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Korea's last chance to overhaul rice market
Korean rice farmers need to see the opening up of the local rice market in 10 years as the last chance at raising their competitiveness rather than reacting defensively and waiting for a windfall, experts say.

"Farmers here need to face reality and be willing to make major reforms in the country's rice market that will help them be more competitive before the 10-year time frame expires under the global trade agreement," said Lee Chang-soo, an agricultural policy researcher at the Korea Institute for International Economic Policy.

Last Wednesday, the National Assembly ratified a controversial rice bill that calls for Seoul to raise its rice import quota to 7.96 percent of its total domestic consumption by 2014 from the current 4 percent with nine rice-exporting countries. In return, Korea received a 10-year grace period for implementing tariffs on rice, a continuation of the 1994 WTO's Uruguay Round agreement.

The country is also required to directly sell foreign rice at retail outlets for the first time, which opponents say threatens the competitiveness of homegrown rice. The staple grain from such countries as the United States and China is expected to hit local retail outlets between March and May.

Under the pact, Korea is obliged to directly sell 22,557 tons of imported rice at supermarkets this year. The volume is expected to increase to 122,610 tons in 2014.

Stressing that receiving another grace period wouldn't be likely, experts urge farmers for their cooperation in reforming the age-old industry and conform to global market standards.

Noting that that the average age of rice farmers are 65, experts cite this as one of the challenges to reforming and modernizing the traditional industry. Of the total of 3.5 million farmers, about 7 percent are rice farmers. This is more than double the average 2 to 3 percent for developing countries.

"There's a lack of young farmers and a serious lack of new entrants; we need a generation change to bring new marketing and business approaches with more modern values," said Suh Jin-kyo, an agricultural policy researcher at the Korea Rural Economic Institute.

While Korea's agriculture market urgently needs structural reforms based on age and business savvy of farmers, it also needs to stand on par with the global trading standards.

Some of the business savvy includes focusing on the quality and building the brands of local rice products.

"They have to make Korean consumers want to reach for their rice brands instead of imported ones even if it's more costly," said Park Dong-kyu, a researcher at the Korea Rural Economic Institute.

The stress and frustration of foreign competition also comes amid declining trend in rice consumption. Rice output totaled 4.76 million tons this year, down 4.6 percent from 2004, according to the Ministry of Agriculture and Forestry.

The drop was attributed to less land being used to grow rice and unfavorable weather conditions in the late summer and fall months.

The ministry attributed the dwindling rice paddies to Korea's rapidly aging population of rural communities, meaning older people were less inefficient in grain production.

The total size of rice paddies reached 979,717 hectares, down 2.1 percent or 21,000 hectares from last year, the ministry said.

But to address such issues, the government pledged to raise investment in aiding eligible farmers to boost the competitiveness of the rice industry.

The Agriculture Ministry said that while rice prices have fallen off by an average of 13 percent at the production level, most farmers will not feel any big difference in their earnings. It noted that if the price of an 80-kilogram sack of rice fell to 140,000 won from the government target price of 170,083 won this year, the government would directly pay farmers 85 percent, or 25,000 won, of the 30,000 won difference.

An overcrowding of rice farmers also signals the need for a drop.

The country needs to reduce the number of its rice farmers and make the agricultural sector more competitive before the rice market is fully liberalized, Vice Finance Minister Bahk Byong-won said last week.

"Given the current agricultural structure, there are too many farmers and the number needs to be reduced." Bahk said in a weekly briefing.

At the end of 2004, there were 3.53 million farmers in South Korea out of a population of 48 million.

The officials' remarks came a day after the National Assembly ratified a trade pact that would slowly open the country's rice market despite fierce protests from rice farmers.

"We have missed an opportunity to restructure the agricultural sector for the past decade. We should have focused on enhancing its competitive edge," Bahk said.

The vice minister also said that to upgrade product quality and expand per-capita agricultural production could help increase local farmers' incomes.
MGR Archive 29.11.2005
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