc Planing Bord. Daa are ased o samplesurvey of ecnomicaly actve poplation Source: Economic Planning Board. Data are based on sample surveys of economically active population. ~ REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 1.5: EMPLOYMENT BY SECTORS (000) Social Overhead Capital and Other Services Agriculture, Forestry Mining and Electricity, and Fishery Manufacturing Gas, water & Transportation, Commerce Agriculture Fishery & Mining & Manufac- Con- Sanitary Storage & and Year Total Sub-total & Forestry Hunting Sub-total Quarrying turing Sub-total struction Services Communications Services Employed Persons 1964 8,210 5,084 4,906 178 726 55 671 2,400 191 14 162 2,033 1965 8,522 5,000 4,785 215 879 79 800 2,643 264 19 204 2,156 1966 8,659 5,013 4,826 187 940 83 857 2,706 213 22 180 2,291 1967 8,914 4,924 4,706 218 1,138 95 1,043 2,852 264 28 192 2,368 1968 9,261 4,863 4.643 220 1,295 114 1,181 3,103 317 23 234 2,529 1969 9,347 4,798 4,660 138 1,335 113 1,222 3,214 333 28 273 2,580 1970 9,574 4,834 4,745 89 1,369 109 1,260 3,371 279 25 343 2,724 1971 9,708 4,709 4,597 112 1,375 88 1,287 3,624 333 24 354 2,913 1972 10,026 5,078 4,853 225 1,423 51 1,372 3,525 371 - - - Composition (%) 1964 100.0 61.9 59.7 2.2 8.9 0.7 8.2 29.2 2.3 0.2 2.0 24.7 1965 100.0 58.7 56.2 2.5 10.3 0.9 9.4 31.0 3.1 0.2 2.4 25.3 1966 100.0 57.9 55.7 2.2 10.9 1.0 9.9 31.2 2.5 0.2 2.1 26.4 1967 100.0 55.2 52.8 2.4 12.8 1.1 11.7 32.0 3.0 0.3 2.1 26.8 1968 100.0 52.5 50.1 2.4 14.0 1.2 12.8 33.5 3.4 0.3 2.5 27.3 1969 100.0 51.3 49.8 1.5 14.3 1.2 13.1 34.4 3.6 0.3- 2.9 27.6 1970 100.0 50.5 49.6 0.9 14.3 1.1 13.2 35.2 2 9 0.3 3.6 28.4 1971 100.0 48.5 47.3 1.2 14.2 0.9 13.3 37.3 3.4 0.3 3.6 30.0 1972 100.0 50.6 47,4 - 14.2 0.5 13.7 35.2 3.7 - - - Source: Economic Planning Board I_ re~~~~~~~~~~~~~~~~~~~~~~~~~~~~ REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY !able 1.6: PROJECTIONS OF POPULATION AND EMPLOYMIENT (Third Five-Year Plan) 1970(A) 1971 1972 197k 1975 197§(B) No.of Cofpo- No.of No.oC No.of No.of No.of No.of B/A Persons sition Pers.. COMP Pers. Ca. Pere COmP. Pers. Comp. Pers. _ Pers. Comp. xlOo coo % 'o0o % 0ooo % ¶oo % '0O % 000 d 000 To2al /1 Population 31,317 10O.0 31,849 100.0 32,359 100l. 32,844 100.0 33,377 100.0 343345 100.O 109.7 (Growth Rate) (1.8) (1.7) (1.6) (1-5) (1-5) (1.5) (1 >) Labor Population 10,420 33.3 10,720 33.7 11,015 34.0 11,309 34.4 11,620 34.8 11,95C 35.3 12,290 35 8 117.9 Employment 9,941 100.C 10,240 100.0 10,532 1OO.C 10,823 100.0 11,131 100.0 11,456 100.0 11,792 100.0 118.6 (1) Agr.Forsstry & Fisheries (4,753) C47.8) C4,704) (45.9) (4,667) (44.3) (4,613) (42.6) (4,558) (41.0) (14,501' (39.3) (4,442&) (37.7) (93.5) (2) Mining & Mfg. C1,596) (Q6.1) (1,717) (16.8) ,8W40) [7.5) 0,972) (18.2) (2,111) (19.0) (2,257) (19.7)(2,413) (20.5)(151.2' (3) S.O.C. and other services 0,592) (36.1) C3,819) (37.3) (4,025) (38.2) (4,238) (39.2) Q&,462) (40.0) (4,698) (41.0) 4,937) (41.8)(137.4' Unemployment Rate , 4.6 2 4-5 4.4 4.3 4.2 4. 4.C /1 As of middle of the year. Source: Overall Planning Bureau, Economic Planning Board REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 1.7: POPULATION DISTRIBUTION BY SETTLEMENT GROUP, 1960 AND 1971 AND PROJECTIONS FOR 1986 1960 1971 1986 Incremental Population _ 1960- 1971 1971-1986 Settlement Size No.of No.of No. of Group Places Population Percentage Places Population Percentage Places Population Percentage Increase Percentage Increase Percentage '000 '000 'o00 % '000 '000 Over 1,000,000 2 3,608 14 3 7,977 24 4 16,552 39 4,369 121 8,575 107 Between 250,000 and 1,000,000 3 1,391 6 4 1,807 6 7 3,273 8 416 30 1,466 81 Between 100,000 and 250,000 4 704 3 11 1,523 5 18 2,721 6 819 116 1,198 79 All settlements over 100,000 9 5,703 23 18 11,307 35 29 22,546 53 5,604 99 11,239 99 Remainder - 19,286 77 - 21,111 65 - 20,179 47 1,825 9 - 932 -4 Total - 24,989 100 - 32,418 100 - 42,725 100 7,429 29 10,307 32 /1 Incremental populations in 1966-71 and actual of those in 1971-86 projected. Source: 1960 Census and Economic Planning Board, in Mark Fortune Mobilizing for Urbanization, 1971 a x SECTION IIs NATIONAL INCO): ACCOUNTS AND FISCAL DATA REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 2.1: MAJOR ECONOMTC INDICATORS Gross Gross National Product Foreign Transactions (Mil US$) Tax Population Current 1970 Per Domestic Industrial Wholesale Foreign Burden ?41dvx'e3r Prices Prices -Capita Savings Production Price index Invisible Investments x of Year (000)_ Buil (?onQ (Bil woart) (US6) Rate (%) (1965=100) (1970=100) Fxports Imports Receipts and loans GNP 1%1 25,498 297 1,184 83 3.9 59.4 35.1 41 316 124 - 9.5 1962 26,231 .49 1,221 87 1.6 69.4 38.4 55 422 122 - 10.8 1963 26,987 489 1,328 98 6.3 78.6 46.3 87 560 92 - 8.9 1964 27,678 700 1,442 102 7.4 84.8 62.3 119 404 97 - 7.3 1965 28,327 805 1,530 106 7.5 100.0 68.5 175 463 126 - 8.6 1966 28,962 1,032 1,719 126 11.8 122.3 74.6 250 716 238 350 I 10.8 1967 29,541 1,270 1,853 143 12.0 155.7 79.4 320 996 375 237 12.1 1968 30,171 1,598 2,087 168 13.7 203.0 85.8 455 1,463 425 358 14.4 1969 30,738 2,082 2,400 208 17.5 245.6 91.6 623 1,824 497 560 15.1 1970 31,298 2,589 2,589 242 16.3 286.7 100.0 835 1,984 491 548 15.4 1971 31,847 3,152 2,827 275 14.5 340.0 108.6 1,068 2,394 487 691 15.7 1972 32,416 3,860 3,024 303 14.6 123.8 1,624 2,522 579 718 13.9 Source; Major Economic Indicators, Economic Planning Board, July 1973, p. 95. Note: 1/ Includes loans a investment from 1939 to 1966. REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 2.2: INDUSTRIAL ORIGIN OF GNP AT CURRENT PRICES (Bil won) Percentage Distribution Agriculture, Mining Social Overhead Agriculture, Mining Social Overhead Total Forestry, and and Capital and Total Forestry, and and Capital and Year GNP Fisheries Manufacturing Other Services GNP Fisheries Manufacturing Other Services 1961 297 119 45 132 100 40 15 45 1962 349 128 58 164 100 37 17 47 1963 489 206 81 201 100 42 17 41 1964 700 321 123 256 100 46 18 37 1965 805 309 159 338 100 38 20 42 1966 1,032 365 207 460 100 35 20 45 1967 1,270 399 260 611 100 31 20 48 1968 1,598 455 348 795 100 29 22 50 1969 2,082 597 454 1,030 100 29 22 49 1970 2,589 725 591 1,274 100 28 23 49 1971 3,152 911 719 1,522 100 29 23 48 Source: Major Economic Indicators, Economic Planning Board, May 1972, p. 19. IF ix REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 2.3: INDUSTRIAL ORIGIN OF GNP AT 1965 CONSTAiNT PRICES (Bil won) Percentage Distribution Agriculture, Mining Social Overhead Agriculture, Mining Social Overhead Total Forestry, and and Capital and Total Forestry, and and Capital and Year GNP Fisheries Manufacturing Other Services -GNP Fisheries Manufacturi Other Services 1961 613 269 91 253 100 44 15 41 1962 635 252 106 277 100 40 17 43 1963 693 271 123 299 100 39 18 43 1964 750 314 130 306 100 42 17 41 1965 806 311 157 337 100 39 19 42 1966 914 346 181 387 100 38 20 42 1967 995 327 222 446 100 33 22 45 1968 1,127 331 280 516 100 29 25 46 1969 1,306 370 339 597 100 28 26 46 1970 1,422 367 398 657 100 26 28 46 1971 1,566 376 471 719 100 24 30 46 Source: Major Economic indicators, Economic Planning Board, May 1972, p. 20m Source: yjDLEonfl4inicators, Economic Planning Board, May 1972, p. 20. 