South Korean Government to Provide 30 Billion Won in Financial Support to Agricultural Distribution Organizations

A Homeplus Express store in Seoul on April 22. [Photo=Yonhap News]

The South Korean government is set to provide approximately 30 billion won in financial support to agricultural distribution organizations facing cash flow issues after failing to receive payments from Homeplus for delivered agricultural products. The initiative aims to defer the principal repayment of policy funds needed for securing raw materials by one year and to allocate additional funds to prevent disruptions in farm shipments and distribution.
On June 23, the Ministry of Agriculture, Food and Rural Affairs announced that it would implement financial support targeting agricultural distribution organizations temporarily experiencing operational difficulties while trading with Homeplus.
This support is directed at organizations that have encountered payment delays after supplying agricultural products to Homeplus, making it challenging to secure funds for contract farming and other necessary operations. The ministry plans to assess the scale of support based on the amount of outstanding payments and the scheduled repayment amounts for organizations facing payment delays related to Homeplus.
The support will be provided by either deferring the principal repayment of existing loans by one year or allocating new funds. The relevant policy funds include the Agricultural Distribution Activation Support Fund for horticultural distribution organizations and the RPC rice purchase support fund in the grain sector. These funds offer low-interest loans to help distribution organizations secure raw materials from farmers, with interest rates ranging from 0.5% to 3% under a secondary compensation scheme.
According to the ministry, 25 agricultural distribution organizations are set to have policy fund maturities this year. Among these, 20 organizations have been identified as having outstanding payments related to transactions with Homeplus, with the total amount of outstanding payments estimated at 26.9 billion won.
Seo Jun-han, director of the distribution and consumption policy at the Ministry of Agriculture, Food and Rural Affairs, stated, "The liquidity issues faced by agricultural distribution organizations are critical as they can impact not only the operations of the organizations but also the farmers who ultimately supply the products. We hope that government financial support will assist in normalizing operations, including securing raw materials."

* This article has been translated by AI.