The amended Grain Management Act, which President Yoon Suk-yeol previously exercised the veto power twice on the grounds of financial burden, passed the National Assembly plenary session on the 4th with an agreement between the ruling and opposition parties. This was thanks to strengthening the standards for the government's mandatory rice purchases, which had previously been controversial.
However, the relevant industry expresses doubts about the effectiveness of the Grain Management Act. To prevent overproduction of rice, it is necessary to induce a transition to other crops, but there are no specific related policies. Experts agree that since the Grain Management Act is set to be implemented one year after the government's announcement, there is a need for policy supplements to minimize anticipated side effects.
According to the National Assembly and the relevant industry on the 5th, the Grain Management Act passed the National Assembly plenary session the previous afternoon. The core content of the Grain Management Act is that if the price falls below a certain level due to oversupply of rice, the government will purchase the excess supply.
The recently passed Grain Management Act includes content agreed upon by the ruling and opposition parties to ensure that it does not impose excessive financial burdens during its subcommittee review by the Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee on the 24th. Major provisions include ▲ financial support for farmers cultivating crops other than rice ▲ strengthening the standards for mandatory government purchases to minimize side effects of overproduction ▲ preemptive adjustment and isolation of rice cultivation areas for rice supply and demand regulation.
However, the atmosphere in the relevant industry is skeptical about the effectiveness of the Grain Management Act. This is due to the lack of concrete policy measures to encourage the transition to other crops in preparation for overproduction of rice.
Earlier in 2023, the Ministry of Agriculture, Food, and Rural Affairs announced it would reduce the rice cultivation area by 80,000 hectares through the "strategic crop direct payment system"; however, the actual implementation amounted to only 60,000 hectares. The government also provided public storage rice purchase incentives by local government, but it was not enough.
In particular, as crops that could replace rice became concentrated in mungbeans, there have been occurrences of oversupply of mungbeans. According to the Ministry of Agriculture, Food, and Rural Affairs, of the 60,000 hectares applied for under the strategic crop direct payment system, more than half, 35,000 hectares, were mungbeans.
A representative running a rice production and distribution company said, "The transition to mungbeans instead of rice is due to it being a crop suitable for cultivation in paddy fields," adding that "for the Grain Management Act to have effectiveness from the industry's perspective, whether it can generate revenue from alternative crops without additional expenses is the key."
Mr. B, who has been farming rice for 18 years, said, "Unless a policy emerges that assures that the income from cultivating other crops is more stable than that from rice production, it is likely that most farms will not transition from rice to other crops."
In this context, recent rice prices have been on the rise. According to the Korea Agricultural Marketing Information Service (KAMIS), the retail price of rice based on 20 kg is 58,636 won as of the 4th. This is a 13.77% increase compared to the same period last year and a 12.4% increase compared to the average of previous years.
The backdrop of the recent decline in rice production is attributed to abnormal weather conditions. According to the Ministry of Agriculture, Food, and Rural Affairs, as of mid-last month, 25,065 hectares, accounting for 3.6% of the total rice cultivation area, suffered from flooding due to heavy rainfall. Last year, flooding affected 7,791 hectares of paddy fields concentrated in the Jeonnam region, and due to the prolonged heat wave from abnormal temperatures, the rice cultivation area damaged by rice borers reached 34,000 hectares.
According to a representative of the food industry, "As the likelihood of rice production becoming insufficient due to abnormal weather will likely increase in the future, it is questionable whether the Grain Management Act, which is a producer-oriented policy, will truly help stabilize rice prices if fundamental issues are not addressed."
Experts advise that since the Grain Management Act will be implemented one year after the government announcement, it is necessary to supplement policies to reduce anticipated side effects.
Professor Lim Jeong-bin of the Department of Agricultural Economics at Seoul National University said, "There is a concern that as crops are transitioned to other crops instead of rice, there could be side effects where those crops are oversupplied and prices collapse," adding that "it is essential to meticulously investigate market demand for alternative crops and diversify items to prevent concentration on specific crops in policy design."
Professor Kim Han-ho of the Department of Agricultural Economics at Seoul National University stated, "How well we can adjust the production volume of rice or alternative crops in advance is a key issue," noting that "policy research is necessary to establish preemptive production adjustment systems before the law is implemented."
A representative from the Ministry of Agriculture, Food, and Rural Affairs said, "We plan to focus on crop management and budget support according to the area of applications for each item to prevent only transitioning to specific crops or oversupply of rice," adding that "we are closely collaborating with the Ministry of Economy and Finance to increase next year's direct payment budget for strategic crops from 240 billion won to 200 billion won and expand the implementation area to 90,000 hectares."