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Rural Tourism in Korea
Kyu-Seob Choi
Department of Agricultural Economics
Kyungpook National University
1370, Sankyok-Dong, Buk-Ku
Taegu-Shi 702-701 Korea, 1998-10-01

Abstract

This paper discusses rural tourism in Korea, focusing on tourism farms, and on policies and programs to promote this important service industry. It also discusses current problems, including the time it takes to obtain planning permission and credit. It suggests various ways in which institutional support might be improved. It emphasizes the importance of good location and good management in determining the success of tourism farms.

Abstracts in Other Languages: 中文(938), 日本語(1025), 한국어(940)

Introduction

Rural tourism* is well-developed in a number of industrialized countries, namely U.S.A., Canada, Japan, France and the Netherlands. In Korea, rural tourism began in 1984 as part of a government project to raise farm incomes. As industrialization expanded in Korea, many people moved from rural to urban areas. This growth of cities and suburbs has destroyed large areas of forest, and reduced the open spaces which city people can enjoy. As the economy grew and leisure time increased, people began to feel a lack of recreational space and facilities.

If these are not provided, people will spend their leisure time in a less healthy way, enjoying the kind of pleasure-seeking business which is becoming a social problem now in Korea. Rural tourism is a way of improving the life of city dwellers, while bringing a service industry to rural areas.

This is needed, because the agricultural sector has developed much more slowly than industry. The migration of the rural population, the reduced cropping index, and the low competitiveness of domestic agricultural products, have seriously damaged rural economies, and produced marked differences of income between different regions, and between urban and rural areas.

This Bulletin discusses the current situation, of rural tourism in Korea, and how Korean farmers can be encouraged to develop the tourism potential of their farms.

Rural Tourism in Korea

Table 1(1114) shows the current situation of tourism farms in Korea. It can be seen that there were 382 tourism farms in 1997, with an average land area of 2.5 ha. Average investment costs were US$ 690,000 per farm, more than half of which was the owners' own savings.

Policies to Promote Rural Tourism

Fig. 1(1178) shows the basic targets of rural tourism, and how it is planned to reach these. Basically, rural tourism aims at improving the welfare of both urban and rural people. Thus, rural tourism combines benefits for rural people, such as the growth of farm incomes, conserving the rural environment, and making more intensive use of rural resources, with those for urban people, such as providing leisure resorts and opportunities to study and enjoy nature.

