This study aims to review the current states of farm household income and agricultural productivity of Korea in the 1960s and 70s, and to analyze the impacts of the measures to boost non-agricultural income implemented by the Korean government with an intention to provide guidelines for future policy-making.
The agricultural sector of Korea has shown a relatively slower growth compared to the country’s GNP. During the 1950s, Korea’s agricultural sector grew only 2.1% per year, as opposed to a 3.7% annual growth of the country’s GNP. The sector grew 3.7% per year during the 1960s with GDP growing annually at 8.7%, and during the subsequent decade, it showed a mere 0.9% of annual expansion when GDP grew at 8.2% annually. Boosting agricultural income level requires higher prices of agricultural products, which cannot be sustained because of the need to control inflation. In the 1970s, high production cost and rising wholesale prices led to the state purchase price of rice to rise 21.6% per year.
Higher domestic prices of agricultural products lead to inflation, which hurts overall price stability and international competitiveness, eventually negatively impacting trade balances. Fiscal deficits and operational problems are making it hardly feasible to sustain the dual price system for rice and subsidies for fertilizers which are being used to help increase agricultural household income and support urban consumers.
In the 1980s, a typical agricultural household in Korea put in 20.48 days of labor in June, the month in need of the maximum amount of labor during a year. Calculating a seasonal unemployment rate based on this figure produces a distribution ranging from 1.6% to 64.8%. The rate varies according to farm size. Bigger farms show greater variability of the rate, according to the analysis.
Measures to increase farm household income in the 1960s centered on developing high-yield varieties of grain and building agricultural infrastructure. In the 1970s, the Korean government focused on increasing staple grains production, implemented the dual price system for rice, encouraged farmers to grow commercial crops, and tried to create wage income sources by setting up side job complexes and New Village plants.
The future policies to increase non-agricultural income and develop agricultural regions must focus on raising profitability by linking combined agriculture projects—combining staple crops with economic ones or livestock— and support programs for economic crops. They also have to include improving agricultural distribution system by building more agricultural infrastructure, enhancing side job complex projects and New Village support programs, and industrializing agricultural regions by establishing small or medium-sized industrial complexes near small cities to create jobs for agricultural households. To achieve these goals, the government must designate and develop agricultural employment areas so that major cities of agricultural regions and other areas of the regions can be functionally interconnected.
농외소득증대를 위한 종합대책
[서울] : 한국개발연구원
|Series Title; No||연구보고 / 2-07|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Agriculture|
|Holding||KDI; KDI School|