Research Reports
A Study on Reforming the Farmland System to Better Reflect Socio-Economic Changes
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AuthorKim, Soosuk
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Publication Date2008.11.01
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Original
Although the current farmland system is asked to play a new role due to circumstantial changes surrounding the Korean agriculture, the farmland system has not worked properly to respond to the demand. As a preliminary step to derive at a blueprint for an ideal farmland system next year, this study investigated today's operational status of the farmland system and on-the-field usage of farmland, and analyzed the economic efficiency of land usage.
By using the land usage classification we designed for the study, we selected three counties (the administrative districts of "ri"), each of which is composed of several villages, for case study and investigated the whole farmland in the areas. According to our investigation, it was shown that 19~33% of the sampled farmland were illegally owned and 42~57% were illegally leased. During the last 10 years, the number of farms cultivated directly by landowners decreased whereas leased farming increased. Most farmers in the sampled areas had a plan to retire or shrink the size of farming rather than expand their business in the future.
An analysis on the economic efficiency of land usage showed that the rent payment capability of tenant farmers increased as business size grew bigger. Accordingly, the increase in land usage efficiency would work as an incentive for a small farm to become a large farm with more than 3ha of farmland. In a net present value analysis, too, we found that the increase of farmland by leasing is more efficient than the farmland increase through purchase because the expected profit from buying farmland is smaller than the opportunity cost. According to the Granger causality test, the farmland price in suburban areas has a Granger causality relation for rent whereas the rent in plain fields has a Granger causality relation for farmland price.
We also estimated the amount of farmland needed for 2020. According to the estimation which was made through the KREI-ASMO model, it is found that if today's changing trends in the size of arable land and the land being cultivated continue (assuming that the DDA and the Korea-US FTA do not go into effect), the necessary farmland in 2020 would be 1,564 thousand ha. As for the demand of land for city and industry complex development under the 4th Land Reconstruction Plan for the 2000~2020 period, the necessary land would amount to 385 thousand ha. Meanwhile, the land available for development is estimated at 816 thousand ha (138 thousand ha farmland and 678 thousand ha non-farmland), which is a sufficient supply regardless of whichever scenario is applied for the future demand. Even in the Seoul metropolitan region where the demand for development is high and the supply is limited due to development restrictions, it was found that there would be no problem in supplying necessary land.
Researchers: Kim, Soo-Suk; Park, Seok-Doo; Chae, Gwang-Seok; Kim, Chang-Ho; Hwang, Yeon-Su; Cho, Ga-Ok
E-mail address: soosuk@krei.re.kr
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