The Agricultural Cooperative
It's fascinating.
Sitting at the meeting table, Ji Hye-min couldn't help but marvel.
She had already witnessed Yun-hyeok's expertise and drive countless times while editing his videos, but watching it unfold live, right before her eyes, was an entirely different experience.
It was truly incredible.
Are politicians actually allowed to be like this?
"The focus of the Smart Farm cluster we are designing is to more than double the yield per unit area compared to traditional open-field cultivation, while cutting labor costs by over fifty percent. Ultimately, the key will lie in the initial construction costs, the automation ratio, and energy efficiency."
Yun-hyeok had thoroughly reviewed all the materials prepared by the Planning and Coordination Director and AgroNex.
"The construction costs are currently budgeted based on second-generation glass greenhouses, but let's pivot to third-generation semi-closed glass greenhouses instead. The initial capital expenditure will be higher, but they allow for much more precise control over temperature, humidity, and carbon dioxide levels, which will ultimately save on heating and cooling costs."
While the general public still found the term Smart Farm unfamiliar, the concept itself had been introduced long ago.
In fact, smart farming had already evolved into its third generation. The first generation focused on making farming 'more convenient' by introducing communication technology to control facilities remotely. The second generation aimed to improve productivity through the precise growth management of crops.
And the goal of the third generation was sustainability and popularization.
Farming had traditionally been an occupation requiring a high level of expertise in both knowledge and physical stamina. However, if machines and computers could replace a significant portion of that burden, it would lower the barrier to entry for the general public and boost profitability.
"If you look at the Techno Farm Keihanna built by Spread in Japan, they harvest thirty-five thousand heads of lettuce a day by automating the entire process from sowing to harvesting and packaging. We should aim for a similar level of efficiency."
The local government leader's depth of knowledge was extraordinary.
"To match the climate conditions of Doma-myeon, we'll need to raise the level of automation for carbon dioxide concentration control and nutrient solution ratios. I assume we'll be going with a combination of EC sensors and substrate scales?"
An EC sensor measures the electrical conductivity of the nutrient solution, while a substrate scale measures the remaining amount of nutrient solution based on the weight of the growth medium.
It was all part of a system designed to analyze how much the crops had consumed and supply the nutrient solution accordingly.
"In that case, the piping layout and the number of monitoring terminals will likely increase. Would it be possible to group these into a shared control system between the greenhouses, Representative?"
The city hall staff were already used to this and barely batted an eye, but the representative of AgroNex was thoroughly flustered.
"By any chance... did you major in agriculture?"
"I just studied a bit because I was interested. I still have a lot to learn, so please guide me."
"Sharing the piping or terminals can indeed reduce installation and operating costs. However, even with those savings, automated semi-closed glass greenhouses are still incredibly expensive."
Assistant Manager Kang Woo-jin, the lead technician, chimed in.
"If we build it on a scale of forty thousand pyeong, it will cost at least twenty billion won."
At that, the city's budget director wore a troubled expression.
"Smart farming is designated as an innovative leading project by the Ministry of Agriculture, Food and Rural Affairs, so we do have provincial and national subsidies secured. But even if we pool all of that together, it only amounts to about eight billion won. That's nowhere near twenty billion."
"Mayor, this project carries significant political risk," Kim Min-cheol warned.
"Even if we somehow secure additional funding from elsewhere to cover it entirely with national subsidies, it is ultimately taxpayer money, and critics will argue that it's excessive. If we tap into the provincial or municipal budgets, it becomes even more dangerous."
"It's a massive project, yet the number of beneficiaries is far too small," the Director of the Agriculture and Rural Affairs Bureau added. "The populations of Doma-myeon and Hawol-myeon are tiny to begin with. Furthermore, they aren't exactly vulnerable social classes. If anything, the local elites of Doma-myeon are quite wealthy, aren't they?"
"And above all else," Kim Min-cheol interjected again, "the active support of those Doma-myeon elites played a crucial role in your election, Mayor."
Yun-hyeok nodded.
"I know."
There was risk. He acknowledged that.
"But it's precisely because politics hesitates to intervene due to those risks that our rural communities continue to vanish."
What was the reason behind the depopulation of rural areas?
Why were young people leaving the countryside?
Anyone could easily answer that.
Because there is no infrastructure.
Forget department stores—rural areas lacked basic amenities like McDonald's, movie theaters, ice cream shops, daycares, schools, cram schools, and study cafes. No matter how far one looked, there was nothing but vast, empty fields surrounding their homes.
