Co-operative and Civil Society - the Korean Experience (1997)

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)
Dec., 1997
(Source: ICA Review, Vol.90 No.4, 1997, pp 92-98)

Co-operative and Civil Society - the Korean Experience
by Churll-Hee Won*

In 1995, at its Centennial Congress, the ICA adopted the 7th principle
of concern or community. At the same time, new ethical values
were added, which resonate with the important terms of
social responsibility and caring for others. 

With these new statements, our co-operative movement came to be
redirected essentially to look outwards to successfully complete our
inward-looking endeavours. Aware of the magnitude and influence of the
co-operative sector in present society, it is a very meaningful turn indeed,
not only for all of our co-operatives in the world, but also for the greater
overall societies.

Particularly in Asia, which is characterised by rapid economic and
population growth, and where more than 545 million individuals choose
co-operative enterprise, the work of co-operatives extends over a wide
range of economic, social and  cultural domains as manifested by their
various industries and livelihoods.

Post Industrial Society and Co-ops
In this contemporary society which has already passed through the era
of industrialisation, we witness the accumulation of significant dilemmas
which restrain further progress; environmental pollution, socio-economic
disparities, political struggles and food insecurity. These challenges
necessitate the mobilisation of appropriate responsive strategies, both
locally and globally, in this post-industrial era.

This is the fundamental task for humans today. It requires the full
participation and integration of all parts of society - governments,
NGOs and voluntary civil movements - horizontally and vertically.
It also requires co-operation between divergent vested interests:
landowners and renters, producers and consumers, authorities and
taxpayers; and between the North and South, developed and developing
countries, and exporters and importers. Certainly, co-operative alone
cannot solve these interwoven problems, but it can take the leading role
in mediating the dialogue and action necessary for solutions.

I am deeply gratified to introduce the experiences of Korean agricultural
co-operatives, in light of this new perspective.

Agricultural Co-ops in Korea
As stated in the Agricultural Co-operative Law, the objective of Korean
agricultural co-operatives is to increase agricultural productivity and to
enhance the socio-economic status of member farmers so as to achieve
balanced national development. However, in the early 1960s, the realities
of agrarian rural life were very poor. Development efforts had to be very
efficiently organized with limited resources. In order to optimize these
resources, therefore, Korea chose a multi-purpose co-operative system
because the scope of the farmers' needs was so diverse and because they
were living on small-scale farms, about 1.3 hectares on average. At
the same time, the umbrella Organization, the National Agricultural
Co-operative Federation(NACF) was launched and merged with the
Agricultural Bank, which could provide financial support for the
various programs.

We now have two million member farmers in the 1,386 agricultural
co-operatives in Korea, comprising almost all of the Korean farm
households. In serving member farmers and in acting as the agricultural
and rural development agency for the country, the agricultural
co-operatives provide diversified business services and activities.
They include co-operative marketing, the provision of farm inputs and
consumer goods, credit and banking, warehousing, transportation,
extension, and other social and cultural activities.

The NACF now operates more than 500 bank branches, over 600
business centres for marketing and processing, and various subsidiary
enterprises, while managing institutions such as training institutes, an
agricultural co-operative college and the Farmers Newspaper. In banking
alone, the NACF network holds the largest amount of deposit in Korea,
totalling 84 billion US dollars including mutual credit for member
co-operatives. In marketing, more than 40% of the total farm production
volume is handled by the agricultural co-operatives.

As we have experienced, such a wide scope of commercial business and
cultural activities requires frequent contacts, networking and collaboration
with the outside  government authorities, the industrial sector and the civic
groups. In the same way, the Federation's business management must be
highly competitive with that of the private enterprises in order to support
the member co-operatives effectively.

Surely, our achievement over the past 36 years has been remarkable and
has now become a model for other developing agricultural co-operative
movements around the world. However, as with the international
co-operative movement today, we must meet the challenges facing our
member farmers internally and our overall society to make future progress.

Korea is one of the very few countries in which industrial transformation
took place in a single generation with a high annual average economic
growth rate of 8.5%. During the period of 1965 to 1996, the agricultural
share of GDP fell from 38% to 6.3%, and the farm population decreased
drastically from 52% to about 12%. Obviously, as industrial development
unfolded, however, the agricultural sector and rural society lagged behind
although it provided cheap food, diligent labour and property for the
industry. Such rapid industrialisation and urbanisation has inevitably
enlarged the disparities between urban and rural societies.

Under such circumstances, Korean agricultural co-operatives had to take
on the responsibility for narrowing these gaps. Policy recommendations
and public relation activities are also important to promote the vital roles
of agriculture and family farms for the balanced and sustainable
development of our nation. This is the background against what we Korean
co-operatives must try to relate to our wider society. Accordingly, the
agricultural co-operative movement in Korea can not remain only within
the sectional sphere of member farmers, but should also dedicate itself to
the communities closely tied with co-operatives. This mandate toward
social concerns takes on even more importance in co-operative activities,
considering that even private enterprises have recently been stressing the
need for social responsibility in their communities.

