Co-operative Models in the World – Lessons of the Models of Denmark and the Republic of Korea

Neszmélyi, György Iván

Keywords: agricultural economics, co-operatives, Denmark, Republic of Korea, land reform, Q13, Q15, N55

The goal of this study is to give an insight to and make a comparison between the agricultural co-operative systems of Denmark, - a success story of the family based farming even in the frames of the EU, - and of the Republic of Korea (South Korea), one of the Asian newly industrialized economies. The author tried to answer the question: how, and by which solutions the farmers can work successfully in these two countries which are quite different from each other in terms of their historical background and economic environment. In spite of this, there are visible similarities between the Danish and South Korean co-operative models, like:
– In both countries farmers receive huge amounts of budgetary subsidies, in lack of which they could not maintain their competitiveness or even economic viability. However, these subsidies are much bigger in South Korea.
– The co-operatives are common properties of the farmer sin both countries which operate on a non-profit basis towards their member (co-owner) farmers.
– Farmers in both countries work individually, separately on their own (or rented) lands, while co-operatives play important or in some cases exclusive role in other stages of the supply chain (processing of products, marketing, logistic tasks, supplying production inputs, etc.)
Besides similarities there are several major differences as follows:
– In Denmark the development of the co-operation model has gone through in a long run by a natural, „organic” way since the last third of the 19th century. The process was not hindered by political events or military conflicts in a noticeable extent. In Korea the present farm structure (miniature farms) and the existing co-operative system was developed from the late 1940’s on the basis of a politically motivated land reform and other legal decisions.
– The majority of the Danish co-operatives are commodity- or product-specialized, while the majority of South Korean co-operatives work on territorial basis with a general agricultural profile and only a minor part of them are commodity based.
– In Denmark the agricultural production, especially the animal products used to be the locomotive of the Danish export (and still it is an important export sector), while in South Korea the main role of the agriculture is the domestic food supply and its main sector is the rice-dominated plant production. –
From the two countries, the Korean farmers are more considerably more vulnerable, as their farmlands are much smaller than the same of Danish farmers, they receive even proportionally higher budgetary subsidies to their production.
The author believes that the examination of this topic may serve with adaptable experiences and useful ideas for the Hungarian specialists and policy makers who may influence the future of the Hungarian family based farms and the co-operative type collaboration for long run.