Posted February. 27, 2005 22:36,
The government decided to set a target price for one sack of rice (80kg) to minimize adverse effects on farmers from the dropping rice price following the its decision to end the practice of buying rice from farmers after the fall harvest starting this year.
In case local rice prices go below the target price, farmers will get a certain amount in financial assistance from the government.
The Ministry of Agriculture and Forestry announced on February 27 that the revised bill on protecting rice prices and grain management that stipulates the above-mentioned changes will be enforced starting this year, as it passed the Committee on Agriculture, Forestry and Fisheries of the National Assembly.
According to the bill, the government will guarantee rice farmers at least 165,000 won in income, even if rice prices drop by 15 percent.
That is because the government sets the target price of 170,070 won per sack of rice and pays the gap between that price and local price directly to individual farmers every year. The government should guarantee 85 percent of the gap and obtain approval of the National Assembly if it wants to change the target price.
The government will pay the rice price in two forms: fixed and changeable payments directly to individual farmers.
The fixed payment means that the government pays 9,836 won per sack of rice to farmers. The changeable payment is to guarantee farmers incomes by additionally paying the excess, in case 85 percent of the gap between the target price and the local rice price exceeds the fixed payment (9,836 won).
For example, if the local price of rice stood at 162,640 won per sack and the price in 2003 dropped by 5 percent to 154,508 won this year, rice farmers would receive 9,836 won in the fixed payment first.
Also, farmers would be granted 3,392 won in changeable payments, which is the margin between the target price (170,070 won) and the local rice price (154,508 won), bringing their total income to 167,736 won.