Along this line, the NACF and member co-operatives have implemented a
number of programs, aiming to attain mutual benefits for both rural and
urban, producer and consumer, agriculture and industry - and for the whole

Ladies and gentlemen, please allow me to elaborate upon some of our
activities in this regard.

Co-op Activities within Society Nationwide Housewife Network
With strong emphasis on sustained development, and as a means for
reaching that goal, co-operatives have organized self-help groups among
member farmers, including Farming Groups, Women's Clubs and Rural
Youth Clubs, at the village level. This practice of organising people within
the co-operative house is worth extending for it creates the basis for the
co-operative's outward-looking. Among others, the women's associations
in townships and cities across the nation are at the frontline of this effort.
The women's associations fostered by the co-operatives are based on two
parts: the rural producers and the urban consumers.

One is the Rural Housewives' Association (RHA), which has 1,211
primary groups, with 31 thousand individual members. This association
basically aims to encourage women's participation in the co-operative
movement. Often, members volunteer to support the co-operative
business and community programs, including environmental concerns,
while the Association offers its members social education activities.
The other is the Alumnae Association of Agricultural Co-operative
Housewives' School (AAACHS), in which 644 primary groups offer 180
thousand members various social and cultural activities. Invited lecturers
have provided expert information on such essential topics as consumer
information, environmental conservation, child education and family
health. In the association, many members become actively involved in
many social services and the environmental movement in urban areas, and
often participate in the NACF's public efforts to promote the situation of
domestic farmers.

These two Associations, as pillars of women's groups in both urban and
rural communities, have maintained a sisterhood relationship, seeking
mutual benefits by mediating direct delivery of agricultural products and
by participating in community concerns through joint social programs. As
a result, these groups have forged a strong nexus for interaction between
Korea's rural and urban societies.

Hospice Voluntary Corps
In activating the women's clubs, 220 voluntary leaders in the metropolitan
Seoul area organized themselves into the NACF Hospice Voluntary Corps
on June 27, 1997 with the aim of caring for the disabled and other
disadvantaged groups. Last May, the NACF commissioned a special
hospice training institution to educate the hospice volunteers. After
completing supplementary training, the volunteers of the Corps are
expected to provide their services in hospitals and at homes in
collaboration with the Korea Hospice Association. The hospice service
will soon be enlarged to the national level, with a particular focus on
patients in rural communities.

To provide assistance for funeral services in labour-short rural areas, the
NACF operates funeral ceremony centres in 13 provinces, and has
provided 135 funeral buses to member co-operatives. Each member
co-operative has organized a funeral activity group that consists of
youth club members, elder club members, and co-operative staff, to
conduct funeral ceremonies for families in rural areas.

The Urban Industrial Sector
We have become accustomed to living in such a way as to serve our
own interests, often to the point of neglecting or ignoring the difficulties
of others. But in most cases,  opposing sides can be supplementary or
complementary because they share common environmental space and
energy resources. Inspired by this, we have launched campaigns,
proclaiming that agriculture and industry are rooted in the same origin so
as to facilitate co-operation for mutual development and prosperity. 

In 1995, the NACF signed co-operative agreements with leading
conglomerates in Korea, such as Samsung, Hyundai, Daewoo, and other
enterprises, seeking collaborative services for the benefit of both urban
and rural communities.

Allow me to share several cases of success. The NACF and the A-San
Social Welfare Foundation, a subsidiary of the Hyundai Group, co-signed
the Agreement for the Rural Medical Service Program in January 1996.
This welfare program has served to aid those farmers who suffer from
accidental and chronic diseases in rural areas. 

Under the agreement, the A-San Foundation designated its 10 General
Hospitals to operate Farmer's Medical Centres with appointed doctors
specialising in treating Farmer's Syndrome. Here, the NACF has taken
part in supporting this program by shouldering the medical bills and
research expenses necessary for uncovering medical solutions for this

In the program, fully-equipped mobile medical vans regularly transport the
doctors to designated program areas. Economically-disabled people
including the aged and orphaned youth may see the doctors without charge
as part of this social welfare program.

In return, those farmers near the hospitals are encouraged to produce safe
and quality farm products to be supplied to the hospitals at reasonable

In another example of a formal co-operative agreement, the NACF and the
Korea Federation of Small Business signed, in October 1995 an agreement
on mutual co-operation for the development of both agriculture and small
sized enterprises in Korea.

To support small enterprises, agricultural co-operatives have decided to
prominently display their commodities in special corners at co-operative
sales outlets to promote the sale of the products produced by small
enterprises. In return, member enterprises nationwide have purchased
NACF farm commodity-sales coupons which help farmers by promoting
co-operatives' sales.

