Research Reports
Establishment of Farm Income Compensation Programs and Farm Safety Net
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AuthorKim, Yongtaek
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Publication Date2004.12.01
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Original
ABSTRACT
Establishment of Farm Income Compensation Programs and Farm Safety Net
With a focus on transformation of agricultural policies and stabilization of farm management and farm household income, this study attempts to explore ways to compensate for lower farm income and to establish the farm safety net under the growing agricultural trade liberalization.
The farm safety net means the integrated farm income support policy whose goals are to support farms with the farm household incomes lower than the minimum level and to help farms get out of the financial woes.
There are two policy alternatives to design the farm safety net. First alternative is to establish the system linking several agricultural policies to compensate lower income earning farm households. Second one is to establish the single farm support program, which is similar to the single farm program of the EU (European Union).
Developed countries have increased operational efficiency of the farm safety net through the target-oriented farm policies, and the farm income compensation programs for agricultural commodities have made the single farm program get mature.
The DDA agricultural negotiation implies that it is necessary to move from the agricultural subsidy, which distorts the agricultural trade, to the agricultural aid, which is allowed by the WTO system, and it is also necessary to introduce the blue-box-type agricultural policies, which compensate for lower farm incomes.
The basic directions to design the farm income compensation program and the farm safety net are as follows:
1) the rules suggested by the WTO system should be observed;
2) the goals of farm policies should be fulfilled consistently;
3) target groups for the farm safety net should be properly selected;
4) the limitation of public finance should be considered; and
5) the farm income compensation programs should be imple- mented step by step.
In order to stabilize the farm safety net, it is necessary to set up the system composed of key elements, such as goals, supporting groups, supporting conditions and methods, substantial farm supports, time, and the monitoring & evaluation system.
Researchers: Yong-Taek Kim, Song-Su Lim, Joon-Kee Park,
and Han-pil Moon
E-mail Address: yongkim@krei.re.kr, songsu@krei.re.kr,
jkpark@krei.re.kr, hanpil@krei.re.kr
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