Agricultural Debt Quadrupled in 10 Years

While agricultural debt has recently quadrupled in 10 years, earnings have only increased by 1.57 times. Although 57 trillion won of the government budget was supported for 10 years from 1993 to 2002, the living conditions of farmers have actually worsened. According to the “2003 Research Findings of Agricultural Economics” that the Department of Statistics presented on April 22, the average debt of each farm household is 26.971 million won, a 3.95 times increase from 1993 (6.828 million won). On the other hand, the average annual income jumped only 56.8 percent during the 10 years from 16.928 million won to 26.543 million won, indicating that the annual income came short of reaching the debt scale.

The Funds for Agricultural Policy-

Using 1993 as a starting point, annual income exceeded debt as the annual agricultural income was 16.928 million won while debt was 6.828 million won. However, in 2003, debt (26.971 million won) exceeded the average annual income (26.543 million won). It reached the point where even if no money was spent at all for a year, it was impossible to pay off the debt. Previous researcher for Korean Agricultural Economics Research Center Choi Sae-gyun stated, “Policy funds spent after the Uruguay Round (UR) agreement placed greater weight on high financing rates on top of increasing the scale of agricultural debts as funds were not implemented efficiently enough” and added, “11.9 trillion won that the government will use for the next 10 years to lessen the farmers’ damage as a result of a Free Trade Agreement (FTA) will have to increase the weight of the subsidy, and subjects for aid should be carefully selected through strict examination.”

“Farming Alone is not Enough”-

Last year’s average annual agricultural income increased 8.4 percent from that of 2002 (22.475 million won), and showed the highest increase since the 8.9 percent increase of 1999. In terms of type of income, farming income of 10.825 million won decreased by 4.0 percent from the previous year, however, external income of 8.825 million won, including business and lodging, increased 8.4 percent. Consequently, from the agricultural income, the dependency on farming income alone decreased 5.3 percent from 40.8 percent to the previous year’s 46.1 percent. The director of Social Statistics at the Department of Statistics stated, “In preparation of a gradual opening of an agricultural market, it seems like farmers are putting more and more importance on other sectors including tourism while lowering their dependency on farming” and analyzed that, “However, since dependency on farming is still relatively high compared to Japan (14.5 percent), it is projected that farmers who are looking for an alternative source of income will be on the rise.”

Jin-Hup Song jinhup@donga.com