In 2008, agricultural input prices including fertilizer and livestock feed have surged dramatically mainly owing to increase in international oil and raw material prices, and devaluation of Korean currency. In turn, farm management cost for major products also significantly went up. As a result, it is expected that the condition of farm economy is worsened compared with those of other years.
This study is carried out for analyzing the trend of agricultural input price, finding out the factors contributing to changes in agricultural input prices, and suggesting selective counterpart policy measures. The major findings of this study are as follows;
First, most of agricultural input prices has increased with a fast speed especially after 2005. In specific, the prices of fertilizer, fuel, and livestock feed were rising with a relatively higher degree.
Second, the share of prime cost in product sale ranges from 74~84%. Most of raw materials of agricultural input are imported, which makes agricultural input price vulnerable for changes in exchange rate and international price of raw materials including feed grain and exchange rate. Accordingly, the level of international price of raw materials as well as exchanges rates heavily influences on agricultural input prices. This point was also confirmed by the simulation results of the impact of changes in international fuel price and exchange rates on agricultural input prices.
Third, it is suggested that immediate or short-term measurers for cushioning the shock caused by drastic changes in agricultural input price are needed with a permanent manner. Strengthening the competitiveness of agricultural input industry through structural adjustment of the industry and expanding agricultural input export is also emphasized.
Researchers: Kang, Chang-Yong; Kwon, Oh-Bok; Lee, Woong-Yeon
E-mail address: cykang@krei.re.kr