Huge Overhaul of NH Organization

National Agricultural Cooperatives Federation to split its operation into two holding companies

The National Agricultural Cooperatives Federation (NH) will split its operations into finance and economics businesses from March 2, 2012, as the Agricultural, Forestry and Fisheries Committee of the National Assembly approved the revision of the National Agricultural Cooperatives Federation Law.
The two sectors will be under two holding companies ― the economics holding company and the financial holding company. The economics holding company will have farm and livestock product retail businesses as its major affiliates while the financial holding company will have the farmers’ bank, farmers’ life insurance and non-life insurance businesses as its affiliates under NH’s main ideal to prepare for the new century in safeguarding the welfare of the farm and fishery communities in Korea.
The reform is aimed at the distribution channels of farm and live stock products, strengthening the stable supply of vegetables, invigorating livestock product distribution and strengthening the pursuit of healthy farms and foodstuffs.
The reform of NH is also targeted at supporting farm household management, building a base for farming and farm towns, strengthening the welfare and rights of farmers, as well as securing the competitive power of farm and livestock businesses.
The move is also aimed at increasing the sale of farm and livestock products overseas to boost farm income by expanding the market.
The financial sector is invigorating finance to farmers and the general public so that they can secure stable earnings sources, strengthen risk management and strengthen mutual financial cooperation.
NH plans to dominate the production of farm products through its organizational setup and boost the power to set prices of farm products in the market through tie-ups with sales outlets of other commodities. The move is expected to expand the distribution infrastructure and wholesale network of farm and livestock products as dominated by NH because the work will include building regional logistics networks and new sales stands and substantially expanding the farm and livestock product sales business.
The reform of the financial business sector is aimed at making financial support available to all farm households in order to stabilize their operations. New farm funding support will be increased to 6.5 trillion won and 62.2 billion won in credit, which will be extended to those isolated from financial loans and credit on a sustainable basis to invigorate their financial standing.
The NH Bank will dish out special loans amounting to 1.2 trillion won under the name of Hatbit (Sunbeam) Loans to invigorate the lives of poor families this year. The financial reform is also aimed at coping with changes in the financial environment for NH member farm and livestock cooperatives around the country by expanding the base for the sustainable growth of their members.
NH also plans to expand its credit guarantees for its members to boost the productivity of farms and fishery businesses to 4.6 trillion won. It will also cut fees for credit guarantees from 0.5-1.1 percent to 0.3-0.9 percent.
The financial sector will also try to expand its profit by managing assets and debt portfolios. It will diversify its means for securing funds and management with detailed plans for quantity and interest rates. The banking sector will also improve its evaluation system to expand its financial profit by restructuring its branches.
The reform is also aimed at expanding the operational base to strengthen the basic power for business promotion. It will expand the deposit and loan activities for a stable management base buildup. Expansion is particularly focused on individual deposits, household deposits and increasing loans to creditworthy mid-level firms.
The credit sector will also secure a base for growth for such business areas as insurance, credit card, foreign exchange and benefit certificate to expand fee income. A special effort will be made on installment payments for insurance premiums and long-term insurance coverage including retirement pension insurance. It will also expand the brand power of the NH Card for its own growth base.
The sector’s operation will be customer and market centered to strengthen its business capacity. nw

A view of NACF’s head office building.

Chairman Choi Byung-won of the National Agricultural Cooperatives Federation.

Photo by courtesy of NH