Korea’s Agricultural Policy: History, Challenges and Ways ... · Korea’sAgricultural Policy:...

Korea’s Agricultural Policy:

History, Challenges and Ways Forward

Feb. 21. 2018 15:00, WTO Room E

CHO, Eun-Ji

Deputy DirectorAgricultural Policy Division

Ministry of Agriculture, Food and Rural Affairs

2

Contents

1. Current Situation of Korean Agriculture

2. History of Korean Agricultural Policy

3. Main Challenges

4. Policy Goals of New Administration

Country Policy Presentation by Republic of Korea

Current Situation of Korean Agriculture

1

3

Country Policy Presentation by Republic of Korea

1. Current situation of Korean Agriculture

4

(1) Farm Size

• Cultivated area: 1,644 thousand ha (54.5% rice paddy, 45.5 dry field)

• The share of cultivated land in total land area declining

23%

17%

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

The share of cultivated land in total land ares (KOSTAT, 2017)

1. Current situation of Korean Agriculture

1.94

1.22

0.47

0.30

0.21 0.19 0.12 0.09

0.05 0.03 0.03

• Arable land per capita: 0.03 ha

5

(1) Farm Size

Arable land per capita (World Bank, 2015)

(ha)

• Average farmland size per household is 1.5 ha

• 69% of farms have less than 1 ha and only 8% have more than 3 ha

24

472

245

108 67 60

83

<0.1 0.1~0.5 0.5~1.0 1.0~1.5 1.5~2.0 2.0~3.0 >3.0

6

(1) Farm Size

1. Current situation of Korean Agriculture

Number of Farms by Farmland Size (KOSTAT, 2017)

(1,000 farms)

• Farm household population in 2016: 2,496 thousand

• Number of farm household declining

7

(2) Rural population

0

5,000

10,000

15,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

farm population aged 0~64 aged 65~

1. Current situation of Korean Agriculture

Changes in total farm population (KOSTAT, 2017)

(1,000 people)

• Share of farm household population fell

• Share of farm household population aged more than 65 increased

8

(2) Rural population

1. Current situation of Korean Agriculture

45%

5%5%

38%

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Share of farm population

aged more than 65

Share of farm population

in total population

(KOSTAT, 2017)

• Agriculture’s share in GDP: 24.9% (1970) → 1.8% (2016)

• Agriculture’s share in employment : 50.4% (1970) → 4.9% (2016)

9

(3) Contribution of agriculture in economy

GDP

1.4 trillion USD

(2016)

Agriculture

1.8%

Service

59.2%

Mining and

manufacturing

29.5%

The Bank of Korea (2016)

1. Current situation of Korean Agriculture

Employment

26,235

thousands

(2016)

Agriculture

4.9%

Mining and

manufacturing

service

KOSTAT(2016)

• Pace of adjustment based on agriculture share of GDP and employment

is very fast in Korea

10

(3) Contribution of agriculture in economy

1. Current situation of Korean Agriculture

Agriculture share of GDP Agriculture share of employment

Year of

40%

Year of 7% Years

required

Year of

40%

Year of

16%

Years

required

Netherlands 1800 1965 165 1855 1957 102

UK 1788 1901 113 1800 1868 68

USA 1854 1950 96 1897 1950 53

Japan 1896 1969 73 1940 1971 31

India 1962 2016(17.4%) >54 2016(45.1%) - -

China 1967 2016(8.6%) >49 2007 2016(27.8%) >9

Korea 1965 1991 26 1977 1991 14

Adapted from OECD (2008)

• Rice production accounts for half of cultivated land and 56.6% of farms

• Share of rice in the agriculture VOP decreased

11

(4) Production

1. Current situation of Korean Agriculture

Share in the value of agricultural production, MAFRA (2017)

35%

13%

6%

14%

5%

10%

2%4%

1990 1995 2000 2005 2010 2016

Rice

Pork

Beef

Chicken

• Per capita annual consumption of rice declined

• Consumption of livestock products, fruits and vegetables increased

12

(5) Food Consumption

1. Current situation of Korean Agriculture

Per capita annual consumption by commodity, MAFRA (2016)

132

63

11

47

120

158

22

67

1980 1995 2000 2005 2010 2015

Rice

Vegetables

Fruits

Livestock Products

(Kg)

• Agri-food import value: USD 23.5 billion (2016)

• Cereal grains and pulses most imported, especially corn for animal feed

• The largest import partner is the United States, followed by China

13

(6) Trade

1. Current situation of Korean Agriculture

Korea Agro-fisheries & Food Trade Corporation (2017)

Most imported commodities

(2016)(million USD)

Beef 2,284

Maize 1,909

Pork 1,363

Wheat 1,023

Soybean meal 781

• Self-sufficiency rate of major grains are very low

• Livestock industry is highly dependent on imported feed

14

(6) Trade

1. Current situation of Korean Agriculture

MAFRA (2017)

Self-sufficiency rate (%)

Feed included Feed excluded

Rice 102.5 104.7

Wheat 0.9 1.8

Maize 0.8 3.7

Soybean 7.0 24.6

History of Korean Agricultural Policy

2

15

Country Policy Presentation by Republic of Korea

• Right after the end of Korean War: increasing food supply

• Government purchase land from landlords and redistribute to tenant

farmers – small-scale farmers increased

16

(1) 1950~1960s

2. History of Korean Agricultural Policy

Rice transplantation (1962)

