Mounting Losses Threaten Regional Agricultural Stability

Agricultural cooperatives in Gyeongnam province are grappling with a severe financial downturn,raising concerns about the long-term stability of the regionS agricultural sector. Recent data reveals a concerning trend: a notable number of cooperatives are operating at a loss, burdened by escalating bad loans and questionable lending practices. This situation not only jeopardizes the financial health of thes institutions but also directly impacts the livelihoods of their members.

Deficit Ratios Exceed National Averages

Last year,a concerning 14 out of 137 agricultural cooperatives in Gyeongnam reported deficits. This represents the highest proportion of loss-making cooperatives nationwide,signaling a notably acute crisis in the region. The implications of these deficits are far-reaching, possibly affecting dividend payouts to members and straining the cooperatives’ ability to invest in essential business operations.

Case Studies: Saego Castle and Goseong Nonghyup

The struggles of individual cooperatives highlight the severity of the problem. Saego Castle Agricultural Cooperative, with its 2,000 members, suffered a net loss of ₩11.2 billion last year, marking the second consecutive year of deficits exceeding ₩10 billion. alarmingly,non-performing loans constitute 30% of its total loan portfolio of ₩2.1 billion. This figure is significantly higher than the average of around 10% seen in savings banks, indicating a serious threat to the cooperative’s asset soundness.

Similarly,Goseong Nonghyup,after 50 years of operation,reported a deficit of ₩3.8 billion last year, largely attributed to bad loans. An audit revealed 51 instances of negligent loan reviews, totaling ₩49.1 billion, forcing the cooperative to allocate ample funds to cover these losses.

impact on Members and the Broader Economy

The financial woes of these cooperatives inevitably effect their members. As Lim Mi-ae, a National assembly Member of the Democratic party pointed out, the consequences include reduced dividends and the potential depletion of business reserves to cover delinquent interest. This financial strain on individual farmers and agricultural workers can have a ripple effect throughout the regional economy.

The frist time dividend will be reduced. Second, there is a situation where the business reserve must be shaken and the delinquent interest is required.

Lim Mi-ae, National Assembly Member of the Democratic Party

National Agricultural Cooperative Federation Responds

In response to the crisis, the Gyeongnam Headquarters of the National Agricultural Cooperative Federation has initiated self-help measures. These measures involve close monitoring of agricultural cooperatives and prioritizing projects based on profitability. As stated by an official from the Gyeongnam Headquarters, Every quarter, the agricultural cooperatives are passed, so if the profits are sluggish, or in this case, the projects that have been planned for the originally planned the priority …

Every quarter, the agricultural cooperatives are passed, so if the profits are sluggish, or in this case, the projects that have been planned for the originally planned the priority …

Official, Gyeongnam Headquarters, National Agricultural Cooperative Federation

Furthermore, the National agricultural Cooperative Federation Headquarters now requires approval for loans exceeding ₩10 billion, a measure implemented this year. However, some critics argue that these actions are akin to losing cows and fixing the barn, suggesting that the measures are reactive rather than preventative.

Looking Ahead: addressing the Root Causes

Addressing the underlying causes of these financial difficulties is crucial for the long-term health of Gyeongnam’s agricultural cooperatives. This includes strengthening loan screening processes, improving risk management practices, and providing support to cooperatives struggling with debt. Failure to address these issues could have severe consequences for the region’s agricultural sector and the livelihoods of its members.