'IN, REPUBLIC OF KOREA AGRICULTURAL SECTOR SUR\EY Table 2.4: CONTRIBUTION OF AGRICULTURE TO GNP AND GROWTi RATES Growth ta 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1961-19'1 - - ---- -------(Billion won) - - - - - - - - - - - - - - - - - - - - - - - (Percent) At 1963 prices 1. GNP at market prices 614 635 693 750 806 914 995 1,127 1,306 1,433 1.567 i1.4 2. Agrizulrure ild forestry 260 242 260 301 298 331 309 311 350 344 '50 3. 3. Hunting and fisHing 9.0 9.6 11.4 12.9 13.6 15.1 17.8 20.0 20.8 23.8 28.3 i3.3 At curren~ p-ices 4. GNP at market prices 297 349 438 697 806 1,032 1,242 1,576 2,047 2.546 3,113 5. Agriculture and forestry 117 123 201 311 298 356 371 62-5 554 663 834 6. Hunting and fishiig 2.0 3.5 5.1 9.5 13.6 16.7 24.0 30.C 35,0 /46.4 62.3 - - - - - - - - (Percent) - - - - - - - - - - - - - - - - - Line 5 as a % of line 4 39 36 41 45 37 34 30 27 27 26 27 Line 6 as a E of line 4 0.7 1.0 1.0 1.4 1.7 1.16 1.9 1.9 I." 2.0 2.0 1/ Annual compound. Source: Economic Planming Board. !1V REPUBLIC OF KOREA GRICCULTURAL SECTOR SURVEY Table 2.5: VALUE ADDED IN AGRICULTURE, FORESTRY AND FISEERY AT CURRENT MARKET ?R-CES (yllion won) 1953 1,54 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 196- 1966 1967 1968 1969 197C 19i Value added iD agriculture, 22,788 26,935 51.998 71,906 89,296 85,340 76,759 90,689 119,489 127,715 206,017 321,012 309,108 365,141 399,263 455,175 597,454 724,588 91r0.731 forestry and fishery Value added in agriculture 21,199 24,204 48,701 67,351 84,185 79,815 70,834 84,632 113,372 118,552 193,112 299,309 280,311 325.658 346,021 393,268 521,764 634,184 80,5584 CultivatLon Output 23,228 26,764 52,723 71,569 90.578 85,551 78,355 91,204 123,795 129,747 210,334 324,237 317,668 380,314 393,200 430,812 580,816 678,3W 850,206 Intermediate goods 2,733 3,993 7,348 10.710 13,347 13,832 15,179 14,809 19,162 22,476 28,109 41,520 57,003 67,339 69,699 78,637 99,811 110,98b i2,058 Value added 20,495 22,771 65,375 60,859 77,231 71,719 63,176 76,395 104,633 107,271 282,225 Z82.717 260,665 312,975 323,501 352,175 481,005 567,404 725,1W8 Livestock O.,tput 9"9 2,026 4,573 7,764 8,701 LU,074 9,738 11,579 13,130 17,153 19,403 26,179 36,136 42,658 57,443 77,034 88,427 115,596 131.958 Intermediate goods 740 1,147 2,501 2,821 3,453 3,707 3,884 5,203 6,333 8,131 11,085 13,528 21,867 35,290 41,314 44,564 60,111 66,121 76,;6Z Value added 249 879 2,072 4,943 5,248 6,367 5,854 6,376 6,797 9,022 8,318 12,651 14,269 7,368 16,129 30.470 28,316 49-475 55.!M Stta. goods Output 117 38 83 127 175 119 144 31 - 136 449 369 347 207 559 837 482 1,102 f, 5O Value added 70 23 50 76 105 71 86 19 - 82 269 221 208 L24 359 502 289 661 750 Agricultural services Value added 385 531 1,204 1,473 1,601 1,658 1.718 1,842 1,942 2,177 2,300 3,720 5,170 5,191 6,032 10,i2l 12,154 16,646 19.190 Value added in forestry 1,160 1,960 2,277 2,797 3,063 3,377 3,417 3,879 4,075 5,659 7,781 12,165 15,177 22,828 29,212 32,036 41,007 43,979 418.757 Output 1,289 2,178 2,530 3,108 3,403 3,752 3,976 4,310 4,528 6.288 8,645 13,517 16,363 25,364 32,459 35,595 45,563 48.866 54,174 Value added in fishery 429 771 1,020 1,758 2,048 2,148 2,508 3,178 2,042 3,504 5,124 9,538 13,619 16.655 24,029 29.872 34,683 46,425 6,l391 Output in fish catch 595 948 1,458 2,Z65 2,583 2,869 2,904 3,125 3,779 5,565 7,191 12,090 15,926 18,554 24,299 30,238 34,013 42U.61 51.613E Value added 394 690 918 1,577 1,882 1,991 2,271 1,857 1,785 3,166 4,568 8.655 11,276 12,984 17,550 21,030 23,792 31.308 36.932 Output in agriculture 58 134 169 301 276 255 380 503 408 530 772 1,253 3,093 3,160 6,691 9,635 7,902 10.562 13.140 Value added 35 81 102 181 166 154 229 303 245 319 464 754 1,863 1,902 4,028 5,800 4,757 6.358 7.910 Output in deep-sen fishery - - - - - 4 12 26 IS 27 129 182 676 2,491 3,452 4,285 8,640 12,337 23.309 Value added 3 - - 3 8 1H 1i 19 92 129 480 1,769 2,451 3,062 6.13. 8,759 16.549 Source: -conoeic Planning Board (EP8) REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 2.6: CENTRAL GOVERNMENT LOANS AND INVESTMENTS BY INDUSTRY (Million won) Percentage Distribution Gross Agriculture, Gross Agriculture, Mining Government Forestry, Mining Social Overhead Government Forestry, and Social Overhead Loans and and and Capital and Loans and and Manufac- Capital and Year Investments Fishery Manufacturini Other Services Investments Fishery turing Other Services 1962 27,155 7,889 5,863 13,403 100 29 22 49 1963 27,328 6,286 5,409 15,633 100 23 20 57 1964 23,785 4,968 4,920 13,897 100 21 21 58 1965 29,500 8,394 7,111 13,995 100 29 24 47 1966 62,579 17,357 11,656 33,566 100 28 18 54 1967 79,023 20,035 13,650 45,338 100 25 17 58 1968 117,588 32,303 12,081 73,204 100 28 10 62 1969 175,551 48,972 20,100 106,479 100 28 11 61 1970 184,332 44,965 22,557 116,810 100 25 12 63 1971 213,330 52,494 32,340 128,496 100 22 15 63 1972 333,177 60,546 94,009 178,622 100 21 15 64, ( x Source: Major Economic Indicators, p. 33, Economic Planning Board, May 1972. AMTE:K 1 2 REPUBLIC OF KOREA AGRRICULTURAL SECTOR SURVEY Table 2.7: INTEREST 3.ATES ON DEPOSITS OF BANKING INSTITUTIONS (percent per annum) Instal- Time Deposits Extra ment New Fffective from -- 3 months 6 months Over one Passbook Savings Notice Depo- Saving House- Year Deposits Deposits__ eits p hold Jan.1,1960 6.o 8.0 10.0 1.8 3.6 3.65 1.1 4.o -- July 10,1961 9.0 12.0 15.0 1.8 3.6 3.65 1.1 h.0 __ web. 1, 1962 9.0 12.0 15.0 1.8 3.6 3.65 1.1 10.0 -- March 16, 1964 9.0 12.0 15.0 1.8 3.6 3.65 1.0 10.0 -- Sept.30, 1965 18.0 24.0 30.0 1.8 12.0 5.0 1.0 30.0 __ Dec. 30, 1967 114.4 24.0 30.0 1.8 -- 5.0 1.0 30.0 __ April 1, 1968 15.6 20.4 26.41 1.8 -- 5.0 1.0 28.0 12.0 Oct. 1, 1968 14.4 19.2 25.2 1.8 -- 5.0 1.0 25.0 12.0 June 1, 1969 12.0 16.8 22.8 1.8 -- 5.0 1.0 23.0 9.6 June 28, 1971 10.2 14.4 20.4 1.8 -- 5.0 1.0 21.0 8.7 Jan. 17, 1972 8.4 11.4 16.8 1.8 -- 5.0 1.0 17.0 6.6 t'ote Maximum rates are decided by the Monetary Board cource! Economic Planning Board, P. 38 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 2,8: INTE.TEST RA1TS ON LOANS AND DISCOUNTS OF BANKING INSTITUTIONS (percent per annum) Loans Loans for Loans for Loans for for Purchase Suppliers Loans on Loans Military -ffective from Discounts Export of Aid of U.S. Rice Lien other Over- Over- Call Supply on bills trades Goods Offshore Loans Bills drafts due Loan Goods ?Procurement Production Oci& .2a, 1960 13.82 13.87 13.87 -- 10.59 17.52 18.25 20.09 