The Graduate School Seoul National University
Korean agriculture has faced many problems such as increasing uncertainties of farm income, widened income disparity between urban workers and farmers due to globalization, decreasing population, and aging phenomenon in rural area. Thus, Korean government has recently introduced a new agricultural policy, ‘6th industrialization of agriculture’ whose final goal is to
overcome these problems, to revitalize rural economy, and to improve a quality of life among rural community members.
6th industrialization of agriculture firstly began from Japan in the mid of the 1990s. It is a concept of converging primary, secondary, and tertiary industry in agricultural field. However, in contrast to the general definition of the three-sector theory, this concept requires the involvement of rural community members and use of local resources. In this manner, this strategy can help farmers to diversify their farm income resources and create added value. Although this policy has been implemented for a short period of time compared to other agricultural policies in Korea, its effects are remarkable, especially with regard to the creation of job opportunities for the elderly and women farmers.
In addition, the demand for 6th industrialization of agriculture has significantly grown because of multifunctionality of agriculture and increased leisure time.
In spite of its importance, there is little quantitative research on the same. Consequently, most previous studies rely on a qualitative data and are limited to some specific categories and regions. Therefore, this study tries to analyze factors that affect decision making of individual farm households when they choose types of 6th industrialization activities in agriculture using a statistical method. Also, this study investigates correlations among the types and the determinants of farm income considering characteristics of eight provinces in Korea as well as those of individual farm households.
To analyze the determinants of choices among types of 6th industrialization activities in agriculture, the first part of this study employs multivariate probit model, which is a useful tool if there are many alternatives and one can choose them simultaneously. For the purpose, four dependent variables are set as types of 6th industrialization of agriculture; direct marketing, processing agricultural products, agritourism, and farm restaurant.
The empirical results show that people who return to rural community and the number of visitors at local festivals have a positive effect on a choice for all the types. However, sex and cultivated plants affect each type in different ways. Also, the degree of farm income diversification, years of practicing 6th industrialization of agriculture, the regional proportion of 6th industrialization of agriculture, and information accessability generally contribute farm households to choose direct marketing and farm restaurant yet, for processing agricultural products and agritourism, those factors affect oppositely. The correlations of each type reveal that processing agricultural products has a negative correlation with all of the other types. Meanwhile, it is estimated that if the two types, for instance, agritourism and farm restaurant, are expected to be operated together, they are not only positively related but also have a larger correlation coefficient.
The second part of this study is to determine which farm household characteristics and regional conditions affect farm income using multilevel/hierarchical linear model. The dependent
variable is farm income, which is defined as the sum of income from on-farm and 6th industrialization of agriculture activities.
The result shows that men, younger farmers, cultivating oil-seeds, mushroom and medicinal crops, and stockbreeding contribute to obtain higher farm income. In addition, it is estimated that the integration types of 6th industrialization activities in agriculture lower farm income if a farm household incorporates only one type or partial integration compared to the integration incorporating all types of activities together. Although farmers operate a primary, secondary, and tertiary integration, it lowers their income if the integration has a relatively weak connection. Years of practicing 6th industrialization of agriculture, knowledge of 6th industrialization of agriculture, and producers’
union participation decision are significant determinants and have a positive relationship with farm income. The regional characteristics; the rate of organic farms, cultivated acreage per farm household, a city that has population more than 500,000, and the proportion of information accessibility also contribute to obtain higher farm income. However, farm income diversification and the regional proportion of 6th industrialization of agriculture do not have a significant relationship with farm income and it can be interpreted that the effects of each type for farm income are different and needed to be estimated by setting models separately.
In sum, for invigoration and burgeon of 6th industrialization of agriculture, the government should provide a differentiated
policy for farmers considering not only the types of 6th industrialization of agriculture but also regional characteristics.
Furthermore, producers’ union participation decision is also an important factor for choosing types and increasing income of 6th industrialization of agriculture. Thus, agricultural industrialization can be achieved efficiently by appropriate and active governmental supports for producers’ union.