Research Reports
An Analysis of the Instability of Farm Households Income and Its Causes in Korea
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AuthorHwang, Euisik
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Publication Date2003.12.01
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Original
An Analysis of the Instability of Farm Households Income and Its Causes in Korea
This study intends to analyze the degree of the instable in Korean farm households income and to examine its determinants with the panel data of Farm Household Economy Survey in 1998~2002. The size of the panel data set is 2,348 of the identical farm household data. And in order to understand the causes of instability in farm income, we categorize the farm households with the farm size, the age of farm manager, the financial debt ratio, the degree of income sufficiency for consumption expenditure and the debt size. We made the analysis on the panel data set with the mean-variance analysis method.
The main results in this study are followings. First, the farming income is more unstable than farm household income. This implies that the farm household income would be more unstable when the agricultural market is more opened. It is suitable policy to stabilize farm income. Second, the fluctuation of farming income highly related to the fluctuation of the farm household income. Third, farm households with large debt and high debt ratio are more unstable. Finally, the farm households with the large debt is likelihood to face the law income and the unstable of farm income fluctuation. The unstable of farm economy is more related to the debt ratio to asset than the size of debt. So, it is important task to manage the level of farm debt comparing to the asset.
In the globalization due to WTO and FTA agreement, the Korean agricultural sector will face the risk of the market share declined and also farmers receipted prices declining. The policies to stabilize the farm income such as safety net income and crop insurance are now more significant measure than any other times. In farm household side, it is a good strategy to reduce the level of farm debt.
Researchers: Hwang Eui-Sik and Moon Han-pil
e-mail Address: eshwang@krei.re.kr, hanpil@krei.re.kr
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