13.87 -- .rr. 1, 1962 13.87 12c78 13.87 -- 10.59 16.43 18.25 20.00 13.87 -- ,Tui-y 3, 1962 13.87 10.95 13.87 10.95 17.59 16.43 18.25 20.00 13.87 16.43 nec. 1, 1962 13.87 9.13 13.87 9.13 10.59 15.70 18.25 20.00 13.87 13.87 IMay 1', 1963 13.87 8.03 13.87 8.03 10.59 15.70 18.25 20.00 13.87 13.87 March 15, 196L l1.oo 8.00 14.00 8.00 11.00 16.00 18.50 20.00 12.00 14.oo web. >, 196$ lJ.oo0 6.50 14.0o 6.50 11.00 16.00 18.50 20.00 12.00 14.00 enpt. 30, 96 2).1.00 6.50 26.00 6.50 11.00 26.00 26.00 36.50 22.00 26.00 heb. 1, 19$6 2L.00 6.50 26.00 6.50 11.00 26.00 28.00 36.50 22.00 26.00 *une n9, 19-5 24.00 6.00 26.00 6.oo 11.00 26.00 28.00 36.50 22.00 26.00 O,ct. 1, 1968 26.00 6.00 25.20 6.oo 11.00 25.20 28.00 36.50 22.00 25.20 *'une 1, 1969 2L.60 6.00 24.00 6.oo -- 24.00 26.00 36.50 21.00 24.00 JTune 28, 1971 22.00 6.00 24.00 6.oo -- 22.00 24.00 36.50 19.00 -- ,an. 17, 1972 19.00 6.00 24.00 6.oo -- 19.00 22.00 31.20- 19.00 -- ote- Maxirnurj rates decided by the Monetary Board Cource: _conomic Planning Board SECTION III: STRUCTURAL ORGANIZATION AND RESOURCE USE REPUBLIC OF XORSA AGRICULTURAL SETOR SURVEY Table 3.1: FAIK HOUSEHOLDS, POPULATION, AND CULTIVATED LAND ARET Number of Farm Population Cultivated Area Cultivated Area Per Fanm Household Year Farm Households Total Per Hosehold Total ddyUpland Total Paddy UD1BDd (000) To000 - _ _ _ (000 Cheongbo) 1961 2.327 I)fl 000 ha g/ 528,927 ha i/ 1,205,023 ha Source: Japan: Farm Machinery Yearbook, 1971. Taiwan: Peng Tien Sonig, J.C.R.R., Agricultural Mechanization in South East Asia- spring, 1971, Farm Machinery Research Corp., Tokyo. Korea: "Prospects for Farm Mechanization in Korea," AERI Report 1, MAFs October 1, 1970; English translation by USAID/Korea. REPUBLIC OF. KOREA AGRICULTURAL SECTOR. SURVEY Table 3.10: DOMESTIC PRODUCTION OF MAJOR FARM MACHNES No. of Mfrs1 Machine 1963 1964 1965 1966 1967 1968 1969 1970 1971 in 1971M Stationary Engines 5,083 10,620 100120 3,860 5,820 8,200 9,600 11,933 10 Power 267 455 533 2,361 4,529 1,914 Tillers~/ 305 266 340 677 2,616 5,371 580 3,717 5,000 2 Irrigation Puaps 2,251 14s,301 20,500 3,825 6,710 9,300 8,300 13,,699 9 Power Sprayers?J 560 2,030 1i6145 997 1, 982 2,062 13,990 24,010 5 Manual Sprayers 38,368 58,440 45,o000 499,500 67,ooo 75,000 46,000 73,093 5 High Pressure Sprayers 8,600 300 2,500 4.500 5,000 11,000 16,000 3A-531 7 Manual Duster 5,500 7,500 980 500 350 300 3,000 3 Power Thresher 738 918 1,1430 1,470 1s570 1,800 2,000 1s537 7 Manual Thresher 30,103 22,861 32,500 30,700 32,000 29,500 17,000 4,238 5 U/ From Korea Farm Machinery and Tool Industry Cooperative, Seoul. ?/ From manufacturers. Sourcet NACF. - ~~~~~~~~~~~~~~~~~~~~~~0 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 3.11: LABOR INPUT PER HECTARE BY CROPS IN 1969 AND PERCENTAGE DISTRIBUTION IN 1965 Crop Labor % of Labor Input by Operations (1965) Input Seed Plow- Seed- Trans- Fert. Irrig. Disease Weed- Thin- Ridging Cutting Trans- Threshing Dry- Other (Hrs/ bed ing ing plant- Appli- & Preven- ing ning & porting & ing Cheoxwbo) ing cation Drain. tion Binding Crop Harvesting Rice 1,282 12.9 3.7 - 13.8 4.6 7.6 1.0 17.5 - - 9.5 7.1 12.4 3.2 6.7 Common barley 892 - 2.8 14.9 - 14.3 - 0.8 22.0 - - 14.1 8.6 14.4 3.2 4.9 Naked barley 889 - 3.4 19.2 0.5 13.9 - - 18.6 - - 16.0 8.2 14.4 3.6 2.2 Whe2t 951 - 2.9 15.2 - 13.0 - - 23.5 - - 14.3 7.9 14.0 4.6 4.6 Millet 1,027 - 2.7 14.7 - 5.3 - - 30.6 - 5.1 12.3 8.4 17.4 3.3 0.2 Corn 1,108 - 2.3 13.5 - 6.1 - - 18.2 - 6.1 10.5 9.2 28.7 5.4 - Soy beans 665 - 3.4 18.3 - - - - 25.8 - 2.8 17.4 4.8 22.0 5.5 - Red beans 620 - 3.8 20.6 - - - - 22.4 - 2.8 18.1 4.5 18.0 4.8 - White potatoes 974 - 2.5 16.3 - 14.6 - 1.4 20.4 - 8.0 - 11.6 17.9 3.0 4.3 Sweet potatoes 1,004 9.6 2.6 - 24.8 5.7 1.0 - 19.3 1.1 1.1 - 9.0 18.8 6.0 1.0 Radish 947 - 2.7 20.9 - 9.5 - 2.7 26.1 - 4.6 0.3 9.7 14.9 4.4 4.2 Chinese cabbage 1,034 - 2.8 19.2 2.3 13.2 1.0 3.6 24.3 - - 7.3 10.0 11.9 4.4 - Red pepper 1,151 - 2.2 15.8 1.6 9.2 - 1.6 26.7 - 4.5 6.2 6.5 18.2 7.5 - Garlic 1,442 - 2.1 23.8 - 6.8 - 0.9 23.7 - - - 5.4 17.0 9.6 10.7 Cotton 1,297 - 2.4 13.0 - 5.4 - - 20.2 8.7 5.4 5.2 5.9 25.1 8.7 - Sesame 1,141 - 2.2 15.7 2.5 5.8 - - 24.0 - 3.8 19.2 9.0 14.1 3.7 - Perilla 848 2.7 2.9 8.7 12.4 4.2 - - 25.6 - 3.3 17.1 7.6 10.8 4.7 - Flax 1,830 - 3.3 9.8 - 1.6 - - 31.7 - - - - 52.5 - 1.1 Ramie 5,990 - - - - 7.0 - 1.0 14.3 - - - - 71.1 - 6.6 Mat rush 7,210 - 3.4 - 31.2 7.3 - - 3.5 - - - - 17.5 19.2 17.9 Tobacco 1,926 7.4 1.6 - 11.4 3.7 0.2 1.1 10.3 2.8 3.2 1.4 5.3 11.5 32.7 7.4 Sources: 1. For the four crops from rice to wheat, "Report on the Production Cost Survey of Agricultural Products," 1970, MAF. 2. For the crops from millet to perilla and tobacco, "Type of Farming in Korea," 1969, NACF. 3. For the three crops from flax to mat rush, "Report on the Farm Management Survey," 1969, NACF. O- z SECTION I\: AGRICULTURAL FRODUCTION REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.1: INDEX NUMBERS OF GROSS AGRICULTURAL PRODUCTION AND GROWTH RATES, 1961-71 1959-61 1/ Growth Rats 2/ distribution 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1961-71 Total grain 68.55 107.8 97.2 107.8 128.1 120.0 134.4 121.2 118.9 137.4 132.8 130.4 129.8 2.5 Rice 46.50 107.8 93.5 116.6 122.7 108.6 121.6 111.8 99.1 126.9 122.2 124.0 122.7 1.5 Barley & Wheat 14.63 105.2 98.1 68.3 108.4 124.9 138.3 131.4 141.9 142.5 135.9 126.9 128.5 4.3 Misc.cereals .89 108.6 109.6 119.6 134.4 132.4 113.6 111.4 174.2 136.7 120.4 105.6 94.8 1.0 Pulses 2.03 114.3 109.3 110.1 115.3 123.2 119.2 145.0 17R A 170.1 171.9 i63.; i62.u 5.7 Pctatoea 450 113.2 124.6 141.7 252.1 279.0 265,6 176.9 211.0 214.9 216.5 197.4 185.2 3.9 Vegetables 6.52 115.0 121.7 112.6 144.6 153.6 189.2 201.6 238.6 239.9 232.3 278.1 268.1 9.2 Fruits 1.79 94. 123.8 113.0 147.0 201.0 217.8 235.4 260.2 284.1 284.8 278.7 350.4 12.3 Special Crops 1.19 109.6 89.3 73.7 79.9 77.5 107.3 111.2 104.1 116.4 117.0 116.6 116.9 3.3 Mtonopoly Crops 2.96 105.5 119.7 105.2 167.0 184.8 235.8 214.4 227.1 205.1 19.7 227.6 407.8 6.5 By Products 7.31 103.1 98.9 *114.2 130.9 112.6 118.1 131.7 133.7 160.1 155.1 157.2 172.4 4.8 Total Crops 88.32 107.6 100.3 108.5 130.6 128.2 141.8 133.3 135.3 150.7 147.1 149.6 156.5 3.9 Livestock and Cocoons 11.68 102.5 107.1 128.1 133.7 114.4 120.5 140.5 136.1 192.6 192.5 188.5. - 6.9 Total Agriculture 100.00 107.0 101.1 110.8 131.1 127.2 140.1 134.1 135.4 155.6 152.4 154.1 - 4.2 1/ PFeliminary 2/ Annual Compound. Source: Yearbook of Agriculture and Forestry Statistics, MAF, 1972, pp. 432-436. RE,PUBLIC OF KOREA AGRICULPTJRAL SECTOR SURVEY Table 4.2: LIVESTOCK PRODUCT OTUTPUT Growth -ia-te Tten 1961 1962 1963 196 1965 1966 1967 1968 1969 1970 1971 1972 1961-19712/ Tthousand metric tons) (percent weef 13.3 16.8 21.1 31.9 27.3 29.4 31.9 35.8 33.1 37.3 39.5 40.2 .)A Pork 60.0 38.0 55.1 62.5 55.9 95.8 72.1 61.8 76.1 82.5 80.9 90.2 5.1 "hicken 18.5 15.7 20.3 18.8 14.5 18.7 23.9 33.7 42.3 45.2 50.0 54.3 16.0 Other 2.7 1.6 .0 3. 