National Agricultural Cooperative Federation


The National Agricultural Cooperative Federation was established in 1961 to enhance the social and economic status of its membership and to promote a balanced development of the national economy. Its role is divided into three areas: marketing and supply, banking and insurance, and extension services.

Terminology

Although literally referring to local member cooperatives, the term nonghyup is used by South Koreans to describe both a local cooperative and the NACF.

History

Member cooperatives are democratically controlled, autonomous business groups, funded by member subscriptions rather than government financial investment. They, in turn, fund the NACF through institutional subscriptions. Cooperatives are governed by directly elected presidents, who, in turn, elect a chairman of the federation.

Member farmers and associate members

Member cooperatives allow non-farmers, who have invested a certain amount of capital into the cooperative, to open tax-free bank accounts and access some services. However, whereas member farmers are defined as the genuine owners or stakeholders, associate members can only obtain limited access to or influence over the cooperative.
As of December 2011, the number of the member farmers was 2,446,836 and the number of the associate members was 15,262,611. In 2010, these figures were 2,447,765 and 14,483,532, respectively, indicating a decline in member farmers of 929, and an increase in associate members of 779,079.

Number of cooperatives

At the end of year 2011, the NACF comprised 1,167 head branches, alongside 3,306 cooperatives.

Korean agriculture

Recent international agreements have affected South Korean agriculture and by extension the effectiveness of the NACF. These include the European Union–South Korea Free Trade Agreement, implemented in July 2011, and the Free trade agreement between the United States of America and the Republic of Korea, which took effect on 15 March 2012. Proposed agreements include the China–South Korea Free Trade Agreement, the official public hearing of which was held at the World Trade Center Seoul on 24 February 2012.
Concerns over free trade agreements are reflected in the uncertain trends in Korean agricultural production. Total production by the agricultural sector in 2011 was KRW 44.62 trillion, up by 7.1% from 2010 and including an 8.5% increase in the livestock and dairy sector. Conversely, the Korea Rural Economic Institute expects the total production of agricultural industries to decrease by 1.1% in 2012.

Operational restructuring

On 2 March 2012, the NACF restructured its operations, establishing financial and marketing holding companies through the revised Agricultural Cooperative Law and a resolution of the board of directors on 2 February 2012. The new NACF performs as the center of the member cooperatives, governing the Extension and Support Unit, the Agricultural and Supply Business Unit, the Livestock Marketing and Supply Unit and the Cooperative Banking Unit.

Extension and support unit

The NACF supports the operations and management activities of member cooperatives by providing education and training for their members and working to promote the rights of farmers. It also provides investments to develop and promote new agricultural technologies and products.

Marketing and supply units

The NACF provides marketing support for the production, distribution, processing, and consumption of agricultural and livestock products, focusing particularly on increasing the income of farming households by expanding sales channels and reducing farming costs. This enables farmers to concentrate their efforts on farming.

Cooperative banking unit

The banking unit serves as an intermediary and facilitator, providing loan and deposit services for member cooperatives and engaging in other incidental businesses. As of 2011, the total deposit is KRW 209 trillion and the total loan volume is KRW 146 trillion.

Subsidiaries and affiliated organizations

Financial holding company

The objective of the financial holding company and its subsidiaries is to secure the funds and revenues necessary for the intrinsic activities of the NACF, and to provide differentiated banking services to its customers. It offers diverse financial services such as deposits, loans credit cards, insurance, foreign exchange, and securities.
The objective of the marketing holding company and its subsidiaries is to vitalize the marketing and supply of agricultural and livestock products through advanced expertise and efficient product distribution.
In 2013, Rep. Bae Ki-woon and monthly news magazine Sisa IN exposed NACF's unethical business practice of paying newspapers and other media outlets to run promo articles. Among the media outlets which received payment from NACF were newspapers Dong-A Ilbo, JoongAng Ilbo, Chosun Ilbo, Kyunghyang Shinmun and Hankyoreh, as well as news agency Yonhap News and news website OhmyNews.
An NACF public relations employee, who requested anonymity, told The Korea Observer that it has paid media outlets in exchange of articles that promote the cooperative and its policies. The employee also said that NACF does not spend its money to bribe media organizations to stop publishing "negative" news against it.