The government has begun overhauling the rice market segregation system ahead of the Grain Management Act, which is set to take effect in Aug. next year. The key question is how to adjust the current "3%·5% rule." Under this standard, the government can trigger market segregation when excess production is 3% or more and prices fall 5% or more compared with the average year.
According to the government on the 7th, the Ministry of Agriculture, Food and Rural Affairs recently commissioned a study titled "Reform of the rice supply and demand system to strengthen preemptive supply and demand control." The study will serve as basic material for revising the enforcement decree of the Grain Management Act and will be reflected in the operation plan for the "Grain Supply and Demand Management Committee," which is scheduled for a pilot run in Feb. next year. The Grain Supply and Demand Management Committee will be chaired by the Vice Minister of the ministry, and producer organizations will make up at least one-third of the Commissioners to oversee overall supply and demand control.
The ministry said it will refine the institutional basis so the government can intervene early at stages when supply-demand imbalances are expected, in order not to repeat the limits of "ex post market segregation" seen during past rice price slumps. A ministry official said, "The law provides that the scope for triggering market segregation is set by presidential decree, and within that, the committee decides the specific criteria," adding, "We plan to decide, based on the research results, whether to keep the current 3%·5% criteria as is or to vary the ranges of production and price fluctuations."
Under the current system, if excess production is 3% or more compared with the average year and rice prices fall 5% or more, the government can purchase surplus rice. However, because it is a discretionary clause rather than a legal obligation, criticism arose that the government failed to intervene in the market in a timely manner during the 2021 rice price slump.
The revised Grain Management Act makes market segregation mandatory and requires that the conditions for triggering it be set by presidential decree to address this limitation. The government is preparing a draft enforcement decree to put this into concrete terms. For example, it would set the excess production range at "3–8%" and the price drop range at "5–10%," with the Grain Supply and Demand Management Committee determining the actual timing of activation within that range.
This overhaul also takes into account that market conditions are changing rapidly ahead of the law's implementation. Recently, even as rice production is exceeding the usual level, prices remain strong. According to the National Data Agency, as of Oct. 25, the rice price (80 kg) was 229,612 won, up about 24% from the same period a year earlier. The Korea Rural Economic Institute (KREI) estimated this year's rice production at 3.551 million tons and expected demand at 3.409 million tons. The excess volume is about 140,000 tons, but the government has secured 100,000 tons as market segregation volume, bringing the situation close to "supply-demand balance."
Im Jeong-bin, a professor in the Department of Agricultural Economics and Rural Sociology at Seoul National University, said, "The market segregation criteria should be designed rationally to reflect the reality of production costs and farm structures, rather than as a simple numerical adjustment," adding, "Instead of managing only rice separately, policy should take a comprehensive supply-demand approach linked with crop conversion or the strategic crop direct payment program."