1.5 1.0 1.9 2.7 2.6 1.8 1.7 1.5 o.5 meat Milk 1.17 2.65 4.51 7.13 10.69 14.60 19.19 24.36 35.47 51.88 65.31 79.8 52.1 Fggs 1/ 818 839 976 943 856 1,298 1,349 1,5o4 2,h30 2,456 2,536 2s790 16.9 1/ Tn millior units. 2/ Annual-compound. Source: Ministry of Agriculture, Livestock Bureau. I! CDX REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.3: TOTAL NUMBERS OF LIVESTOCK AND POULTRY Native Milk Beef Cattle Year Cattle Cow. (OQO) Horses Hg Chicken 1955 867 0.3 - 17 1,232 8,92k 1956 917 o.4 - 17 1,161 9,031 1957 887 Oke - i8 1,233 9,352 1958 1,003 O.6 - 19 1,324 9,894 1959 1,023 0.5 0.7 19 l,439 12,0Ohl 1960 1,010 0.9 0.7 20 1,397 12,030 1961 1,096 1.1 0.2 21 1,256 11,218 1962 1,253 2.4 0.0 25 1,672 13,047 1963 1,363 3.5 1.0 27 1,510 11,097 1964 1,351 5.2 0.9 27 1,,256 10,282 1965 1,313 6.6 0.8 28 1,382 11, 893 1966 1,290 8.5 1.1 28 1,167 14k008 1967 1J243 10.4 2.1 25 1,296 17,079 1968 .1193 13.8 3.3 20 1,396 25,968 1969 1,202 18.8 309 18 1,338 22,651 1970 1,271 22.8 3.0 - 1,121 23,477 1971 1,227 30.0 2.9 13 1,333 25,903 1972 1,333 36.1 4.9 11 1,248 24,537 Sources: Yearbooks of Agriculture and Forestry Statistics; MAF. REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.4: PLANTED AREA OF FOOD CROPS Comaon Naked Soy Red White Sweet Total Year Rice Barley Barley Wheat Millet Corn Beans Beans Potatoes Potatoes Grains 1955 1,098 474 286 122 152 23 271 28 48 44 2,546 1956 1,106 503 293 124 151 24 272 26 49 46 2,594 1957 1,114 516 305 145 147 25 280 26 58 47 2,663 1958 1,118 467 314 128 152 23 271 28 49 49 2,599 1959 1,122 469 318 126 151 22 273 27 48 53 2,609 1960 1,130 472 327 125 142 23 275 28 48 60 2,630 1961 1,137 477 333 125 145 24 292 29 48 62 2,672 1962 1,148 475 363 134 141 26 290 29 49 76 2.,731 1963 1,165 487 408 138 140 32 285 30 46 92 2,823 1964 1,205 519 423 147 138 43 284 31 47 134 2,971 1965 1,238 545 486 153 125 50 311 32 61 154 3,155 1966 1,242 498 471 154 97 43 278 37 61 149 3,030 1967 1,246 502 477 153 86 50 313 38 59 138 3,062 1968 1,160 479 507 159 117 42 316 40 61 138 3,019 1969 1,230 446 503 154 76 45 308 40 56 137 2,995 1970 1,213 423 488 159 56 47 298 38 54 128 2,904 1971 1,200 382 457 143 42 40 277 35 52 112 2,,740 1972 1,201 363 512 103 35 36 284 32 44 105 2,715 Sources: Yearbooks of Agriculture and Forestry Statistics, WAF. L REPUBLIC OF KO-EA AGRICULTURAL SECTOR SURVEY Table 4.5: PLATED AREA OF VEGETABLES Chinese Sweet Red ,Jater All Tear Radish Cabbage Garlic Pmkin melon pepper melon vegetables (in thousand cheongbo) 1955 34.1 32.7 5.4 3.2 3.1 10.0 1i0 108 1956 34.2 32.5 5.5 3.h 3.0 13.5 1.1 111 1957 36.5 36.3 5.5 3.2 2.9 13.5 1.1 117 1958 32.8 30.6 6.2 3.0 3.5 13.1 1.3 113 1959 33.2 31.1 5.4 2.8 3.2 12.3 1.4 110 1960 34.2 31.7 6.6 2.7 3.8 14.2 2.6 118 1061 35.5 324 ?.5 2., 4.1 14-.9 2.4 118 1962 35.8 34.2 7.9 6.2 4*4 16.5 2.4 124 1963 34.9 32.9 7.5 6.5 4.7 16.1 2.7 121 196h 38.1 35.5 8.9 9.4 5.8 19.4 3.8 139 1965 41.6 39.0 8.8 7.7 6.0 19.6 4.9 151 1966 42.2 39.1 10.6 7.4 6.2 23.1 4.0 154 1967 44.6 49.3 13.2 6.9 6.6 28.6 4.9 177 1968 49.3 50.7 13.3 7.8 6.6 33.8 5.8 193 1969 54.4 67.3 14o2 8.8 7.5 31.8 6.4 226 1970 66.4 71.3 15.4 8.8 8.9 37.0 7.3 254 1971 62.7 74.4 15.3 8.4 8.1 41.0 7.3 257 Sources: Yearbooks of Agriculture and Forestry Statistics, MAF _?,PJ3LPTBL 0i OF TQ A.2YUICTJLT-J-R.A F 3TOE S UIRNEY Table L.6: PLAa!TED kA?A OF FF?UIITh vear .vnp1es Peaches Pears Grapes Persimmons All Fruits (in thousand cheongbo)1 1955 8. 2.8 4.7 0.5 1.7 lg.!L 1956 8.7 2.8 ).45 o.h 2.7 20.3 1957 8.8 2.9 4.6 0.5 2.7 20.5 1958 11.0 2.7 . 6. o.5 2.6 22.5 1959 11.9 2.7 h.5 0.5 2.5 23.3 1960 11.5 2.6 4.3 0.6 2.8 22.5 1961 11.5 3.3 h.o 0.8 2.4 23.1 19652 11.6 3.h 3.7 1.2 2.6 23.2 1963 11.7 3.5 3.6 1.0 2.9 23.7 1961)I[ 12.8 5.1 3.8 2.1 h.o 28.6 1965 19.0 10.6 5.? 3.5 2.7 t2.8 1966 1°.S 10.8 5.6 3.8 3.3 45.2 1967 19.8 11.4 5.9 h.3 3.8 48. 1968 2t.2 11.6 6.2 IL.5 4.5 51.? 1969 20.8 11.6 6.2 5.2 5.C 55.7 1970 21.0 11.8 6.7 6.2 5.2 60.? 1971 2*.2 9.0 6.8 7.1 3.0 55.3 Sources: Yearbooks of A-riculture and Forestry 6tatistics, MAF REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.7: PLANTED AREA OF INDUSTRIAL CROPS Black Perilla All Year Cotton HemD Rush Sesame frutescens Rape industrial (in thousand cheongbo) 1955 112.8 9.3 1.8 4.9 4,8 - _ 1956 116.1 9.5 1.6 4.8 44.9 - 1957 77.6 9.0 1.3 5.0 4.5 - _ 1958 56.5 9.5 1.2 6.o 5.2 - _ 1959 6008 9.5 1.5 5.8 5.2 - _ 1960 50.8. 8.1 1.1 5.8 6.o - - 1961 48.5 7.2 2.1 7.2 6.4 1.8 81.6 1962 52.7 7.1 2.4 8.1 7.1 9.2 102.7 1963 25.3 6.6 2.6 7.7 6.7 5.7 66.1 1964 23.2 6.o 2.8 9.2 7.6 7.1 64.6 1965 19.2 5.7 1.3 10.3 8.3 6.9 60.9 1966 18.8 5.7 1.6 11.4 9.5 12.3 68.2 1967 17.3 60o 1.9 13.-5. 10.6 16.4 74.2 1968 16.4 5''7 1.8 13.6 10.5 17.6 72.1 1969 16.8 5.8 1.8 17.4 10.6 27.9 88.8- 1970 16.0 5.3 1.6 25.8 11.6 23.2 89.2 1971 13.8 3.9 1.1 27.7' 10.8 28.7 90.6 Sources: Yearbooks of Agriculture and Forestry Statistics, MAF. REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4 .8: PLAN'B.?3D AREA OF 01i3EI?RTES AND TMACCO 1955 - 1971 Year Mulberri.e;o Tobacco -uinstouand oheongbo) 1955 32 A4 1956 34.5 _ 1957 36.2 21.5 1958 36.7 21.1 1959 36.1 20.4 1960 36.h 20.1 1961 23.)4 20.2 1962 27.3 22.5 1963 30.9 21.9 196h 42.3 29,h 1965 50.5 34.4 1966 61.7 36.7 1967 68.5 37.6 1968 94h. 38.7 1969 99.3 39.1 1970 85.0 43.0 1971 8i4 41.0 Sources: Yearbooks of Agriculture and Forestry Statistics, MAF. D REPUBLICE OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.9? YIELDS PER TANBO OF FOOD CROPS Common Naked Soy Red White Sweet Year Rice Barley Barley Wheat Millet Corn Beans Beans Potatoes Potatoes 1955 269 143 127 16Lb. 42 57 55 46 197 526 1956 220 137 136 175 38 47 56 49 148 429 1957 269 116 115 150 38 55 55 50 161 416 1958 283 152 150 175 51 60 57 48 172 452 1959 281 177 167 211 39 61 50 43 162 420 1960 269 181 158 2077 38 59 47 43 176- 402 1°61 3in,4 18o 17A 22i s z t r 56 pi i93 408 193 4 1962 263 162 168 200 49 67 54 54 169 467 1963 323 120 82 165 53 64 55 52 170 474 1961g 328 173 146 210 54 80 57 57 242 614 1965 283 175 176 196 49 80 56 51 191 6o4 1966 316 196 221 205 60 79 58 51 226 559 1967 289 185 207 203 48 118 64 51 193 376 1968 275 176 245 217 67 149 78 64 204 462 1969 333 205 229 237 80 140 74 62 212 482 1970 325 193 236. 224 78 144 78 65 224 518 1.971 333 194 244 2214 82 160 80 66 224 526 Note: 1 tanbo is equal to 0.1 cheongbo. Sources: Yearboolcs of Agriculture and Forestry 3tatistics, MAF. RiEPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.10: YIELDS PER TANBO OF VEGETABLE CROPS Chinese Sweet Red "Water Year Radish Cabbage Garlic Pumpkin Melon Pepper Melon 1955 1956 1957 1958 1959 1960 - _ _ 1961 1,295 1,199 437 1,043 907 250 1,096 1962 1,985 1,252 498 1,110 928 212 1,039 1963 1,197 1,118 486 1,632 827 210 1,205 1964 1,315 1,266 532 1,187 849 21ja 1,213 1965 1,411 1,230 508 1,094 882 237 1,176 1966 1,,413 1,329 626 1,174 969 290 1,369 1967 1,301 1,235 549 1,204 1,034 234 1,755 1968 1,98 1,81 564 1,117 1,118 249 1,787 1969 . 