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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
28
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
29
(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
30
(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
31
(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
32
(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