How to revive the Korean ginseng industry

How to revive the Korean ginseng industry

By Shin Wang-su, President of Korea Ginseng Research and a director of the Korea Ginseng Federation

Oct 07,2013

Korea’s ginseng industry is in a crisis. The farmland is diminishing, farmers are getting old and the costs of material and labor are going up, jeopardizing the production of ginseng. Repeated cultivation of ginseng drastically reduced its yield, and ginseng farmers need to find fresh land where ginseng was never planted before. Therefore, securing arable lands is the most pressing task. However, the average leasing price for 3.3 square meters (35.5 square feet) of land is about 3,000 won ($2.80), so producing six-year-old ginseng from a 330,000-square-meter field cost about 10.8 billion won. The leasing price is translated into the production cost, lowering price competitiveness of Korean ginseng.In order to resolve the challenges, the Ministry of Agriculture and Forestry, the Korea Rural Community Corporation and the Korea Forest Service may want to consider developing parts of forest lands, which make up 63 percent of Korea’s territory, in each region as production bases and lease the plots to farmers. The forest assets are only perceived in terms of environmental issues, but we can change the perspective and utilize them as industrial bases.
Secondly, wood-cultivated ginseng can be planted in natural settings, and the environmentally friendly, pollution-free, organic white and red ginseng products should be exported to the world market. The wood-cultivated ginseng is controlled as a forest product, according to the Forestry and Mountain Villages Development Promotion Act, but it should be transferred to the Ginseng Industry Act to be treated as a ginseng variety.
Only then, cultivation and breeding are managed transparently, and standards for products using wood-cultivated ginseng can be prepared in the Food Safety Act and the Health and Functional Foods Act, which are controlled by the Ministry of Health and Welfare and the Ministry of Food and Drug Safety. When related products are manufactured, marketed and consumed, farmers, processing companies and consumers will have greater choices, and the market size would grow as well.
The size of the worldwide herb market is $200 billion, and the global ginseng market is $20 billion. However, Korea’s ginseng export was merely $150 million in 2012. Switzerland does not produce a single root of ginseng, but the sales revenue of Pharmaton’s ginseng product Ginsana was $300 million. When the total ginseng export of Korea is half of a single ginseng product by a global pharmaceutical company, can we really say Korea is the origin of ginseng? As a strategy to boost the industry, we can convert some of the forest lands, which make up 63 percent of Korea’s land, as foundation for ginseng farming.
Goryeo Ginseng was the first Korean brand that earned global recognition. We can save Korean ginseng and enhance international competitiveness of agricultural industries by developing the woodland.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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