The promotion of rural tourism in Korea tries to coordinate the institutions concerned in an efficient way, make sure that the location is appropriate, and train participants in efficient management. Active marketing is also important. First, we review how different institutions have worked together to develop rural tourism.
INSTITUTIONS TO DEVELOP
RURAL TOURISM
Having begun as a means of increasing off-farm income in rural areas, the development of rural tourism has been promoted by both the government and agricultural cooperatives. Planning was carried out by the government, while the cooperative provided much of the financial support.
TYPE OF TOURISM FARM
Policies have been adapted several times over the years. In its early stages, agricultural tourism mainly consisted of tourism farms which carried out the direct sale of farm goods. After 1988, agriculrural tourism diversified. Some tourism farms were rented rather than owned. Some developed multiple facilities, with a complex of accommodation, restaurant and leisure pursuits ,etc. Others specialized in nature study, or as a place where young people develop their mental and physical abilities ("youth parks"), or as a holiday resort.
Scale of Tourism Farm
With the land reform program of the 1960s, Korea limited the maximum size of a farmland holding to around 2 ha. This was the maximum size of tourism farms in 1984. The following year, the maximum size of a tourism farm was expanded to 3 ha, and is now 5 ha (1997). In practice, most tourism farms are much larger than 2 ha, since they are made up of several land holdings. A minimum of five households are necessary to qualify as a "designated area" with special funding and privileges. From 1985 this was increased to 10 households. Since 1997, the standard has been only three households, each with more than one year's farming experience. It is now possible for non-farm households to take part in farm tourism, and also newcomers from other areas. Participation was enlarged in 1992 to include local agricultural cooperative associations, farming groups, and corporate type farming groups. Because the qualifications have changed frequently, many participants have become rather confused.
Credit
From 1984, farmers and other qualified people engaged in rural tourism were each offered credit to a limit of 20 million won per village (around US$22,000). Annual interest is 10%, repayment is in four years with a one-year grace period. This was increased to 50 million won (US$55,000) for designated tourism areas in 1985.
From 1986, credit was raised to 30 million won (with the same conditions), and from 1997 to 200-250 million won ( US$220,000) for both existing and new designated areas, with a lower interest payment over 8 years and repayment in seven years with a three-year grace period.
Institutional support for rural resorts was begun in 1990, and for home-stay villages in 1991. Rural resorts were given credit amounting to 250 million won (US$275,000) and 30 million home-stay villages were given 30 million won (US$33,000) apiece.
DEVELOPMENT OF TOURISM FARMS
To develop a farm into a tourist attraction, it should be well located for sightseeing, with beautiful scenery, historical remains and other attractions. It should be accessible by road and public transport, and there should not be major problems in getting permits for development.
Procedure of Designating a Tourism Farm
First, a group of at least five households headed by farmers and/or fishermen make a request to their local mayor and county headman, via their local cooperative. The mayor and county headman assess whether the request is reasonable, and if it is, forward it to the city council. They then forward the application to the county and provincial councils. The investment schedule is completed according to the decision of the Provincial Council and the financial schedule of the Ministry of Agriculture and Forestry.
CURRENT PROBLEMS IN RURAL TOURISM
At the planning stage, there is the complex business of getting the application approved by the city, county, and provincial councils. There are often delays in this process, and difficulties arise from the lack of staff with specialized training.
Approval of credit can also take a considerable time, since this depends on the budget of central government (approved in May each year). Permits to convert arable land to other uses, preparation of the ground, permits to carry out construction, all take more time. It is difficult for farmers to keep to a schedule. When new areas are designated for tourism, there are often special problems. Farmland in Korea is protected by law from being converted to other uses. When this restriction is lifted to allow a farmer to convert arable land to tourism, an opportunity may arise for land speculation. Land without any restrictions is very valuable, so there may be an abrupt increase in the price of farmland.
If the tourism farm fails because of poor management, there may be difficulty in restoring the land to its original arable use.
In the case of home-stay facilities, regulations concerning building and safety standards are not yet well established. This can cause difficulties, and additional expense and delay.
Even though three farm households are required for an area to be designated for tourism, in most cases, only one of the three households does the work of actually managing the tourist farm. The concept of extra farm income by diversification into tourism is thus gradually becoming eroded. Some participating farm households stop taking part, in the absence of clear regulations related to the scale of management, while some disagree with the distribution of profits.
Because only one farm household is usually in charge of getting the credit for the initial investment, the other households may not be fully consulted. Since most participating farm households have to borrow large sums to raise the investment capital, the possibility of failure is usually fairly high. Repayment is a heavy burden on managers of tourist farms, since they must pay 8% interest each year (repayment in five years with a five-year grace period). The limited availability of funds for infrastructure such as road improvements, plumbing and electricity are another restriction.
IMPROVEMENTS IN SUPPORTING INSTITUTIONS
It would facilitate rural tourism projects if licenses could be granted by experts in this field working for the council of the county concerned. Furthermore, all necessary licenses and permits should be approved at the same time.
There should be frequent monitoring, to identify the tourism farms that are having poor results and suggest remedial action.
If a tourism farm violates the regulations by which its original plans were approved, the law should be immediately enforced. There is also an urgent need to formulate clear and consistent laws governing public health, sanitation, hygiene, safety, etc. for tourism farms.
