This study examines the limits and problems with the decision of state purchase of fall harvest grains in 1994, and suggests new directions for relevant policy.
Assuming Korea freezes the price of state purchases of fall harvest grains and purchase quantities this year to their 1993 levels according to “Decision on State Purchase of Fall Harvest Grain and Related Restrictions” as a result of the Uruguay Round agreement that demands Korea’s subsidies through purchase systems should be lowered to 35.5% for the next 10 years starting from next year, Korea will have to cut 75 billion Won of subsidies annually for the next 10 years. Even though the government may continue to raise purchase prices because it is not obliged to decrease subsidies in 1994, a significant decrease—also offsetting the costs associated with this year’s increase —should be made next year.
In the event that the government continues to raise purchase prices to compensate for farm income, due to the result of the Uruguay Round, it should demonstrate a long-term direction for agriculture and farmers by funding areas that will lead to increased productivity as a way to ensure an equal treatment of rural households.
The increase of purchasing volume will exacerbate issues of income compensation effect and fairness between farmers. In addition, mitigating measures should be considered because, pursuant to a rice policy reform plan, the entire purchase budget should be delivered as a financial budget in 1994, and the expansion of the purchase budget will be impossible without cutting budgets for improving agricultural structure or the budgets of other departments.
To achieve an increase in farm income by cutting subsidies for rice, the gap between purchase price, a fundamental cause for increases in purchase volume, and rice price based on producer price should be reduced. Freezing purchase price and preventing the drop of producer price during harvests by facilitating private distribution should be implemented concurrently.
This year, purchase prices need to be frozen transitionally, and the volume of direct purchase by the government should be decreased. Instead, the government may consider using the finance generated by the decrease to increase net settlements for purchase volume by Nonghyup. This could be a method to accommodate some of the farmers’ demand, as it can increase the entire purchase volume within an extent that does not increase domestic subsidies.
1994년 추곡수매 무엇이 문제인가(What Is the problem with the state purchase of fall harvest grain in 1994?)
|Series Title; No||정책포럼 / 제65호(9435)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Agriculture|
|Holding||KDI; KDI School|