Low prices leave farmers drowning in onions and debt

Posted on : 2014-07-21 11:57 KST Modified on : 2019-10-19 20:29 KST
A bag of onions costs around 7,500 won to produce, but sells for only around half of that
 South Jeolla Province
South Jeolla Province

By Jin Myeong-seon, staff reporter in Muan

On July 16, bags of onions were stacked up in various places on the road from Hyungkyung township to Haeje township in South Jeolla Province’s Muan County. For the past month, about 1,400 bags of onions have been stacked up on the shoulder of the road next to the fields at Ipseok village.

When Na Tae-ju, 65, started cultivating onions last year, he took out a loan of 30 million won (US$29,140). Today, he lowers his head in shame, unsure of how he is going to repay the money that he spent on seeds, fertilizer, farming equipment, and workers’ wages.

In 2013, the price of a bag of onions was 10,000 won (US$9.71). This year, the price continues to plummet, even with the Ministry of Agriculture, Food, and Rural Affairs pulling out all the stops, including buying up product and not releasing it on the market, known as hoarding. “Some time ago, a broker offered me 4,200 won per bag, and I just couldn’t give it to him. There are some brokers who will only pay 3,000 won,” Na said.

Na Gwang-woon, 59, is the head of Ipseok Village, where 25 families are growing onions. “Producing 200 bags of onions costs exactly 1.5 million won. Just to break even, they have to make 7,500 won per bag. They’re all drowning in debt,” he said.

The purchase price offered by the government, which is taking steps to buy onions for the first time since 2003, is 6,500 won, but this doesn’t even meet the minimum production cost that the farmers are talking about. To sell onions to the government for hoarding, the farmers also have to pay to have them shipped all the way to Gwangju.

After the onion harvest, the fields of Muan ought to be full of soybeans, summer cabbage, and sesame, but most fields were bare or overgrown with weeds.

“In order to grow another crop, we have to invest more money. When farming just increases your debt, you stop farming,” said Lee Eun-ja, 50. Quite a few elderly people aren’t able to pay 60,000 won rental fee for equipment they used to cultivate the onions.

Generally, the onions that are harvested in June are put in a low-temperature warehouse and sold again in December, but the farmers aren’t even able to pay the storage cost of 2,000 won per bag.

The situation is not any different for the farmers who growing other kinds of vegetables, including peppers, garlic, radish, and cabbage. The price of such items has dropped 30-70% from last year. This is also why about 10,000 pepper, garlic, and onion farmers held a protest in Yeouido, Seoul, on July 10.

The farmers say that the falling prices are the result of opening up the market. One couple that took out a loan of 42 million won and planted onions on around 33,000m2 of land barely made 11 million won. “Farmers have trouble calculating things, but the government does, too. The government decided to import onions since the price was a little high last year, and it imported too much,” the husband said.

In fact, the Ministry attributes the falling prices to the fact that the 67,000 ton supply of onions has not run out. In 2013, 65,000 tons of onions were imported.

There isn’t much difference between the 48,000 ton stock of garlic and the 44,000 tons that were imported. The surplus stock matches the amount of vegetables that were imported.

In 2013, 91.4% of imported onions and all imported garlic came from China. This is why farmers are not very enthusiastic about the pledge made by Chinese President Xi Jinping during his visit to South Korea to import more Korean kimchi.

“Korea exports around 12,000 tons of kimchi to China and imports 130,000 to 150,000 tons from China. It is inconceivable that Korean farmers would benefit from a free trade agreement between the two countries,” said Kang Jeong-jun, chair of the Korean Garlic Industry Alliance.

Farmers feel increasingly defeated, sensing that they are being excluded from the benefits of market liberalization. “The price of onions now is similar to what it was 12 years ago when I first started farming,” complained Park Gwang-sun, 40, from Muan, a father of three.

“When you compare the wages of workers, the daily wage back then was 30,000 won, and today it is 140,000 won. It makes me think that the government is artificially holding down the price of produce to keep inflation down,” Park said.

Statistics from the Ministry show that between 2007 and 2012, the average annual household income of urban workers increased by 10 million won from 43.874 million to 53.908 million won, while the income of farmers actually decreased from 31.967 million won to 31.301 million won.

 

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