1,326 1,176 560 1,137 1,206 196 1,824 1970 1,152 1,117 508 1,216 1,092 145 1,625 1971 1,394 1,329 534 1,273 1,234 181 2,077 Note: 1 tanbo is equal to 0.1 cheongbo. Sources: Yearbooks of Agriculture and Forestry Statistics, MAF. REPUBLTC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.11:YIELDS PER TAMBO OF FRUIT CROPS Year Apples Peaches Pears Grapes Persimmons (kg) 1955 1956 1957 1958 1959 1960 - - 1g61 694 591 753 677 561 1962 1,019 580 728 651 639 1963 941 555 657 655 486 19614 971. 687 7h6 521 589 1965 878 512 764 536 876 1966 893 583 737 589 661 1967 958 620 693 581 621 1968 984 615 775 609 763 1969 1,055 591 738 716 680 1970 1,008 660 777 551 584 1971 1,095 734 709 473 753 Note: 1 Tanbo is equal to 0.1 Cheongbo. Sources: Yearbooks of Agriculture and Forestry Statistics, MAF HCD (Dffr REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table h.12: YIELDS PER TANBO OF INDUSTRIAL CROPS Black Perilla Year Cotton Hemp Rush Sesame Frutescens Rape -- - ~~~~~~~- ~( kg ) 1955 1956 1957 1958 1959 1960 - - 1961 57 79 82 39 38 71 1962 33 79 69 38 4o 57 1963 47 78 78 39 35 32 1964 55 82 97 42 41 73 1965 61 98 166 4o 42 88 1966 73 102 249 46 50 99 1967 69 102 232 45 43 108 1968 77 111 228 48 50 119 1969 80 126 248 44 5 112 1970 83 125 207 4o 55 108 1971 87 125 224 48 61 128 Note: 1 Tanbo equals 0.1 Cheongbo Sources: Yearbooks of Agriculture and Forestry Statistics, MAF REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 4.13: PRODUCTION OF FOOD CROPS Common Naked Soy Red lWhite Sweet Total Yield per Year Rice Barley Barley tTheat Millet Corn beans beans potatoes potatoes Grains Tanbo (thousand metric tons) I kg) 1955 2,959 679 362 201 64 13 149 13 95 230 4,817 182 1956 2,438 692 400 218 57 11 153 13 73 198 4,310 160 1957 3,002. 600 351 218 55 14 153 13 93 194 4,744 172 1958 3,161 712 471 223 78 14 153 13 85 220 5,189 193 1959 3,150 829 530 268 58 14 138 12 77 222 5,359 198 1960 3,047 852 518 258 54 14 130 12 84 242 5,271 193 1961 3,463 898 580 280 68 16. 165 15 93 291 5,933 215 1962 3,015 768 611 268 63 18 156 16 82 35? 5,223 192 1963 3,758 583 335 228 74 20 156 5 78 435 5,742 197 1964 3,954 895 619 309 75 35 163 17 114 822 7,066 231 1965 3,501 951 856 230 61 40 174 16 116 929 7,006 216 1966 3,919 975 1,0143 315 58 34 161 19 138 834 7,568 243 1967 3,603 931 945 310 l42 60 452 19 113 518 6,836 218 1968 3,195 841 1,243 345 78 63 245 26 123 635 6,357 221 1969 1,090 916 1,150 366 6o 63 229 25 120 658 7,737 252 1970 3,939 819 1,154 357 44 68 232 24 121 662 7,476 252 1971 3,998 742 1,115 322 34 64 222 23 118 589 7,271 260 Note: 1 tanbo equals 0.1 cheongbo Sources: Yearbooks of Agriculture and Forestry Statistics, MAF. pD :H REPUBLIC OF KOREA AGRICUJLTURAL SECTOR SURVEY Table 4el4: PRODUCTIONJ OF VEGETABLE CROPS Chinese Sweet Water Red Yield Year Radish Cabbage Garlic Pumpkin melon melon pepper Total per Tar.bo (thousand metric tons) ( kg ) 1955 - - 1956 - - - - - - - - - 1957 - - _ _ _ _ . _ _ 1958 - _ - - - - 1959 359 309 26 27 26 15 26 1,010 915 1960 392 333 32 26 33 30 21 1,088 925 1961 46o 389 33 30 37 26 37 1,235 718 1962 46o 423 39 69 41 32 35 1,300 1,049 1963 413 445 37 105 39 32 34 1.167 983 1964 381 450 47 112 49 47 47 1,436 1,032 1965 587 48o 45 85 53 58 .46 1,576 1,046 1966 597 520 66 87 60 55 67 1,717 1,114 1967 580 609 72 83 69 86 67 1,869 1,055 1968 690 700 75 87 74 104 84 2,150 1,116 1969 722 791 79 100 91 117 62 2,428 1,073 1970 765 797 78 107 98 119 53 2,520 991 1971 874 989 82 107 99 152 74 2,918 1,134 Sources: Yearbooks of Agriculture and Forestry Statistic, MAF. AGRICULTURAL SECTOR SURVEY Table 4.15: PRODUCTION OF FRUIT CROPS Total Yield Year Apples Peaches Pears Grapes Persimmon fruit per Tanbo (thousand metric tons) 1955 1956 195? 1958 - - 1959 104.0 14.8 26.0 3.4 13.2 166.8 716 1960 104.1 '3.8 26.0 3.6 13.5 166.4 741 1961 179.9 19.7 29.9 5.6 13.3 149.9 648 1962 117.9 19.6 27.2 7.5 16.6 195.3 843 1963 110.2 19.2 23.6 6.4 14.i 138.1 750 1964 124.7 34.8 28.4 10.9 23.6 288.7 800 1965 166.8 54.3 39.5 18.6 23.5 310.0 723 1966 174.4 63.1 41.4 22.6 22.1 331.1 733 1967 189.7 70.7 40.8 25.1 23.6 358.9 765 1968 198.7 71.5 47.8 27.5 34.6 392.4 760 1969 219.4 68.3 46.0 37.4 33.9 416.8 743 1970 212.0 78.1 52.0 34.1 30.3 423.3 703 1971 220.7 66.o 48.3 33.6 22.9 404.3 731 Sources: Yearbooks of Agriculture and Forestry Statistics, MAF '1> REPUBLIC OF KOREA AGRICULTURAL, SECTOR SURVEY Table 4.16: PRODUCTION OF INDUSTRIAL CROPS Black Perilla Yield Year Cotton Hemp Rush Sesame Frutescens Rape Total per Tanbo (thousand metric tons) (kg) 1955 - - _ _ _ 1956 - - _ 1957 - - - _ _ _ _ 1958 - - - - - _ 1959 24.6 6.8 2.6 2.1 1.9 1960 19.0 5.6 1.5 2.1 2.3 - - 1961 27.9 5.7 1.7 2.8 2.4 1.3 46.7 57 1962 17.6 5.7 1.6 3.1 2.8 5.3 41.2 4o 1963 12.0 5.2 2.0 3.0 2.3 1.8 32.5 49 1964 12.7 4.9 2.7 3.8 3.1 5.2 38.8 60 1965 11.8 5.6 2.2 4.2 3.5 6.o 4o.7 67 1966 13.7 5.8 4.o 5.2 4.8 12.0 56.7 83 1967 11.9 6.1 4.3 9.1 5.1 17.7 62.2 84 1968 12.7 6.3 4.1 6.5 5.3 21.0 66.8 93 1969 13.5 7.3 4.5 7.7 5.7 31.2 82.7 93 1970 13.3 6.6 3.3 lo.4 6.3 25.1 72.6 81 1971 12.1 4.8 2.5 13.4 6.5 36.9 82.6 91 Sources: Yearbooks of Agriculture and Forestry Statistics, MAF SECTION V: INTERNATIONAL TRADE REPUBLIC OF KOREA AGRICUL'TRAL SECTOR SURVEY Table 5.1: SUMMARY OF EXPORTS AND IMPORTS (000 US$) Year Exports Imports Trade Deficit 1961 40,878 316,142 -275,264 1962 54813 421,782 -336,969 1963 86,802 560,273 -473,471 1964 119,058 404,351 -285,293 1965 175,082 463,442 -288,360 1966 250,334 716,441 -466,107 1967 320,229 996,246 -676,017 1968 455s4OO 1,468,166 -1,012,766 1969 622,516 1,823,611 -1,201,095 1970 835,185 1,983,973 -l,148,788 1971 1,067,607 2,3949320 -1,326,731 Note: Exports are valued at f.o.b., imports at c.i.f. Both exports and imports include trade without draft and exclude sales of go6d to military forces in Vietnam. The figures are based on trade statistics in the Office of Customs Administration. Source: MaJor Economic Indicators, 1961-71, Economic Planning Board, May 1972, p. 67. REPUBLIC OF KOREA AGRICULTURAKL SECTOR SURVEY Table 5.2: EXPORT STRUCTURE (000 US$) Manufac- Agricultural Marine Mining Manufacturing Agricultural Marine Mining turing Year Total Products Products Products Products Total Products Products Products Products 1961 429901 8,151 7,293 18,018 9s,439 100.0 19.0 17e0 42.0 22.0 1962 56,702 13,0141 12,474 15,877 15,310 100.0 23.0 22.0 28.0 27.0 1963 84,368 11,222 13s,090 16,446 43,610 100.0 13.3 15.5 19.5 51.7 19614 120,851 12,562 24,090 21,917 62,322 100.0 10.4 19.9 18.1 51.6 1965 180,9450 15,695 24,738 27,645 I12,372 100.0 8.7 13.7 15e3 62.3 1966 255,751 