The political sphere was well aware of the need to expand living, educational, and cultural infrastructure in rural sectors, but they rarely pushed forward with it. It was because of the very reasons Kim Min-cheol and the Bureau Director had just pointed out.
Compared to urban centers packed with high-rise apartments, the population density of rural areas, dotted with country homes and sprawling fields, was abysmally low.
But was it truly fair administration to inject massive amounts of public capital just to benefit a tiny minority?
Even the most passionate and strong-willed politicians tucked their tails when confronted with this argument.
On top of that, any attempt to build anything was immediately blocked by strict land-use regulations, as almost all the land was designated for agriculture. Having to initiate negotiations starting from the Ministry of Land, Infrastructure and Transport made the scale of the task far too daunting.
Consequently, the government resorted to neglecting these areas, throwing them a few meager subsidies while the youth continued to flee, the population aged rapidly, schools closed down, and villages slowly decayed into ghost towns.
What was needed to fix this structural issue was not passion, will, or knowledge, but rather sheer courage.
After all, most politicians already knew deep down that rural areas were strategically vital.
"Jim Rogers, widely regarded as one of the world's top three investors, once said this," Yun-hyeok began. "'Why get an MBA? Just go to agricultural school. Agriculture is the future. In the future, farmers will be richer than investment bankers.'"
Amid global supply chain crises, aging populations, and rapid global population growth, food was quietly being reorganized into a critical strategic industry.
Rogers argued that agriculture would possess immense scarcity in the future, and that nations must actively cultivate agricultural talent.
To back up his words, he personally owned farmland larger than the entire area of Gyeonggi Province and had even taught his own daughter agriculture.
Yun-hyeok was a man who had personally lived through that very future Rogers predicted.
"Even if it costs a fortune, if we are certain that this project is headed in the right direction, we must have the courage to forge ahead," Yun-hyeok said. "We will use Smart Farms to increase land integration, and on the idle land we secure as a result, we will build infrastructure like schools and cultural centers. By leveraging the automation and accessibility unique to third-generation Smart Farms, we will attract and settle young farmers. That is how we will resolve rural depopulation and raise the next generation of agricultural successors. And..."
Yun-hyeok was a man obsessed with budget efficiency.
"Of course, we won't be funding the entire twenty billion won out of taxpayer money. There will be no additional budget allocations beyond the subsidies already earmarked by the central and provincial governments."
"Is there any other place we can pull money from?"
Kim Min-cheol, the bureau directors, and the budget director all brightened up instantly.
However, their expressions quickly froze at Yun-hyeok's next words.
"We'll get it from the Agricultural Cooperative."
"..."
Kim Min-cheol cleared his throat.
"Mayor... the Agricultural Cooperative will likely be extremely hostile toward this project."
"I will persuade them myself."
At those words, Jo Hyeon-seo pulled out his phone from beside him.
"Should I schedule a meeting?"
"Set it up right now, please."
The National Agricultural Cooperative Federation—commonly known as Nonghyup.
There was a very good reason why Kim Min-cheol predicted they would be hostile to Yun-hyeok's project.
Fundamentally, the Cooperative controlled the entire process of shipping, distributing, and settling the agricultural products produced by its members.
Not only that, but they also supplied the equipment farmers needed through bulk purchasing programs—everything from simple hand hoes to massive tractors.
Since the economies of scale generated through this process were the core driver of the Cooperative's profits, they were naturally obsessed with maintaining their member count and solidarity.
But a Smart Farm?
The city hall was showing up with tech entrepreneurs from Pangyo, talking about building 'glass greenhouses' instead of vinyl hoop houses, installing nutrient solution pipes, and doing God knows what else?
They wanted to establish a so-called 'Smart Farm Innovation Valley' stretching from Doma-myeon to Hawol-myeon, completely reshaping the traditional rural landscape?
The Cooperative was already growing anxious.
The mere idea of a new agricultural model growing to such a massive scale—one they could neither predict nor control—made them deeply uncomfortable. Naturally, they were bound to be conservative regarding such ventures.
But Yun-hyeok took it a step further.
"The Smart Farm Innovation Valley I intend to build will consolidate previously fragmented individual farms into agricultural corporations to co-operate the greenhouses. This will allow us to produce high-value crops more easily, quickly, and with uniform quality. Furthermore, by eliminating inefficient middle steps in the distribution chain and supplying directly to large supermarkets on a B2B basis, we will deliver high-quality produce to consumers at lower prices while maximizing profit margins for the farmers."
