National Agricultural Cooperative Federation Chairman Lee Seong-hee, who celebrates the 1st anniversary of his inauguration, is interviewing the JoongAng Ilbo at the main building of the Agricultural Cooperative Federation in Jung-gu, Seoul on the morning of the 26th of last month. Reporter Kim Kyung-rok
The Nonghyup is expanding the nationwide’fresh delivery’ service that delivers ingredients within two hours from ordering this year. National Agricultural Cooperative Federation Chairman Lee Seong-hee said, “We will work on’distribution innovation’ with the idea that the Agricultural Cooperatives will sell all agricultural and livestock products in rural areas. In an interview with the JoongAng Ilbo held at the main building of the National Agricultural Cooperative Federation in Jung-gu, Seoul on the 26th of last month.
The Nonghyup, which celebrated its 60th anniversary this year, is facing more rapid changes than ever before. The distribution business is threatened by the latecomers Coupang and Market Curly, and the financial industry is being chased by fintech (finance + technology) companies. Chairman Lee’s plan to celebrate the 1st anniversary of his inauguration is to upgrade the distribution network of the Nonghyup, which shined as a channel for supplying’public masks’ last year.
- The amount of domestic agricultural production exceeds 50 trillion won, and the amount of goods distributed by the Agricultural Cooperatives, which has a history of 60 years, is less than 8 trillion won per year. Market Kurly is said to be in the club with sales of 1 trillion won in 5 years. The scale of online shopping transactions is over 15 trillion won due to the corona 19 effect. I think the Agricultural Cooperatives should secure 45% of the market share of agricultural and livestock products. It must change quickly.
National Agricultural Cooperative Federation Chairman Lee Seong-hee visited the Digital Full Filament Center (DFC) of the Nonghyup Seongnam Distribution Center on the 22nd of last month to look at the digital transformation situation. National Agricultural Cooperative Federation
- First of all, it is planning to convert the offline store into a digital full-filment center (DFC) capable of ‘2-hour fresh delivery’. Coupang is said to do’rocket delivery’, but the Nonghyup will have the ability to deliver at the speed of light. Seongnam Distribution Center, which applied DFC for the first time, is currently capable of processing 150 orders per day, and plans to receive more than 1000 online orders per day. DFC will be added to 11 distribution centers within this year. The number of members of the Nonghyup Mall, which had reached 1 million by the end of 2019, now exceeds 3.4 million. The goal is to increase it to more than 5 million people in the future.
- Recently, an unmanned store was opened in Sinchon, Seoul.
- Please call me’Korean version Amazon Go’. It is operating as a pilot store with the idea that artificial intelligence (AI)-based unmanned stores will become the trend in the future. In a few months, the company plans to see the performance of sales and customer satisfaction to determine the possibility of national expansion. Recently, we are watching the news that Amazon will join hands with SK to enter Korea.
Nonghyup Hanaro Mart artificial intelligence (AI) store that opened in Sinchon, Seoul on the 1st. National Agricultural Cooperative Federation
- What differentiates Nonghyup from competition with large retailers?
- The difference is that the NACF aims not only to increase consumer satisfaction by supplying high-quality agricultural products, but also to increase farm household income. General companies make profits by selling agricultural products, but the Agricultural Cooperatives will focus on making this profit lead to farm household income. The average annual farm household income in Korea is about 41 million won, of which agricultural income (income from agricultural activities) is only around 10 million won. If agricultural income can be raised to the level of 15 million to 20 million won, the income gap between urban and rural areas is expected to decrease more rapidly. The Agricultural Cooperative’s distribution reform is also focused on increasing agricultural income.
- Last year, agriculture was also unable to avoid the effects of the novel coronavirus infection (Corona 19).
- The agricultural sector also had a year of crisis, overlapping the Corona 19 crisis and the longest rainy season in history. In order to promote the consumption of agricultural and livestock products and flowers, direct support activities were carried out, and financial support was provided to small business owners and small and medium-sized enterprises with more than 13 trillion won through a bank. Following the crisis of last year, it plans to pursue innovation in the distribution and digital fields from this year.
- Do you have any other plans to stabilize the income of farmers?
- It is promoting the’Nonghyup-type smart farm’ project for small and medium-sized farmers. Nonghyup provides not only smart farm materials and management services, but also product sales channels and financial support. Old farming methods do not increase production and produce high-quality agricultural products. I think it would be nice if the Nonghyup could play a leading role in producing and selling high-quality agricultural products of smart farms. When I visited a farm that actually operates a smart farm, it was said that a single pepper tree picked 130,000 peppers in 5 years. It means that it makes 50 million won in annual sales on a 14-pyeong land. In particular, it is trying to spread smart farm facilities to those who wish to return to farming, etc., where the disabled or the elderly can farm.
National Agricultural Cooperative Federation Chairman Lee Seong-hee is interviewing with JoongAng Ilbo at the main building of the Agricultural Cooperative Federation in Jung-gu, Seoul on the 26th. Reporter Kim Kyung-rok
- Some pointed out that smart farms are used by large corporations to steal farmers’ income.
- In the meantime, smart farms have been widely distributed mainly to large-scale farmers such as corporate farms due to high investment costs, and there has been a limit to small and medium-sized farmers from enjoying the benefits of new agricultural technologies. We believe that there is a 99% chance that large corporations’ capital will continue to enter agriculture. If agriculture does not change now, farmers’ jobs will be lost to large corporations.
- Above all, as the rural population declined, it was in danger of extinction.
- Most of the agricultural population is over 60 years old. It is also told to the members of the Agricultural Cooperative that the existence of the Agricultural Cooperative is also worth when the rural society continues. To solve the problem of aging farmers and creating jobs for young people, the Nonghyup operates a youth farmers academy that fosters 100 entrepreneurs every year. From this year, it is planned to provide benefits such as providing additional points in fund screening, etc., by having a dedicated post-management staff to manage whether young farmers have actually returned to farming and settled well.
- The direction of the Nonghyup Financial Holdings this year?
- Like the distribution sector, it will emphasize digital transformation. The Nonghyup Bank is not behind other financial institutions in terms of scale, but it is detecting a threat from the digital perspective. The number of customers visiting branch offices was noticeably reduced, and fintech and big tech companies entered the financial industry with advanced digital technology. If the Nonghyup is settled in the past business behavior of the’national bank’, it is believed that it will be neglected by young and fast digital customers.
Reporter Seongbin Lim [email protected]