Nonghyup Decides on a 4% Price Increase This Year… Local Governments Ignore Unit Price

Hikes, Creating Discord; Companies Desperate to Meet Supply Volumes, Resolving Stagnation in Product Research and Development Is a Key Challenge


(Korea Agricultural News = Reporter Choi Jeong-min) Concerns are mounting within the potting soil industry as it is expected to face difficulties again this year, following last year.

Potting soil is a type of soil used in nurseries to cultivate seedlings; it is soft, has good drainage and water retention, and is rich in various nutrients.

Since the healthy cultivation of seedlings significantly impacts not only crop yields but also crop quality, potting soil has established itself as one of the essential agricultural materials.

While material and labor costs are rising, potting soil prices remain stagnant. It

appears that the industry, which relies on imports for over 90% of its raw materials last year, suffered a major blow due to the impact of COVID-19.

Not only is it difficult to import raw materials, but rising exchange rates have also caused the price of coco peat to skyrocket within just a few months; furthermore, due to a shortage of supply, prices are essentially whatever the seller demands.

Consequently, the potting soil industry strongly advocated for price increases, asserting that they were inevitable. However, due to the structure where potting soil is delivered to local governments through contracts with the National Agricultural Cooperative Federation (NACF), raising prices proved difficult. The

NACF has historically maintained or lowered the prices of the majority of agricultural supplies, including fertilizers, pesticides, and potting soil, citing the need to stabilize farm income. It is reported that they maintained the position this year that raising potting soil prices would be difficult, arguing that the expenditure on these materials could place a financial burden on farmers.

Amid reports of minor and major friction regarding pricing during the recent NACF contract process, this year's potting soil prices were ultimately finalized at a 4% increase.

Regarding this, an industry official expressed regret over the current situation, stating, "Although it is not the increase we initially aimed for, we are satisfied that there was at least a slight raise." However, the official added, "Our goal is to produce and provide high-quality potting soil to cultivate premium produce that reaches the public's dinner tables. It is

deeply disappointing that the environment necessary to produce such high-quality soil is not being established."

Urgent Need for Structural Improvement in the Potting Soil Market

Opinions are emerging that the difficulties faced by the potting soil industry are not merely price-related, but require the resolution of structural issues within the market.

In addition to problems with timing contracts with the National Agricultural Cooperative Federation (NACF), it is frequently observed that companies are forced to supply at low prices against their will, as some local governments do not recognize the NACF contract prices that serve as the standard.

In particular, it has been revealed that despite a 4% price increase being officially announced this year, some provinces are setting prices that do not reflect the increase, exhibiting a brazen administrative attitude of essentially telling only companies capable of supplying to do so.

An official from the potting soil industry, identified as "A," stated, "This year's increase was only 4%, not the extent the industry had desired. However, the provinces did not recognize even this, and some proposed the same unit price as last year." He added,

"Potting soil companies handle not only potting soil but also various agricultural materials such as fertilizers and pesticides. We are in a situation where we have no choice but to supply for fear of facing disadvantages elsewhere if we do not meet the proposed price." This

hinders the development of the OEM potting soil market... Conditions for product development must be established.

Currently, further development of potting soil products is stalled because market prices and distribution have not stabilized. A bigger problem is that companies are forced to use OEM potting soil to meet price and volume demands.

An official from the potting soil industry, identified as "B," expressed regret, stating, "OEM potting soil is practically nonsensical. To obtain a manufacturing permit, products must be manufactured at the exact location where the product was registered.

However, OEM feed factories are operated separately, with only the packaging differing." He added, "Potting soil is a crucial component that marks the beginning of the year's farming.

If we cannot approach the issue properly starting from potting soil, we cannot hope for a bountiful harvest, let alone high-quality farming.

We need to create an environment where high-quality potting soil can be produced and supplied to farmers, but under the current market conditions, we are merely scrambling to supply existing volumes rather than focusing on product development."