Farm Cooperative Reform Underway Amidst Internal Opposition
A new reform initiative targeting the National Agricultural Cooperative Federation (NACF) is moving forward, proposing the establishment of an independent external audit body. This move aims to address long-standing issues of misconduct and irregularities within the cooperative system, particularly concerning the election of regional cooperative leaders and the distribution of funds.
External Audit Proposal: Aims and Concerns
The reform task force, established in January, is pushing for the creation of an external audit committee, tentatively named the NACF Audit Committee. This body is intended to operate independently from the NACF’s internal audit and cooperation audit functions. The task force believes this separation is crucial to resolving issues such as fraudulent activities and problematic resource allocation that have been observed in the selection of regional cooperative chiefs.
However, the NACF has expressed strong reservations about the proposal. Officials from the NACF argue that establishing an external audit committee would lead to excessive operational costs, thereby infringing upon the organization’s managerial autonomy. They estimate that such a committee would require between 450 to 500 personnel and an annual budget of approximately 140 to 150 billion Korean won.
In contrast, the reform task force contends that if the existing internal audit and cooperation audit functions are merely separated and made independent, the costs could be managed within 50 billion won, utilizing current personnel. They also challenge the NACF’s concerns regarding costs associated with the direct election system for cooperative chiefs, which is also part of the reform proposal.
Electoral Reform and Cost Projections
The proposed reform includes a significant overhaul of the NACF leadership selection process. Currently, the NACF president is elected through an indirect system primarily involving cooperative chiefs. The reform aims to transition to a direct election system, allowing all 1.87 million cooperative members nationwide to participate directly. This represents a fundamental shift from the existing representative election method.
The NACF estimates that implementing this direct election system, including costs for entrusting central election management to a committee and election campaign expenses, could exceed 40 billion won annually. They argue that government subsidies are necessary to cover these costs.
Conversely, the reform task force projects the costs for election entrustment and campaign activities to range between 20.8 and 22.8 billion won. They maintain that given this is an election for representatives within the cooperative, the NACF itself should bear the financial responsibility.
Enhancing Transparency and Future Plans
To foster greater transparency within the cooperative and the NACF, the reform task force also plans to significantly lower the thresholds for public disclosure of financial statements and other records. Currently, the agreement of over 100 members or more than 3% of cooperative members is required for such disclosures. The proposal seeks to reduce this requirement to the agreement of 20 members or fewer.
Furthermore, the composition of the personnel recommendation committee will be revised to include one member recommended by the government.
The reform task force plans to release a second set of reform proposals in August, following the completion of the public comment period for the initial proposals. These future proposals are expected to focus on the NACF’s business operations, the cooperative and member systems, and governance structure reforms.
