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Time to restart North-South agricultural collaboration in Kaesong

Kim Kwan Ho, Senior Researcher for the Korea Rural Community Corporation (KRC)  |  2017-01-03 16:25
The Kaesong Industrial Region (KIR) was closed down in the wake of worsening ties, continued North Korean nuclear tests, and international sanctions targeting the North. [Kaesong was formerly host to a collaborative economic development complex with the South.] Although South Korea recently pulled out of the KIR, the region should be reopened as soon as possible to serve as a channel linking the North and South. If the inter-Korean relationship is repaired and the region is reopened, agricultural cooperation should be the starting base for activity at the site. 

The area to the rear of the Kaesong Industrial Region is primely situated to provide meaningful interaction that could expose 20,000 North Korean locals and families to South Korean market activity. Since the region formerly contained the Songdori Collaborative Agricultural Facility, the likelihood is high that the residents and authorities alike will be receptive to renewed cooperation. 

We believe that it would be advantageous to use the rear region of Kaesong as the centerpiece for the test run for North-South agricultural cooperation. The cooperative project will create a synergy by simultaneously helping to provide for the basic food requirements of the local workers and increasing the field efficiency of their agricultural practices. 

The difference between past agricultural collaboration efforts and what we must do for the future is stark. Unlike the past, we need to move away from simple financial support and towards meaningful North-South exchanges.  

The statistical chart below shows North-South imports and exports from 1995-2014. The composition of said trade can be divided into 10 major categories. These categories include agricultural and marine products, mineral products, chemical products, plastics and leather, textiles, everyday goods, steel and metal, equipment and machinery, and electrical equipment. Around the year 2000, we can see that agricultural and marine products begin to occupy over 50% of all North-South trade. After 2010, North-South trade almost collapses entirely. 

In the road ahead, the most desirable outcome will be to once again make agricultural products the centerpiece of North Korea - South Korea - China trade by engaging in agricultural development collaboration. South Korea currently imports brown rice, non glutinous rice, cauliflower, kimchi, garlic, carrot, and cucumber from China. And North Korea imports corn, rice, flour, and cereals from China.   

From North Korea, the South imports shiitake mushrooms, sesame seeds, perilla seeds, soybeans, and garlic. North Korean imports rice, flour, garlic, and potatoes from the South. By promoting this kind of trade, the North Korean farming units will get a major boost. The role of the government assisted entities will be to help provide the hardware and software necessary for the agricultural development process. 

First, when it comes to the hardware, the public sector will need to provide industrial scale infrastructure so that the civic organizations (NGOs) can can work to resolve the problems related to agricultural cooperation on the ground level. In other words, the sorts of problems that normally plague such projects - like fund shortages and the difficulty of growing a sales network - can be ameliorated by the public contribution. The rubber meets the road through the NGOs, however, which will be responsible for really connecting the North and South on a face to face basis. 

Next, when it comes to the software, it will be necessary to establish a training center to raise the next generation of North Korean agricultural experts with knowledge on quality control, agricultural technologies, and market strategies. It will be important to raise managers in the agricultural sector with skills and knowledge related to production techniques, product quality improvement, facilities installation, forestry, and long-term land management. The livestock sector can likewise be improved through training and education related to veterinary inspection, health and disease management, and feed control. 

It is possible to divide future agricultural development and trade projects into three large categories: direct investment and collaboration, contract cultivation of agricultural products, and processing imported agricultural products. 

The first category is direct investment and collaboration. Under such a system, South Korean companies would provide capital and technology. In exchange, North Korea would provide land and labor. It would need to be a joint investment. A company would be established in North Korea and the profits generated from the product sales would be distributed according to the investment shares. 

The second category relates to the contract cultivation of agricultural products. In this method of cooperation, South Korean companies would provide cash or in-kind compensation as capital for the North Korean ventures. The North would then cultivate or mill products that will be released to the Southern entities for sales and distribution.  

The last category describes processing imported agricultural products. Under this method, South Korean companies provide all or some of the necessary raw materials to North Korean entities, which are consigned to complete elements of the production process. These goods are then re-imported back to South Korea for completion and/or sale.  

The system set up to manage these projects will need to have posts filled at top levels by representatives of the North and South. 

The project managers will oversee research, evaluate project progress, manage the North-South communication channels, and direct the resulting trade between North and South. The undersecretaries will work on detailed provisions such as personnel, equipment,  training, and monitoring.  

Additionally, South Koreas Ministry of Unification, Ministry of Agriculture, Food and Rural Affairs, and other related public departments will perform functions in the collaborative entities. North Korean departments related to local, land management, agriculture, and chemicals will also be involved in the collaborations.  

As momentum is created through these initial North-South agricultural development collaboration projects, it will be necessary to conduct research and create budget designs for operations that match the local conditions. The most important step at the moment is to get the ball rolling by starting with North Koreas most pressing needs in the agricultural sector. 

*Views expressed in Guest Columns do not necessarily reflect those of Daily NK
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