249336 379536 34s195 159,684 100.0 9.5 14.7 13,4 62.e4 1967 358,592 16,972 52,834 37s,6.2 251,175 100.0 4.7 14.7 10.5 70.1 1968 500,408 21,607 50s856 41°,005 386,940 100.0 4.3 10.2 8.2 77.3 1969 702,811 29,748 66,052 51,956 555,055 100.0 4.2 9.4 7.4 79.0 1970 1,003,803 30,056 82,324 52,059 8399369 1C0.0 3.0 8.2 5.2 83.6 1971 1,352,037 37,992 103,9983 47,207 1,162,855 100.0 2.8 7.7 3.5 86.0 Note: Includes both siqple remittances, exports of bonded processings, sales of goods to military forces in Vietnam and exports without drafts. The figures are based on settlements of transactions in the Min stry of Commerce and Industry. Source: Major Economic Indicators, 1961-71, EPB, p. 68. IA BERMLC OF KORW. AGRICULTURAL SETOR SURVr Table 5.3: VAIIJE OF AGOCULUR&L EPRTS (000 us$) 1962 1263 1969 1965 1 968 169 1970 1971 Agricultural Products Cereals 9,901 912 2,270 3,361 7,852 855 649 1,340 855 270 Beans 233 71 33 1,222 839 220 23 169 905 3,333 Apples 173 86 127 71 359 658 565 559 889 296 Fresh Fruit & Dried Frit - - 54 47 68 98 44 97 191 176 Canned Food - - 105 8 335 568 401 1,624 3,436 5,191 naw Silkr -4,966 5,099 6,685 8,312 13,232 21,963 24,745 31,286 50,895 48,040 Crude Vegetable lterias 425 382 928 374 295 281 532 699 221 370 Other Agricultural Products 72 143 10 160 195 406 551 2.089 5.054 _.8.16 Sub-Total 14.960 6,693 lo,212 13,555 23,175 25,049 27.510 37,863 62,446 61,512 Livestock Products Pbrk 20 293 - 6 - - 70 692 337 457 Pig Hair 1,026 1,570 1,736 880 996 1,065 871 965 901 653 Live 41l 1,517 3,870 1,007 92 29 146 32 275 - - Hide and Skin 145 157 203 201 164 96 110 94 75 52 ldvesI.tockr^l Pr_^t.ts 6?O 1.& i .,9,,,354 uy53 7 Sub-Total 381 7.86S 1 1.752 1.702 1.631 2.81S 14 1.617 Forestrv ad Hantine Proucts Ply-ood 2,973 6,782 12,550 19,055 30,683 41,4014 67,408 81,758 102,395 138,724 lishroo 375 259 528 309 342 506 594 929 1,414 1,702 I.zber and Cork - - 38 11 43 99 50 231 346 891 Arrow Ebot Wall Paper 128 224 542 1,458 1,973 1,678 2,363 2,500 4,114 3,477 Wood Maemfactures - - - 26 1144 59 261 1,313 - 3,342 Birds and Animls - - - - 84 122 177 245 296 188 Others _ - - - 221 336 714 565 1.268 1.1o- Sub-Total 3.476 7.65 13.658 20.859 33.490 44.24 71.567 87.541 109.833 149.734 Marine Prodacts Live l s n.a. 658 984 1,091 1,755 2,456 2,750 3,025 Fresh Fish 4,327 3,532 5,075 6,298 5,212 5,265 4,482 3,739) 31,853 18,217 FroZen Fish 1,381 1,763 2,255 2,368 3,872 6,084 4,65,) 4,556 5,994 8,001 Cuttle Fish 2,371 2,078 5,010 5,452 6,290 4,630 1,970 4,156 10,335 9,361 Dried Fish 295 384 264 419 390 .533 646 343 599 776 Salted Fish - 843 519 882 1,368 1,730 1,217 1,224 1,566 2,629 Canned Fish 272 372 826 1,406 1,655 519 2,221 2,184 375 1,885 Agar-Agar 1,420 1,641 1,849 2,176 2,753 5,800 1,851 1,780 1,227 1,171 Seaweed 352 328 654 819 1,002 929 588 998 1,525 2,678 Laver 1,267 1,343 5,391 3,781 6,838 14,373 17,054 21,721 11,592 4,749 TU1 - 625 320 2,404 7,971 11,969 15,559 24,072 37,663 55,103 Others 656 21 138 142 87 102 86 149 510 1,298 Fishing Nets - 103 381 1.254 2.843 4.111 4,246 5.969 7.313 9.113 Sub-Total 12.341 13.691 23.666 28.492 42.036 57.499 5323 73.916 90.052 114.981 T. cl Livstock, eFnresry 34.158 3388 53.401 64.652 100.453 128.454 158.031 202.135 264,174 327.864 Total Herchaldise Exports 56.7o2 84.368 120.851 180.450 255.751 358.692 500.408 702.811 1.003.808 1.352.037 Source: Xinistry af Agriculture and Forestry (MAF). REPUBLIC OF KOREA AGRICULTURHAL SECTOR SURVgY Table 5.4: VOLUME OF PRINCIPAL AGRICULTURAL IMPORTS (m ton) 1965 1966 1967 1968 1969 1970 1971 Powdered Milk 7,639 4,635 855 5,988 5,568 6,328 798,434 Wheat 476,245 425,828 635,718 813,465 1,342,906 1,178,066 1,654,090 flour of Wheat 47,532 105,361 13,747 54,582 199,024 27,053 123,706 Rice 20 10,034 13B,977 246,803 631,261 769,604 1,007,448 Barley 105,755 7,231 2,996 154,610 107,105 10892 60,707 Raw Sugar 39,857 85,739 143,055 156,519 202,447 229,074 260,308 Molasses 16,294 27,130 17,221 30,442 81,137 145,591 213,377 Cattle Hides 84 1,541 3,291 6,977 8,724 9,933 11,657 Soybeans 193 150 25,760 4,014 17,660 29,590 61,780 Rubber 12,662 15,647 18,211 24,898 27,427 27,081 38,018 Wood and Lumber 536,477 1,082,450 1,338,420 1,982,198 3,225,635 2,901,922 3,305,825 Pulp 59,146 96,597 104,225 149,474 162,900 171,763 209,398 Sheep and Lamb's Wiool± 1,015 1,522 2,132 2,690 3,884 2,953 2,649 Wool and Animal Hair./ 1,148 1,636 2,790 3,392 3,390 3,111 3,106 Raw Cotton 70,685 74,119 90,764 86,440 98,584 108,453 124,422 Manila Fiber 4,416 4,024 3,471 4,841 3,749 2,991 2,613 Beef Tallow 14,233 21,314 26,99d 34,758 37,805 45,313 66,607 G Grease basis 2/ Ekcept wool 3/ This is the figure appearing in the source, but it appears to be in error as value increased from $6,625,000 in 1970 to $9,136,000 in 1971 (see p. 283 in 1972 source). Source: &conomic and Statistics Yearbooks, 1965-1972, .Bank of Korea (BOK). REIUBLIC (3 lDRE AGRIMULTURAL SMCTOR SURVEY Table 5.I: VAIUE OF FRINIPAL ADRICULTURAL IHPOIT (ooo us$) 196_ 1967 1968 1969 1970 MMl Live Ani als 293 759 554 1,044 1,846 2,297 2,344 Neant and Neat Preparations 205 167 262 384 986 1,043 1,666 Pobdered Milk 2,976 2,085 439 2,403 1,492 6,625 9,136 Fish and Fish Preparations 23 125 81J- 1ln9 159 L6 11 - Wheat 35,890 40,h82 46,2914 62,788 90,345 79,528 115,101 Flour of Wheat 5,171 11,752 2,510 5,337 22,177 2,499 10,129 Rice 4 3,088 24,902 43,305 120,465 145,367 150,164 Barley 5,759 657 291 11,806 7,454 956 4,150 Bais Sugar 3,459 5,434 8,964 10,169 17,454 23,479 31,069 Molasses 510 701 592 1,258 3,359 4,781 4,464 Bovine Skin 19 682 1,207 2,106 3,001 3,350 3,606 Soybeam 49 12 3,231 214 3,880 3,455 8,944 aubber 6,353 7,589 7,930 9,419 13,889 13,244 14,718 Wood ani Luber 20,771 43,131 58,437 91,487 108,422 125,306 153,700 Pulp 8,814 12,296 15,620 21,539 24,474 31,191 35,108 Sheep and Iabl's wool, Greasy or Fleece ihahed 2,592 3,982 5,781 7,181 10,136 8,422 6,093 MWol and Animl Hair, Ebcept Greasy wool 1,812 2,753 5,368 7,168 7,655 6,343 4,773 Bay Cotton 40,839 42,774 49,328 49,052 52,038 62,669 84,188 Minila Fiber, Tow and Ibste 1,271 2,086 874 1,104 1,021 931 793 Beef Talow 3,294 4,651 5,327 5,269 7,219 10,554 15,797 Scum: Economic and Statistics Yearbooks. 