Research Reports
Plan For Rice Market Stabilization In the 2011 Harvesting Period
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AuthorPark, Donggyu
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Publication Date2011.11.30
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Original
The 2011 rice cultivation area was reduced to 853,823 ha by 4.3% (38,251 ha) compared to last year, due to the diversification policy of paddy field income. The reduction rate of 4.3% in the 2011 rice cultivation area is higher than the average annual acreage reduction rate of 1.8% from 2001 to 2010 years. There was a concern for poor harvest because of the significant reduction of rice cultivation area and the poor weather conditions by the mid-August such as frequent and heavy rainfalls and reduced duration of sunshine.
Fortunately, the production level was expected to increase because the weather condition had been recovered to the normal from the end of August. The weather condition in the grain filling stage significantly impacts on the rice production level by 74%.
The rice supply in 2012 marketing year is expected to fall by 9.8% over the previous year to 5.53 million tones, due to the reductions of 2011 production and stock levels. The rice demand in 2012 marketing year is expected to fall by 12.7% over the las year to 4.51 million tones because of the reductions in food and processing rice consumptions. There will be no problem in supply-demand condition since the total demand is expected to be less than the total supply
However, the price during the harvest period was higher than the price level reflecting the supply-demand condition, due to the factors other than market condition. Most farmers delay the shipment expecting prices to rise, due to their belief that the rice production is less than the normal level. Although the weather condition improved at the late growth stage, many people worried that the real production is less than the government-announced level. Thus, it turns out that the farmers' sales in the early November had decreased by 16.2 percent compared to the same period last year while farmers' reserve level had increased by 14.3%. The delay of farmers' shipment and the high price during harvest periods are mainly due to the price rise expectation of farmers, who had experienced that the off-crop season prices rose by 11.5% over the harvesting season to 153,207 won/80kg in 2011 marketing year. The rice price can be declined as the off-crop season comes. Such price decline during the off-crop season over the harvesting season can make the price in the following year fall compared to the supply-demand conditions and the market anxiety repeat. Some mid-term measures may need to be considered, although additional stabilizing policies are not necessary because the supply exceed the demand in 2012 marketing year.
The public stockholding system should be operated according to the original purpose to prepare for the bad harvest. To contribute to the market stabilization by providing recently produced stock, the public stockholding reserve should be managed based on the principle of rotating or replacing 1/2 of the old reserved stockpile by the new one. The operation of the public stockholding system should be focused on the original goal to supplement the supply during the temporary shortfall. Therefore, the operation of the public stockholding system should be separated from purchasing for stabilizing market during the good harvest year and for government and military use.
Diversification policy of the paddy field income needs to be operated for farmers who voluntarily want to participate instead of against their own will. In 2011, the application period was extended from February, 21 to March, 31 and the operation scope was expanded to attain the goal of the diversification policy. The careful consideration on the diversification policy is required for the comprehensive review of the effectiveness during the trial period and sustainability for the future.
The accuracy of the production and consumption statistics is prerequisite for the effective implementation of market outlook and stabilization policy. Although the government claims that there is no problem in the supply-demand condition, there are many cases that the accuracy of production and consumption statistics is questioned and the rice prices move away from the appropriate level. Rice consumption statistics is considered relatively well to reflect the reality. However, the survey sample needs to be extended to cover one-person household and foreigners' one in order to improve the accuracy of the survey. The rice production statistics also need more sophisticated survey method to enhance the credibility of statistics for the involved parties. The survey sample of production statistics needs for careful review process to reflect the recently increasing proportion of high-yield varieties and regional productivity differences. The national statistical office decided to apply 90.4% Hyeonbaekryul(milling ratio) for production statistics with simultaneous release of survey results based on 92.9% Hyeonbaekryul for time-series stability from the statistics of 2011 rice production. Reassessment is still required to fill the existing gap between reality and the adjusted Hyeonbaekryul.
Researchers: Dong-Gyu Park, Dae-Heum Kwon, Jun-Ho Seung
Research period: 2011. 9. - 2011. 11.
E-mail address: dgpark@krei.re.kr
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