At that explanation, Park Tae-gang, the branch manager of the Mir Agricultural Cooperative's central branch, turned pale.
"That... that makes absolutely no sense! You want us to invest in a project like that?"
The branch manager practically leaped out of his seat.
"So you're telling us to throw away the farm equipment we've been supplying through bulk purchases, build glass greenhouses with some unheard-of company called AgroNex, and let the city hall overhaul everything from crop production to distribution and sales?!"
"Precisely."
"You are essentially replacing everything we do! Why on earth would we invest in that?!"
"Because if you try to compete with us, you won't be able to win."
"Ha!"
The branch manager burst into a scoffing laugh, utterly dumbfounded.
"Mayor, you must have heard somewhere that smart farming is the next big thing and gotten completely carried away, but that business is not nearly as profitable as you think. Of course the Cooperative has looked into smart farming in the past. But it doesn't work. Do you know why? Because the initial construction and operating costs are astronomical. Sure, let's say labor is reduced, water usage is cut, and crop quality improves—fine! Even with all of that, it takes forever just to break even."
To be perfectly objective, he wasn't wrong.
That was precisely why the vast majority of smart farms had failed.
"No matter how wealthy the local elites in Doma-myeon are, do you think they would pool twenty billion won of their own money to build a Smart Farm? Absolutely not! No matter how well you grow tomatoes in a twenty-billion-won greenhouse, you'll never recover that initial investment."
"But the reason it's so difficult to recover that investment," Yun-hyeok countered, "isn't a large part of it because of the Cooperative?"
Yun-hyeok was well aware of the elephant in the room that the branch manager was actively avoiding.
"The Cooperative's management and distribution structures are completely dysfunctional right now, aren't they?"
"..."
The branch manager swallowed hard.
"In the past, when farmers produced goods, the local cooperatives supplied them directly to Hanaro Mart to be sold. The distribution structure was simple, and by supplying necessary equipment and seedlings through bulk purchasing, you truly helped the farmers," Yun-hyeok said. "But that's no longer the case. You know it too, don't you, Branch Manager? You know how the National Agricultural Cooperative Federation has changed."
Over time, the Cooperative had ceased to be a true cooperative for farmers.
It had taken on the distinct character of a financial institution.
Furthermore, while a cooperative was supposed to reflect the democratic will of its members, it had degenerated into a bureaucratic, top-down model run entirely by the central federation.
And it wasn't as if they were doing a good job, either.
"Right now, the buyer and the seller within the Cooperative are completely different entities."
In the process of integrating its distribution network, the federation had birthed a bizarre structure unseen in any other business model in the world: the mega-logistics center.
Now, local cooperatives did not sell harvested crops to Hanaro Mart; instead, they sold them to the logistics center.
Then, the logistics center supplied them to Hanaro Mart.
Hanaro Mart would then sell the crops to consumers, using those funds to offset the money the logistics center spent purchasing them.
In other words, the entity purchasing the crops and the entity selling them to consumers had been completely severed into two separate branches: the logistics center and Hanaro Mart.
Both were different subsidiaries of the same Cooperative.
Did this make any sense?
What kind of business in the world entrusted purchasing and sales to two entirely separate subsidiaries?
In any basic business, you forecast the selling price based on demand, calculate your margin, and set your purchase price accordingly. Conversely, you set the selling price to maximize margins based on what you paid to acquire the goods.
"But under this deformed, divided structure, no one calculates operating profits, and no one takes responsibility. When inventory piles up, the purchasing side blames the sales side for failing to sell, while the sales side claims they can't sell because the purchasing side bought it too expensively. They just shift blame back and forth while blindly buying and selling. Adding an extra layer to the distribution chain naturally drove up absolute costs and weakened your competitiveness. Now, your deficits are skyrocketing, and you have absolutely no way to troubleshoot the issue, isn't that right?"
Yun-hyeok's voice remained calm, but his words hit with the force of a sledgehammer.
"And of course, the profits that should rightfully go to the farmers are instead being swallowed up to cover the massive deficits generated by this absurd distribution structure. You're already facing capital impairment, aren't you?"
"..."
"And yet, the central federation remains hyper-focused solely on its financial services, with little to no real concern for the farmers, Branch Manager."
The branch manager bit his lip.
Yun-hyeok didn't press too aggressively. He kept his voice calm, but his question was razor-sharp.
"Is the Agricultural Cooperative still an organization for farmers?"