At the moment, tourist farms need approval by the provincial governor. Although supervision may be needed at a higher level, approval by a mayor or county headman should be sufficient — after all, it is mainly the local community which is concerned.
Where several households contribute land to a joint enterprise, there must be a clear agreement over management and income which covers all distribution to those participating. This would prevent nearly all the discord now sometimes found in groups of participating farmers.
Funding for joint enterprises also needs to be improved. To foster a larger scale of tourism farms, the limit of supporting funds must be adjusted to more than US$330,000 and the interest rate reduced to 5%, while the repayment term should be extended to 15 years.
For basic facilities such as the entrance and car park, perhaps we should consider subsidies to help cover the cost, like those given in many countries overseas. To make sure that it is farm households who will participate, it is necessary to prevent speculation in tourist farms by commercial interests. Also, although regulations limit the size of a tourism farm in Korea to 5 ha, this regulation should perhaps be relaxed for tourist farms in which many households participate, and which are being managed by a rural community or a rural institution such as a primary agricultural cooperative. Regulations governing capital investment should also be adapted to fit the needs of a larger tourism farm. In the case of Japan and Taiwan, tourism farms may be as large as several hundred hectares. It is also important to improve the standard of management in Korea. A plan on how to administer corporate bodies such as joint tourism farms, and clarification of ownership and liabilities, is urgently needed.
Since the outcome of business is often determined by the legal framework within which business operates, it is necessary to establish laws governing rural tourism development, as are found in many industrialized countries (e.g. Germany, Netherlands, United Kingdom, Japan). We should also note specialized laws overseas governing the citizen's use of public land for agriculture, such as the law of "Klein Garten" (Germany), and the law governing Allotments* (United Kingdom). It should also be noted that subsidies are provided in Japan to cover half the cost of road construction and maintenance of facilities. This kind of support given in many industrialized countries overseas is intended, not only to increase the welfare of citizens and farmers, but also to preserve rural resources.
SELECTION OF LOCATION
The success or failure of a tourism farm mainly depends on its location. In particular, the condition of the roads and the surrounding scenery are very important. Profitable rural tourism is likely to be in beautiful natural scenery, and close to places of historic interest, or a lake, river, swimming beach, fishing place or mineral spring. Other factors to be considered are the possible sale of local special products, whether there are limits on construction, and whether there will be a problem in obtaining a license.
It is desirable to develop tourism farms within one and a half hours' travel from urban areas, both for ease of access and the direct sales of farm products.
The Uruguay Round of GATT has made crop production in the marginal lands in mountain villages uneconomic. Farms with good views might be very suitable for tourism. Other areas where soil and climatic conditions are not favorable for crops may benefit from tourism, but only if their location is good.
IMPROVED OPERATIONS
The management of a businesses is very important. Rural tourism must be treated as a business. All tourism farms experience operational problems, and operators must learn how to handle these successfully.
In order to optimize the scale of management, tourism farms must be classified into three sizes (large, medium and small). The present tendency to try and regulate the maximum size to around 5 ha is perhaps not the best strategy.
The choice of crop is important. Sometimes tourism farms can specialize according to crop type, e.g. fruit farms, farms with a flowering plant center, vegetable farms, livestock farms, mixed cropping etc.
Labor is a vital resource in rural tourism. It is necessary to train farmers in tourism management, and promote the flow of information between tourist farms so that farmers can learn from each others' experiences. Basic and supplementary facilities are important in attracting visitors to a farm. However, if there is too high an investment into facilities, the tourism farm misses its basic purpose.
MARKETING AND PROMOTION
It is important to determine the rational price level of farm products sold on the farm, as well as accommodation and other services. Farmers need to show a profit, but they also need to induce tourists to come back for another visit.
To attract visitors, new commodities need to be developed. A membership system for regular visitors would encourage repeat visits. To publicize what rural tourism has to offer, local governments or agricultural cooperatives should be responsible for a national promotion scheme, as is often carried out overseas. Publicity and promotion should use mass communications and develop an effective advertising campaign.
IMPROVEMENT IN ADMINISTRATION
Most tourism farms are operated by only one farmer, even though several farmers may have jointly invested into the farm. This means that all participating farmers are not benefiting fully. It is recommended some kind of monitoring system be established, and some way of promoting joint, rather than sole, management of tourism farms. One way of doing this would be to provide a joint management agreement for participants. Other possible improvements include creating public organizations which can take responsibility for managing a tourism farm, and making tourism farms into cooperative units which receive investment from, and are operated by, a rural village. It should also be possible to foster large-scale tourism farms which receive investment and are operated at a regional level.
REFERENCES
Shin, Dong Joo. 1997. A study on the realities of, and directions for, developing the tourism and recreation resources in the rural and seaside area. Tourism Agriculture Study. 1,4. (In Korean).
Ryu, Seung Woo, et al. Dec. 1998. Theories, policies and realities of the rural tourism development. Proceedings of the Seminar on Tourism Agriculture. (In Korean).
Choi, Kyu-Seob. 1991. Assessment of Projects for Developing the Off-farm Income Sources in Kyungsangpook-Do Province and Their Development Strategies. Korea Rural Economic Institute. (In Korean).
Choi, Kyu-Seob 1998. Agricultural Development in the Suburbs and Fostering Tourism Farms. Institute of Agricultural Science and Technology, Kyungpook University. (In Korean).

