[Editorial] Urgent Reform Needed at Nonghyup

The National Agricultural Cooperative Federation, or Nonghyup, held an emergency meeting of its management committee yesterday on reform after President Lee Myung-bak scolded the state-run company’s management for going against the interests of farmers under its founding philosophy. Nobody, however, believes that a single comment by the president will be a cure-all for Nonghyup’s mounting problems. The federation has deep-rooted and structural problems.

After democracy spread across the nation, Nonghyup introduced an election system in 1988 under which members voted for branch managers and the federation chairman. Since then, Han Ho-seon, Won Cheol-hee and Chung Dae-geun have been elected chairmen but all three of them have been arrested on corruption charges. This means Nonghyup’s mounting problems can be ascribed to flaws in qualifications and systems. Such problems include excessive power given to the chairman and an extremely large organization covering numerous sectors ranging from distribution to finance, to name a few.

Nonghyup has 1,200 branches and its mutual finance broke a whopping 140 trillion won (94.8 billion U.S. dollars) in Dec. 2006. It has 25 subsidiaries and 78 businesses and the number of employees is 15,000. Whether the federation’s extremely large size is good for the domestic agricultural industry and farmers, however, is open to question.

As the organization’s name of the National Agricultural Cooperative Federation says, Nonghyup was originally created to help farmers. Instead, the organization has changed into a lifelong workplace for its employees. Nonghyup also provides jobs for retired officials from the Food, Agriculture, Forestry and Fisheries Ministry, which supervises the federation. The policy fund of 10.2 trillion won (6.9 billion dollars) including 1.6 trillion won (1.1 billion dollars) in subsidies will go to Nonghyup next year. How much of the fund will be spent on farmers and rural communities is uncertain. Due to cozy relations between Nonghyup branch managers and lawmakers, many farmers have faced difficulty borrowing money from Nonghyup even when they have collateral.

Needless to say, politics is at the top of the corruption pyramid. Nonghyup’s chairman has the final say in personnel management, controls billions of won to be loaned to farmers at no or low interest rates, and even yields influence in politics. The federation’s structure is too complicated to ask Nonghyup, the ministry or the National Assembly to reform the organization. President Lee should deal with the problems himself. His administration can be recognized as a reform-minded government only after it deals with such large-scale reform.