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[Column] Farms need technology more than debt relief

Posted January. 12, 2001 13:28,   


It is disheartening to hear that due to recent heavy snowfall, a number of greenhouse and poultry raisers suffered great losses. The mishap came shortly after the plunge of pig prices, inflicting big losses on pig breeders in the latter half of last year, followed by the sharp price drops of vegetables and green onions of late.

A series of farming disasters saddens the hapless farming populace and the people as a whole. What is worse, late last year, more than 100,000 farmers from across the country staged violent demonstrations, occupying expressways, and demanded the enactment of a special law for reduction or exemption of farm debts and government measures to make up for price declines for agricultural products. There were a multitude of big and small issues in our society, yet farming villages have been constantly exposed to troubles or problems.

As witnessed in the repeating farm product price fluctuations in recent years, the government's agricultural policies posed various questions. Experience showed that if the farming product prices were higher than the average year, the farmers increased farmland cultivated to produce more of the particular crops, leading to intensifying internecine competition. Farmers' debts have steadily increased due to price destruction on the part of agricultural products, ranging from vegetables to cattle. And the government policy failure has provoked the farmers' radical demonstrations.

The first issue is that the government has failed to prevent excessive production, based on the scientific calculation of the farming land for specific produce. For example, the goods of short supply recklessly were imported from foreign countries and those of surplus supply were relentlessly discarded. Such a supply-side farming policy cannot expect an advanced agriculture to usher in the digital era. According to the data of the Central Federation of Agricultural Cooperatives, the amount of farm debts reached the astronomical figure of 39.8 trillion won as of July last year. If the debts of the government, state-run and private enterprises are counted, the amount of the total national debt is alarming enough to be cynically called the Republic of Debt.

More serious is the fact that farm debt reached beyond the farmers' capability to repay. Fortunately, the National Assembly last year passed a special law for reducing or exempting farmers' debts, providing 10 trillion won in low-interest loans at 6.5 percent over five years for repayment. However, in order not to repeat the injection of public funds in the farming communities as was done for nonviable businesses, the government will have to work out measures to resolve the traumatic question fundamentally and systematically. And in terms of concrete steps, the government needs to implement countermeasures on an equal footing with the ongoing structural reforms in four major sectors.

The government poured a total of 42 trillion won into the rural communities for their agricultural restructuring from 1993 to 1998 as a means of coping with the overall agricultural market liberalization. Afterward, the government injected 1.5 trillion won into the farm villages annually with the financial sources from special farming and fisheries taxes.

Despite the injections of the massive amounts of public money, the government's rosy promise to realize welfare farm villages ended up an empty word. Instead, farmers have been saddled with accumulated debt.

Lee Man-Woo, Prof. of Economy in Korea University