Table 1(1114)

Welfare of

urban and

rural areas

Growth

of farm

incomes

Conservation

of rural

environment

Better use

of rural

resources

Recreational

spaces and

facilities

Tourism farm

with nature study,

especially for

children

Establishment

and enlarge-

ment of

tourism farms

Institutional

approach

Location of

tourism area

Management and

organization

Marketing

Advertizing

Administration

Region-specific

business schemes

Simplified

authorization

More autonomous

business scheme

Improvement

of qualifications

of participants

Efficient credit

and other

financial support

Laws to promote

rural tourism

Regulations to

manage rural

tourism

Natural scenery

No. visitors

Traffic

conditions

Consideration

of utilization

of idle lands

Optimization

of scale

Appropriate

selection of

crops or fruits

Information

network for

participants

Improvement

of facilities

Personnel

management

Rational price

determination

Promotion

Extending

the tourist

season

Development of

new products

Introduction of

membership

system

Selection of

advertizing

organization

Selection of

advertizing

medium

Development of

advertizing

campaign

Joint participation

by farm households

Paticipation by public

organizations

Joint operation of rural

tourism

_ at village level

_ at regional level

Final

goal

Basic

target

Basic

strategy

Policy

Fig. 1(1178). Promotion of rural tourism in Korea

Year 1984 1988 1992 1997

Type of

development

Scale of

development

Qualification

Financial

assistance

Direct sale of

farm goods

Rental farms

for tourism

Direct sale of

farm goods

Rental farms for

tourism

Tourism farm

complex

Tourism farm for

studying nature

Weekend farming

allotments

Tourism farm park

for sports and

leisure

("youth parks")

Mountain resorts

Tourism to study

nature

Weekend farming

allotments

Health and exercise

Rural resting

Tourism farms

for the aged

Limit 2 ha for

rented tourism

farm

Limit 3 ha

Limit 3 ha

Limit 5 ha

Must be

residents of

designated

area

Joint

participation by

more than 5

households

Farmers and

non-farmers

both qualify

Newcomers

may qualify

Joint participation

by more than 5

households

(all should contri-

bute farmland)

Joint participation by farmers in part-nership with coo-peratives of farmers, also of fishermen and Rural Development Corporation, or farm-land improvement associations

Residence over 1

year on farm and

partnership with 3

farm households

Corporate type

farming group

organized with at

least 5 farm house-

holds. Farming

group. Producer

cooperatives in

partnership with

farmers

Mayor or magistrate

of a county, and

Rural Development

Corporation

Farming group,

Corporate type

farming group

of more than 5

farmers

Limit 20 million

won* per ham-

let (5 million

won*per

household)

Interest:

10% per annum

(repayment in 4

years with a

one-year grace

period)

Limit 100

million won* in

new tourism

area, limit 50

million won* in

already designa-

ted area

Interest: 8%

per annum

(repayment in 5

years with a

three-year grace

period)

Limit 150 million

won* in a new

tourism area, limit

200 million won* in already

designated area

Interest: 5% per annum (repayment over 7 years with a

three-year grace

period)

Limit 200 million

won* in a new

tourism area, limit

250 million won*

in already

designated area

Interest:8%

per annum

(repayment in

5 years with a

five-year grace

period)

Note: 5 million won = US$ 5,555.00 1US$ = 900 won

20 million won = US$ 22,000.00

50 million won = US$ 55,000.00

100 million won = US$ 110,000.00

150 million won = US$ 165,000.00

200 million won = US$ 220,000.00

Table 2(1273). Development of rural tourism, selected year

* Allotment (United Kingdom). Urban gardens owned by city or town councils, used for vegetable production by citizens. Laws govern the amount of land given to holders of allotments, and the type of land use (e.g. it must not be left fallow during the growing season). The law of "Klein Garten" ("little garden") in Germany is similar. (Ed.).

Index of Images

Figure 1 Promotion of Rural Tourism in Korea

Figure 1 Promotion of Rural Tourism in Korea

Table 1

Table 1

Table 2 Development of Rural Tourism, Selected Year

Table 2 Development of Rural Tourism, Selected Year

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