Go to contents

Inducing Dropping Rice Prices for Reducing Productivity

Posted April. 19, 2002 09:13,   

한국어

Public reserved rice system will be introduced and purchase of rice by government will be withdrawn after 2005.

Government will let market function decide rice prices and allow price dropping as well as introducing reduction in productivity.

Decreased amount of income to farmers following a fall in the rice prices will be compensated by raising subsidy.

Ministry of Agriculture (MOA) confirmed such comprehensive measure in rice industry and reported on 18th in order to prevent excessive supply of rice and prepare re-negotiations for rice in WTO in 2004.

Following comprehensive measures, government will introduce public reserved rice system in which it will buy rice according to market price and sell it again from 2005.

Aimed reserved rice is `6 million~10 million seom` ( 1 seom is equivalent to 5.12 U.S. bushels) which can be maintained for two years in case of scant harvest and government will arrange this system in 2003~2004.

Kim Dong-Tae, minister of Agriculture intimated possibility of withdrawal of government purchase of rice system, saying, “public reserved rice system and existing government purchase of rice system can`t be consistent”.

Government will allow fall in rice prices by entrusting it on market in order to solve out the problem of excessive supply.

MOA predicted that area under cultivation which was 1,083,000 ha last year will be reduced up to 12 percent, therefore, it would become 953,000 ha in year 2005.

Decreased amount of income following a fall in rice prices will be compensated by raising subsidy.

The maximum area for subsidy will be expanded from 2 ha to 5 ha next year and money for subsidy will be raised from Agriculture promotion area.

However, non-agricultural promotion area will be frozen at existing level (400,000 won per ha) in order to introduce reduction in production of rice.

Operation of adjustment of production like resting land and introduction of raising subsidy, which caused criticism, will be decided considering its methods and timing after observing re-negotiation for rice in year 2004 and real situation of demand-supply of rice.

Agricultural industry groups protested strongly that loss of farmers will increase as measures of government is insufficient to maintain expenditure for producing rice and by fall in rice prices.



Joong-Hyun Park sanjuck@donga.com