National Archives of Korea

• Saemaul Movement: improving basic living conditions and infrastructure

of small rural villages

• diligence, self-help and cooperation between residents

17

(2) 1970s

2. History of Korean Agricultural Policy

Saemaul Movement (1973)

National Archives of Korea

• Start to terminate agricultural import restrictions

• Strong opposition from farmers against WTO

18

(3) 1980~1990s

2. History of Korean Agricultural Policy

Farmers’ protest against WTO (1994)

The Kyunghyang Shinmun

• A five-year comprehensive plans based on the Framework Act on

Agriculture, Rural Community and Food Industry

• New 2018-2022 plan was announced on February 6th

19

(4) 2000s~

2. History of Korean Agricultural Policy

Main Challenges

3

20

Country Policy Presentation by Republic of Korea

• Korea is experiencing very rapid aging, especially in rural areas

• Only 17 years from an aging society to an aged society – much faster than

Japan (24 years), the United States(72 years) and France(115 years)

21

(1) Aging Farm Population

3. Main Challenges

42.5%

9.4%

3.1%

41.0%

1970 1980 1990 2000 2010 2017 2020 2030 2040 2050 2060

0~14 15~64 65~

Population age composition, projected, KOSTAT(2016)

• Proportion of farm population aged over 65 years is 40.3% in 2016, higher

than national average(14%), and 61% of rice farmers are aged >65

• 56% of farms smaller than 1 ha have main operators aged >65

22

(1) Aging Farm Population

3. Main Challenges

56% 53%

37%

27%18%

40% 44%

58%

67%

74%

4% 3% 5% 6% 8%

< 1ha 1~3ha 3~5ha 5~10ha >10ha

<55

55~65

>65

Age of farm operators by farm size, KOSTAT(2015)

• Farm household income increasing very slowly because of decrease in

agricultural income caused by increased import and price fall

• Agricultural net income declined 0.4%

23

(2) Farm household Income

3. Main Challenges

Farm household income, KOSTAT(2017)

0

10,000

20,000

30,000

40,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

farm income non-farm income other income(thousand KRW)

• Disparity between urban and farm household income increased

• Low income problem is concentrated in old age population

• Income stabilization for rice farmers is most important and political issue

24

(2) Farm household Income

3. Main Challenges

Ratio of farm household income

to urban household income, KOSTAT(2017)

96%

64%

1995 2000 2005 2010 2015

37

,21

5

25

,58

8

1995 2000 2005 2010 2015

average paddy rice

Rice farmers’ household income

KOSTAT(2017)

(thousand KRW)

• Korea reduced considerable amount of current total AMS since abolishing

MPS and introducing rice direct payment in 2004

• Korea had to use all of AMS limit due to rice price collapse in 2017

25

(2) Farm household Income

3. Main Challenges

• Rapid expansion of intensive livestock production caused water and soil

pollution from manure emissions

• In 2015, 11 million birds destroyed due to HPAI

• In 2010-11, 3.3 million pigs and 150 thousand cattle destroyed due to FMD

26

(3) Animal disease, food safety and environmental issues

3. Main Challenges

Policy Goals of New Administration

4

27

Country Policy Presentation by Republic of Korea

• The vision of 2018-2022 Development Plan has four main policy targets

• Bottom-up participation will be strengthened

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4. Policy Goals of New Administration

Innovation for

Sustainable

Agriculture

Improving Rural

Welfare

Enhancing Food

Safety

Strengthening

Income Safety Net

Farming & Consuming

without Concerns

• 100 thousand ha of paddy rice field will be reduced for 2018-19

• Direct payment program for rice will be less coupled with production

• Direct payment scheme will be reformed to strengthen cross compliance

• Crop insurance programs will be expanded

• Rural diversification(food industry, tourism) will be promoted to give

more access to non-farm income for farmers

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(1) Strengthening income safety net

4. Policy Goals of New Administration

• Young start-up farmers will be provided comprehensive support

• Digital technology will be integrated into agriculture with regard to

production, distribution and rist management

• Renewable energy generation will be promoted, including solar

photovoltaic, biomass and geothermal heat

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(2) Innovation for sustainable agriculture

4. Policy Goals of New Administration

• Bio-security system focusing on animal disease prevention

• Environment-friendly livestock industry to reduce pollution

• Comprehensive animal-welfare road-map will provide standards for

facilities, maintenance and rearing density

• Labelling system for customers’ knowledge about each livestock farm

related to animal welfare and health

• Pesticide registration and traceability management system will be

improved

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(3) Enhancing food safety

4. Policy Goals of New Administration

• Enhancing direct payment for retirement, farmland pension and basic

pension to encourage aged and low-income farmers retire from production

• Building infrastructure including housing, traffic and medical condition

• Affordable transportation for the elderly and financially disadvantaged

• Rural rental housing with energy saving facilities and barrier-free design

• Medical outreach service for health check-up

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(4) Improving rural welfare

4. Policy Goals of New Administration

• Agricultural governance to reflect local and regional characteristics

• Policy design reflecting the opinion of farmers and customers

33

(5) Bottom-up policy participation

4. Policy Goals of New Administration

Thank You

CHO, Eun-Ji

Deputy DirectorAgricultural Policy Division

Ministry of Agriculture, Food and Rural Affairs

ejcho0518@korea.kr