Another way in which the two parties have helped each other, is with
small business procuring raw agricultural materials from co-operatives
while member farmers purchase farm inputs and consumer goods from
small industrial firms. We believe that such co-operation will further
improve the welfare of both farmers and urban labourers at small

These successful co-operative endeavours have led to a series of
collaborative agreements with such social organisations as the LIONS
Club, the JC, the YMCA, the YWCA, and the ROTARY Club.

Legal-aid Service to Farmers
A group of Lawyers provides legal aid to defend the interests and rights
of farmers who have poor knowledge of professional fields such as
legislation and taxation. In July 1995, the NACF made an Agreement
on Legal Aid for farmers with the Korea Legal Aid Corporation to
conduct this activity. To raise funds for this aid program in 1996,
the NACF developed a deposit item named Love to Farmers, designed
to automatically commit over 0.4 percent of volunteer customers' bank
account interest to legal aid projects, while the NACF itself contributes
to the fund two percent of the equivalent interest paid to depositors.
Since July 1995, the NACF has raised 1.6 million US dollars for the trust
fund which has been used for over 9,000 legal aid cases. The NACF has
a target of raising 11 million US dollars for this fund by the year 2000.

Environmental Activities - Soil Revitalization Campaign
Soil is the most fundamental basis of all living beings. Industrial and
farming activity have contaminated the soil during the development
decades while people have lost sight of the importance of soil's micro
organic world. Since farmers manage most of the land, their role is vital
to the soil environment.

The NACF has boosted the Soil Revitalization Campaign since 1995,
placing great emphasis on its activity as the basis for national
environmental conservation and the mainstay for sustainable agriculture.

In co-operation with other social environmental programs, this campaign
aims to reduce farmers' application of pesticides and chemical fertilisers
to two-thirds of the present level by the year 2004. In helping the project
to materialise, the NACF provided one thousand soil-test kits to
Co-operative Farming Groups while setting up 41 NACF Soil-test
Centres, and 42 organic fertiliser manufacturing complexes across the
country. Ultimately, our wishes are to produce safe products in fertile soil.

For this campaign's ultimate success, the inclusion and education of the
urban citizens and opinion leaders is vital. Besides producing a series of
media materials, the NACF opened a public educational institution in June
1996, named the Environmental Agriculture Education Institute. The establishment 
of this institute brought about the active participation of
many people including local government officials, media representatives
and even their families, and the number of people who have utilised this
program has reached about 20 thousand as of today. 

Co-operation with Seoul Citizens
Environment-friendly farming will be beneficial for farmers themselves
as well as urban citizens. On May 26, 1996, the NACF and the Seoul City
government signed an agreement to support the environmental farms in the
area around the Paldang Dam located in the upper Han River which serves
as the drinking water source for Seoul.

To reward participating farmers, agricultural co-operatives provide
concessional loans to farmers for which the Seoul Municipal Government
compensates the difference between commercial and concessional interest
rates and supports the marketing of the farm produce.

Organic farming in this area is expected to not only supply consumers
with healthier foods but also to protect the delicate environment near and
around important drinking water sources. This agreement which
demonstrates urban and rural people caring for each other, is a good model
of co-operation between local government authorities and agricultural

Mobilising Environment Funds
The image of the agricultural co-operative in Korea has been favourable
because of its senses of morality in business and a highly responsible
attitude toward society. In mid-1994, the NACF developed a new deposit
account named Evergreen Bankbook from which a portion of deposit
interest makes up the trust fund for the national environmental program.
The depositors voluntarily commit one percent of interest received to the
fund and the NACF donates two percent of the equivalent interest of
depositors. We were surprised at the enthusiasm generated by this
voluntary program. We now have one million participating customers and
an environmental protection fund of approximately 10 million US dollars.

Through these experiences, we learn that co-operatives can initiate civil
movement in the business world and that co-operation with the broader,
whole society can provide co-operatives with firm support in the country,
which will eventually lead to the benefit of co-operative members. The
co-operative sector in Korea now has 14 million members, which is about
30 percent of the total population.

We co-operatives, in almost every kind of industry, regardless of
demographics, and at all social levels, have built-up mosaic institutions
together with a versatile variety of racial, religious, political and cultural
groups. With such enormous potential and solid experience, it is time now
for co-operatives to take the leading role in preparing for the prolonged and
continuing progress of humankind in the new millenium.

In this sense, it is very proper and supportable for the ICA, at its 75th
International Co-operative Day of last July, to call for the full
participation of co-operative society in realising food security to eradicate
poverty and malnutrition in the world.

I firmly believe that co-operativism will fill the vacuum that remains after
the long confrontation between capitalist and socialistic ideologies. That is
why we, the co-operative leaders of the world, are advocating open
co-operation with the rest of society. I hope that the experiences of the
Korean co-operative movement, can help serve as a reference for our
combined international efforts to make the affluent Co-operative Society
in the next century. 

* Mr. Won is Chairman and President of the National Agricultural
Co-operative Federation (NACF)