1969 and 1972, Bank of Korea (BOK). ANNEX 12 Table 5.6 REPUBLIC OF KORBA AORICULTURAL SECTOR SURVBY Table 5.6: IMPORTS AND EXPORTS OF FOCD, BWBRAGES, AND AGRICULTURAL RAW MATERIALS (Million US$) Direction and Commodity Group 1962 1963 14 5 1966 1967 1968 1969 1970 1971 1972 Imports Food (Inmluding Feed) Live Animals 0.7 0.2 0.4 0.3 0.8 o.6 1.0 1.8 2.3 2.3 2.9 Meat 0.2 0.2 0.1 0.2 0.2 0.3 0.4 1.0 1.0 1.7 3.0 Dairy Products and Eggs 2.5 3.1 1.8 3.1 2.1 o.6 7.0 3.7 7.0 9.5 3.8 Cereals 40.1 107.2 60.8 54.4 61.3 76.6 129.3 250.3 244.8 304.0 518.0 Fruits and Vegetables 0.3 0.4 0.4 0.5 0.5 0.9 0.9 1.3 1.9 2.3 7.0 Sugar 4.5 4.7 3.8 4.0 6.2 9.7 12.3 21.4 28.9 38.4 50.0 Coffee, Cocoa, Tea and Spices 0.1 0.1 0.2 0.3 0.3 0.5 1.0 1.9 4.3 3.9 5.0 Animal Feed 0.1 4.2 0.4 0.4 o.6 3.7 12.9 16.2 23.2 33.9 9.0 Misc. Food Preparations 0.1 0.5 0.4 0.3 0.3 o.6 2.6 3.8 5.5 3.2 3.3 Beverages 0.1 0.2 0.1 0.2 0.2 0.5 0.5 0.7 o.8 0.4 0.7 Agricultural Raw Materials Urnmanulactured Tobacco - 0.1 - - - 0.1 0.7 0.7 0.4 3.0 8.5 Hides and Skins 0.4 0.3 0.2 - 0.7 1.3 2.1 3.0 3.4 4.0 20.0 Oilseeds 0.7 o.6 1.2 0.3 1.4 4.3 1.7 4.8 5.4 11.9 22.5 Natural Rubber 5.5 6.9 4.7 6.4 7.6 7.9 9.4 13.9 13.2 14.2 16.0 Natural Fibers 43.2 45.8 42.7 47.1 52.2 62.3 65.1 68.6 80.4 100.6 140.0 Crude Materials 1.6 1.2 0.8 1.5 1.5 4.1 7.6 5.7 5.8 5.5 5.5 Oils and Fats 3.9 4.8 3.9 3.8 5.5 6.9 8.3 12.3 15.2 21.3 21.0 Total Agriculture 104.0 180.5 121.9 122.8 141.4 180.9 262.8 411.1 443.5 560.1 840.0 Exports Food (Including Feed) Live Animals 1.5 3.7 1.1 - - 0.1 0.1 - - _ 0.2 Moat 0.1 0.2 0.2 0.2 0.1 0.1 0.8 1.6 1.4 2.5 10.7 Uairy Products and Eggs 0.1 0.1 - - - - - - - - 0.1 Cereals 9.0 1.3 2.4 3.6 7.3 0.8 0.8 1.5 1.3 2.4 1.5 Fruits and Vegetables 2.2 2.2 6.8 5.5 10.4 9.0 15.6 16.4 19.5 20.7 19.1 Sugar 0.7 1.3 0.7 o.8 0.7 0.8 0.8 1.0 1.5 0.9 2.1 Coffee, Cocoa, Tea and Spices - - - 0.1 - 0.1 0.1 0.4 0.4 0.6 1 .0 Animal Feed - 0.2 0.1 0.2 0.2 0.1 0.3 0.1 0.1 0.1 0.2 Misc. Food Preparations - - - - 0.1 - 0.1 0.2 o.6 0.2 1.7 Beverages 0.1 - - - 0.4 2.4 0.8 1.3 o.8 1.1 1.4 Agricultural Ra, Materials Unmamufactured Tobacco 0.1 0.2 0.1 0.9 6.5 6.6 7.6 13.6 13.4 14.1 12.6 Midas and Skins 0.1 0.1 0.2 0.2 0.2 6.1 0.1 0.1 0.1 - 0.4 Oilseeds 0.1 - _ - - - - - 0.1 0.2 - Natural Rubber - - - - - - - - - - Natural Fibers 4.3 5.1 6.7 7.6 12.7 16.7 19.7 26.7 39.2 43.2 60.7 Crude Materials 3.9 7.2 6.4 6.9 7.7 10.9 9.3 11.7 15.6 15.9 18.7 Oils and Fats 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.3 Total Agriculture 22.3 21.7 24.8 26.1 46.4 45.8 56.2 74.7 94.1 102.0 130.6 Source: United States DeparteDmt of Agriculture. Y"TFI I? Table 5.rl REPBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 5.7: IMPORTED AND DOMESTICALLY PRODUCED FEED SUPPLIES (000 m ton) Byproducts Local from Grains Imported Iaported and Con- Sub- Roughages Year Grains Grains centrates Total (Local Only) Total 1962 21 87 869 977 2,017 2,994 1963 18 265 617 900 2,222 3,122 1964 5 189 978 1,172 2,195 3,367 1965 0 131 1,082 1,213 2,135 3,348 1966 3 82 1,337 1,,422 2,193 3,615 1967 45 210 1,263 1,518 2,258 3,776 1968 82 300 1,69 1,851 3,093 4,944 1969 196 344 1,757 2,297 3,233 5,530 1970 259 307 1,802 2,368 3,381 5,749 1971 464 381 1,850 2,695 3,490 6,185 1972 493 534 2,561 3,588 4,031 7,619 Source: MAF. SECTION VI: MCIES, INCOME, AND CONSUMPTION REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 6.1: INDEX NUMBERS OF PRICES RECEIVED AND PAID BY FARMERS (1965=100) Prices Received Prices Paid All Farm Fruits Livestock, (B) (A) Products and Cocoon & All Goods House- Farm Parity All Farm Excl. Vegeta- Poultry and Farm hold Wage & Ratio Year Products Vegetables Grains bles Products Others Services Supplies Goods Charges (A/B) 1961 47.1 47.4 50.7 42.1 42.3 40.2 55.5 57.1 57.0 48.4 84.9 19i2 51- _3 5 8 4j5.1 19.4 48.6 61.4 65.1 62.3 53.9 84.4 1963 76.7 76.1 86.5 83.4 51.7 63.2 68.1 64.7 69.6 67.6 112.6 1964 96.0 96.7 110.4 86.4 65.4 77.3 86.5 75.6 89.8 91.0 111.0 1965 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1966 106.1 104.8 105.1 123.3 108.8 91.3 112.2 111.7 112.1 114.3 94.6 1967 121.5 122.3 117.8 109.4 140.5 102.6 127.0 124.8 126.4 133.8 95.7 1968 142.3 144.0 133.6 116.7 182A4 110.3 152.2 163.4 145.7 163.4 93.5 1969 162.4 163.5 162.5 135.2 178.5 132.7 167.7 173.7 159.0 200.0 96.8 1970 191.4 188.3 182.7 244.8 211.1 158.3 193.1 194.9 181.5 248.6 99.1 1971 235.9 233.6 228.8 287.2 254.5 192.7 227.2 240.5 208.3 297.3 103.8 Source: Major Economic Indicators, 1961-71, Economic Planning Board, May 1972, p. 96. ANNEX 12 Table 6.2 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 6.2: PRODUCER PRICES OF FARM PRODUCTS Won per 1965 1966 1967 1968 1969 1970 1971 Food Crops Rice 100 ltr 3,210 3,386 3,730 4,390 5,435 6,000 7,503 Common Barley " 2,133 2,026 2,342 2,564 2,974 3,282 4,580 Naked Barley " 1,650 1,520 1,940 2,133 2,618 3,014 4,172 Wheat " 1,653 1,722 1,884 1,926 1,865 1,843 2,263 Millet " 2,128 2,226 2,575 2,636 2,946 3,401 4,467 Corn " 1,456 1,769 1,898 2,050 1,976 2,121 2,440 Soybeans " 3,254 3,659 4,863 3,402 3,709 5,847 5,914 Red Beans 4,082 3,445 4,480 4,027 4,027 7,275 7,577 White Potatoes 3.75 kg 51 52 57 58 54 62 79 Sweet Potatoes 31 34 42 43 48 55 76 Fruits Apples 18.75 kg 520 502 593 747 773 970 1,154 Peaches " 80 73 110 94 123 124 164 Pears 3.75 kg 612 543 689 783 857 1,071 1,206 Grapes " 169 199 232 204 309 290 310 Vegetables Radish 3.75 kg 21 27 43 38 47 77 87 Chinese Cabbage " 27 34 52 45 48 85 110 Garlic " 753 538 382 454 476 404 619 Sweet Melon 92 81 81 87 106 139 148 Red Pepper " 767 1,435 789 820 1,147 2,829 2,521 Water Melon 79 73 76 76 86 136 146 Pumpkin " 46 38 39 39 44 50 60 Industrial Crops Cotton 600 g 99 67 72 79 83 121 148 Hemp 3.75 kg 486 440 504 454 467 450 639 Black Rush " 250 356 436 421 477 1,333 1,299 Sesame 100 ltr 8,472 11,047 9,988 8,359 17,144 19,612 24,503 Rape 1 kg 52 62 50 58 54 60 61 Others Mulberries 3.75 kg 150 152 177 142 - 168 286 Tobacco, 1st grade 1 kg 254 258 258 256 284 360 482 Source: Yearbook of Agriculture and Forestry Statistics, MAF. ANNEX i2 Table 6.3 REPUB:LIC OF KORA. AGRICULTUIRAL SECTOR SURVEY Table 6.3: INDEX NUMBERS OF PRODUCER PRICES OF FARM PRODUCTS 1965 1966 1967 1968 1969 1970 1971 Food Crops Rice 100 105' 116 137 169 187 23h Common Barley 100 95 110 120 139 15h 215 Naked Barley 100 92' 118 129 159 183 253 Wheat 100 10 114 17 113 111 146 Millet 100 105. 121 124 138 160 210 Corn 100 121 130 1U1 136 1146 168 Soybeans 100 11. 149 105 l14 180 182 Red Beans 100 84z 110 99 99 178 186 White Potatoes 100 102 112 114 106 122 155 Sweet Potatoes 100 11() 135 139 155 177 2145 Fruits Apples 100 97' 114 144 149 187 222 Peaches 100 91. 138 118 154 155 205 Pears 100 89 2 113 128 111o 175 197 Grapes 100 :118 137 121 183 172 183 Vegetables Radish 100 1259 205 181 221 367 h1.. Chinese Cabbage 100 126' 193 167 178 315 407 Garlic 100 72. 51 60 63 54 82 Sweet Melon 100 88 88 95 115 151 161 Red Pepper 100 187 103 107 150 369 329 Water Melon 100 92 96 96 109 172 185 Pumkin 100 83 85 85 85 96 130 Industrial Crops Cotton 100 68 72 80 84 122 1h9 Hemp 100 91 104 93 96 93 131 Black Rush 100 142 174 168 191 533 520 Sesane 100 130 118 99 202 231 289 Rape 100 119 96 12 O 104 115 117 Others Milberries 100 101 118 95 - 112 191 Tobacco, 1st grade 100 102 102 101 112 142 190 Source: Yearbook of Agriculture ani Forestrry Statistics. MAF. ANNEX 12 Table 6.L REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 6.4: PRICES PAID BY FARMERS FOR FERTILIZER (Won per ton) WeightedWV Year Nitrogen-' Phosphate?