In Korea, vegetables associated with seasoning process in cooking such as red (hot) pepper, garlic, onion, and so on have been important income source of most rural farm households. However, the scale of individual farm household's crop acreage has been too tiny falling short of attaining scale of economy, and the implementation of automatic machinery process while planting and harvesting is highly limited. Thus, the average production cost of red pepper is seven folds higher than that of chinese red pepper. In case of garlic, the average production cost is four or five times higher than that of chinese garlic. If the international agricultural product trade agreement (DDA) reaches to a certain level of settlement such as huge scale of tariff rate reduction or very low level of tariff rate ceiling limit, it's too obvious what negative impact on small scale of farm households' income or rural economy will be in the future.
If mentioning about the specific problems linked to three major vegetables, the rural economies harvesting three major crops across all nation is so vulnerable, and there are too numerous individual households running too tiny scale of crop acreage. Further, the proportion of aged farm households such as over 60's has been majority in the major production regions of three crops in Korea. In other words, the implementation of the newly devised government renovation program might have coped with in depth difficulties due to the mentioned reasons.
Thus it's too obvious we could expect the devastating negative impact on the rural economy if the scale of imported agricultural products (three major crops) from foreign countries is expanded and the level of major three crops' domestic prices are drastically decreased. In order to minimize the expected negative impact due to the expanded scale of imported major three crops, the new government policy program associated with renovation and restructuring of three major crops would be a matter of urgency. Also, by the government farm policy program, some farm households are needed to be induced to harvest other kinds of crops which have international competitiveness or to shift into other alternative industries.
Main themes of our research focus on the net impact of tariff rate reduction associated with three major crops after DDA negotiation settlement. In particular, expected level of domestic production scale and crop acreage based on different domestic market price condition linked to the level of tariff rate and scale of imported volume from foreign countries are estimated. Further, we performed to estimate the tentative financial value of negative impact on rural economy due to the deteriorated market condition of major three crops. Also, the negative impact was classified by different crops or the different scale of arm acreage (large or small farm). As closing summary, we proposed several alternatives of upgraded farm competitiveness and staged road maps for the successful implementation of government renovation program.
Researchers: Byung-Ryul Kim, Seung-Ji Hong, Seok-Ho Han, Seong-Cheon Seo
E-mail address: brkim@krei.re.kr