This study aims to synthetically evaluate the achievements of the Korean rice policies that have been promoted since the WTO sailing and to provide the directions for their improvement. Especially, this study focuses on the status analysis of rice industry in view of market directivity and industrial competitiveness and political and institutional proposals to better accomplish these objectives.
Each chapter of this study is organized on the following main issues: impacts of rice policies on productivity improvement, large farming scale, income stabilization, marketing efficiency, and supply and demand adjustment.
The first issue is about the changes of rice productivity by the government's investments and loans for the rice industry. The movement of rice production cost is examined by the two separated periods: before and after the WTO sailing. This examination finds that the reduction rates of production cost have been very small over time; however, the production cost per 80kg has been somewhat cut down due to the increase of rice yield per hectare. The impact of investments and loans for the establishment and maintenance of rice production base indicates that these government efforts have contributed to reducing rice production cost significantly. The results also show that technology progress has acted as an important factor of rice productivity improvement during the study period, implying the necessity for a sustainable R however, it has not guaranteed some amount of profits since a huge fall of rice price in 2002. The causes of the income fluctuations can be found in the changes of three factors over time: the amount of production, the farm selling price, and operating cost. A fast rise of operating cost has appeared since the middle of the 1990s. In the meantime, a fall of farm selling price since 2000 has been ascertained as a major cause for a fall in income. In addition, the income gap among rice farm households has been so magnified that the income disparity between the top and the bottom classes out of five farm classes in 2004 was 8 times larger than that of 1995. For easing this bipolarization, special social insurances for the elderly farmers with a small farm should be reinforced.
The fourth issue is related to rice marketing. The marketing situations of both rice-producing districts and rice-consuming districts are examined. The relationship of marketing channels and the fluctuation of rice price are empirically assessed with causality tests. The results demonstrate that the rice market has moved toward a market oriented direction, indicating that the farm selling price leads to a change in rice price. Accordingly, there is a need to establish a system to reflect consumers' tastes and behaviors in forming the farm rice price. Futhermore, institutional measures for supporting purchase funds and obtaining a proper marketing margin might draw RPC to act as the core of rice marketing.
The last issue is related with the supply and demand adjustment of the rice market. The dilemma in the Korean rice market is that the supply and demand is out of balance owing to the constantly decreasing rice consumption, the requirement of a stable rice production base, and the increase of imported rice. The government's rice purchasing and releasing policies, which had been conducted for the stabilization of supply and demand and price until 2005, brought benefits to both producers and consumers at the expense of the government's budget. It is anticipated that excessive rice supply will bring about more financial expenditure. The government efforts to increase rice consumption and reduce the amount of reserved rice are required.
In giving a synthetical summary of the results from all analyses, the rice policies can be positively evaluated because related policies have been rapidly carried out toward a market oriented direction. However, more still remain to be done in the Korean rice industry to cope with further market opening. First, the establishment of an institutional system for the effective adjustment of rice supply and demand and the government efforts to raise rice consumption through quality control and promotions are urgently needed. Second, various support systems should be set up in line with the farming's development which allows rice specialized farms to expand their farming scale and operate under a stable management with a bright future vision. Lastly, it is necessary to review and rearrange the current direct payments for the income stabilization of farm households and the adjustment of supply and demand.
Researchers: Kim Jeong-Ho, Sung Myung-Hwan, Kang Hye-Jung, Han Doo-Bong
E-mail address: jhkim@krei.re.kr, mhsung@krei.re.kr, kang@krei.re.kr