- Potash/ Average 1961 23,650 13,320 7,010 23,480 1962 39,4o00 24t,440 12,780 29,,410 1963 39,660 24,440 12,780 33,150 1964 44,160 29,980 17,540 35,440 1965 65,300 46,600 24,330 54h,040 1966 63,940 46,600 23,920 53,270 1967 52,370 42,270 21,650 44,800 1968 54,550 47,9930 37,600 50,350 1969 58,120 44s,010 33,130 50,750 1970W 58,120 4h,4sO 33,130 50,560 v/ Based on the price of Ammonium Sulfate, Urea and Compound Fertilizers. #/ Based.on the price of Triple Super Phosphate, Fused Magnesium Phosphate and Compound Fertilizers. / Based-on the price of Potassium Chloride, Potassium Sulfate and Compound Fertilizers. h/ Reflects quantities utilized per year. Actual 1970 utilization figures for the various fertilizer compounds are unavailable. It is assumed that usage proportions within cate- gories are equal to 1969 proportions, i.e., out of a total Nitrogen usage the proportion obtained from Urea, etc., is the same in 1969 and 1970. Source: U.S. Agency for International Development. ANNEX 12 Ti'aDle o.; REPUBLIC OF KOREA AGRICULTU:RAL SECTOR SURVEY Table 6.5: INDICES OF FARM WAGE RATES, PRICES PAID FOR FARM HOUSEHOLD GOODS AND REAL FARM WAGE RATES (196-emOO) (A) (B) Index Prices of Farm Real Wkges Year Farm Wage3 Household Goods (A)/(B) 1959 42.6 51.O 83.5 1960 43.1 53.3 80.9 1961 47.6 57.0 83.5 1962 51.5 62.3 82.7 1963 65.2 69.6 93.7 1964 88.5 89.8 99.6 1965 100.0 100.0 100.0 1966 116.9 U12.1 104.3 1967 142.7 126.4 113.0 1968 178.3 145.7 122.4 1969 216.4 159.0 136.1 197oki 285.5 187.8 152.1 U,/ As of October Source: Monthly Ebonomic Statistics- Bank of Korea. ANNEX 12 Table 6.6 REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 6.6: COMPARISON OF PER CAPITA INCOMES OF FARM AND NONFARM HOUSEHOLDS (won) Classification 1967 1968 1969 1970 1971 A. Farm Household Income 149,470 178,959 217,874 255,804 356,382 B. Per Capita Income 24,423 29,727 36,373 43,210 61,129 C. Per Worker Income 47,907 59,653 73,606 87,905 122,049 D. Nonfarm Household Income 248,640 285,960 333,600 381,240 451,920 E. Per Capita Income 45,538 52,566 61,550 71,393 85,591 F. Per Worker Income 192,744 219,969 254,656 286,647 339,789 A/D 60.1 62.6 65.3 67.1 78.9 B/E 53.6 56.6 59.1 60.5 71.4 C/F 24.9 27.1 28.9 30.7 35.9 Note: Nonfarmers mean salary and wage-earners. Source: EPB REPUBLIC OF KOREA AGRICULTURAL SECTOR SURVEY Table 6.7: FOOD BALANCE SHEET Per Capita Year Supply Deficits* Balance Demand Present I/ Changes or in Household Industrial Study FA0- Food Item Production Import in Stock Total Surplus Percentage Use Use Export Feed Waste Total (kg) (kg) Grains (1964) Eice 3,758 - 176 3,934 302 7.7 3,437 53 14 9 119 3,632 130 126 Barley 1,514 167 63 1,774 733 42.0 904 25 - 30 52 1,011 36 41 Wheat 280 625 3 908 179 19.7 545 143 - 14 27 729 26 30 Bean 190 9 - 199 35 17.6 94 56 - 8 6 164 6 7 Millet 75 - - 75 32 42.7 41 - - - 2 43 2 - Potatoes 936 - - 936 294 31.4 454 63- - 31 94 642 23 84 ihite Potatoes 114 - - 114 - - 104 - - - - - - - Sweet Potatoes 822 - - 822 - - 350 - - - - - - (1965) Grains Rice 3,954 - 318 4,272 422 9.9 3,632 69 19 11 119 3,850 134 130 Barley 1,807 79 7 1,893 864 45.6 907 32 - 33 57 1,029 36 55 Wheat 268 512 3 783 36 4.6* 593 188 - 15 23 819 29 26 Bean 203 - - 203 5 2.5 104 74 5 9 6 198 7 6 Millet 61 - - 61 13 21.3 45 - 1 - 2 48 2 - Potatoes 1,045 - - 1,045 311 29.8 513 83 - 34 104 734 26 85 'White Potatoes 116 - - 116 - - 122 - - - - - _ Sweet Potatoes 929 - - 929 - - 391 - _ _ _ _ _ oQ VI : (D -m ' rso Per Capita Year Supply_ _ Deficits* Balance Demand Present Changes or in Household Industrial Study FAO Food Items Production Import in Stock Total Surplus Percentage Use Use Export Feed Waste Total (kg) (kg) Grains (1966) Rice 3,501 32 530 4,063 265* 6.5* 4,013 151 44 17 103 4,328 147 116 Barley 2,018 - 38 2,056 962 46.8 913 68 1 50 62 1,094 37 58 Wheat 289 493 -8 774 309* 39.9* 631 406 - 23 23 1,083 37 24 Bean 195 - - 195 106* 54.4* 117 160 4 14 6 301 10 6 Millet 58 - - 58 5 8.6 50 - 1 - 2 53 2 - Potatoes 972 - - 972 61 6.3 583 179 - 52 97 911 31 77 White Potatoes 138 - - 138 - - 143 - - - - - - - Sweet Potatoes 834 - - 834 - - 440 - - - - - - - Grains (1967) Rice 3,919 113 - 4,032 389* 9.6* 4,094 178 - 28 121 4,421 146 - Barley 1,999 - - 1,999 770 38.5 907 78 - 184 60 1,229 41 - Wheat 330 919 - 1,249 139 11.1 678 358 - 39 35 1,110 37 - Bean 236 - - 236 116* 49.2* 134 186 1 23 8 352 12 - Millet 42 - - 42 15* 35.7* 56 - - - 1 57 2 - Potatoes 631 - - 631 399* 63.2* 630 176 - 87 87 1,030 34 - White Potatoes 113 - - 113 - - 175 - - - - - - - Sweet Potatoes 518 - - 518 - - 505 - - - - - - - (1968) Grains Rice 4,402 - - 4,402 318* 7.2* 4,369 190 - 29 132 4,720 153 - Barley 1,901 - - 1,901 780 41.0 895 81 - 88 57 1,211 36 - Wheat 331 - - 331 819* 247.4* 725 374 - 41 10 1,150 37 - Bean 279 - - 279 102* 36.6* 152 197 - 24 8 381 12 - Millet 41 - - 41 23* 56.1* 63 - - - 1 64 2 - Potatoes 864 - - 864 282* 32.6* 786 183 - 91 86 1,146 37 - White Potatoes 132 - - 132 - - 209 - - - - - - - Sweet Potatoes 732 - - 732 - - 577 - 0 3 m oq cr 0D x o~ M Per Capita Year Supply Deficits* Balance Demand Present 1I Changes or in Household Industrial Study FACF Food Items Production Import in Stock Total Surplus Percentage Use Use Export Feed Waste Total (kg) (kg) (1969) Grains Rice 4,523 - - 4,523 467* 10.3* 4,623 202 - 29 136 4,990 158 - Barley 1,916 - - 1,916 797 41.6 43 85 - 89 57 1,119 35 - Wheat 355 - - 355 859* 242.0* 771 390 - .41 12 1,214 38 - Bean 303 - - 303 106* 35.0* 169 207 - 24 9 409 13 - Millet 36 - - 36 34 * 94.4* 69 - - - 1 70 2 - Potatoes 970 - - 970 295* 30.4* 885 190 - 93 97 1,265 40 - White Potatoes 146 - - 146 - - 242 - - - - - - - Sweet Potatoes 824 - - 824 - - 643 - - - - - - - (1970) Grains Rice 4,651 - - 4,651 609 13.1 4,876 214 - 30 140 5,260 162 - Barley 1,933 - - 1,933 819 42.4 878 88 - 90 58 1,114 34 - Wheat 366 - - 366 914 249.7 816 407 - 42 15 1,280 40 - Bean 336 - - 336 102* 30.4* 186 218 - 24 10 438 14 - Millet 32 - - 32 44* 137.5* 75 - - - 1 76 2 - Potatoes 1,137 - - 1,137 255* 22.4* 986 198 - 94 114 1,392 43 - White Potatoes 150 - - 150 - - 276 - - - - - - Sweet Potatoes 987 - - 987 - - 710 - - - - - - - (1971) Grains Rice 4,778 - - 4,778 761 15.9* 5,138 228 - 130 143 5,539 167 Barley 1,911 - - 1,911 806 42.2 866 92 - 90 57 1,105 33 - Wheat 376 - - 376 971* 258.2* 862 424 - 44 17 1,347 41 - Bean 361 - - 361 110*. 30.5* 206 230 - 24 11 471 25 - Millet - 28 - - 28 55 196.4 82 - - - 1 83 3 - Potatoes 1,285 - - 1,285 244 19.0* 1,099 206 - 96 128 1,529 46 - White Potatoes 156 - - 156 - - 314 - - - - - - Sweet Potatoes 1,129 - - 1,129 - 785 - - 1/ Korea FAO Association Study Grain Consumption by Industrial Uses and Feed, December 1967, pp. 72-79. Z Source: An Analysis of Food Consumption in the Republic of Korea, Yonsei University, Seoul, Korea, 1969. a ,