{"id":2200227,"date":"2023-02-23T07:40:04","date_gmt":"2023-02-23T07:40:04","guid":{"rendered":"https:\/\/www.nknews.org\/koreapro\/?p=2200227"},"modified":"2023-04-05T16:09:39","modified_gmt":"2023-04-05T07:09:39","slug":"south-korea-struggles-to-tackle-its-growing-rice-supply-glut","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/02\/south-korea-struggles-to-tackle-its-growing-rice-supply-glut\/","title":{"rendered":"South Korea struggles to tackle its growing rice supply glut"},"content":{"rendered":"

In late January, the opposition-controlled National Assembly <\/span>introduced<\/span><\/a> a bill to amend the country\u2019s <\/span>Grain Management Act<\/span><\/a>, with the stated goal of stabilizing the rice market by forcing the government to purchase surplus rice from the market. This bill is waiting for a plenary session vote, which Democratic Party (DP) floor leader Park Hong-geun <\/span>says<\/span><\/a> will happen on Friday.<\/span><\/p>\n

President Yoon Suk-yeol has <\/span>characterized<\/span><\/a> the bill as the DP\u2019s attempt to rescue their leader Lee Jae-myung from <\/span>prosecution<\/span><\/a> by gaining support from farmers, and he has strongly <\/span>hinted<\/span><\/a> that he will veto the bill if it reaches his desk.<\/span><\/p>\n

However, what appears to be a straightforward partisan fight between the opposition party and the president masks a much more complicated relationship between the political establishment and South Korea\u2019s rice farmers.<\/span><\/p>\n

A BOTTOMLESS JAR?<\/b><\/p>\n

The proposed bill would amend the Grain Management Act to compel the ROK government to purchase overproduced rice when supply exceeds more than 3% of demand. The government will also have to purchase rice if prices fall by more than 5% on-year.<\/span><\/p>\n

Yoon has <\/span>described<\/span><\/a> the bill as akin to \u201cpouring tax money into a bottomless jar.\u201d<\/span><\/p>\n

South Koreans\u2019 consumption of rice has been on a steady <\/span>decline<\/span><\/a> since 1980 and hit an all-time low in 2022 due to changes in diet and eating habits and a declining population. South Koreans consume less rice today than at any point since the government began compiling related data in 1962.<\/span><\/p>\n

The price of a 44-pound (20-kg) bag of rice fell <\/span>24.9%<\/span><\/a> compared to the previous year in 2022, marking the largest on-year decline since 1977.<\/span><\/p>\n

If the bill does become law, it will lock in the South Korean government to purchase an ever increasing amount of rice at higher costs to make up for the losses.<\/span><\/p>\n

\"\"

Rice field near Gopyeongri in Yecheon County, Gyeongsangbuk-do, South Korea | Image: Wikimedia Commons<\/em><\/p><\/div>\n

PROTECTED MARKET<\/b><\/p>\n

Of all the industrial sectors in South Korea, few have been as thoroughly and well-protected as the rice market.<\/span><\/p>\n

The ROK government excluded rice entirely from the U.S.-Korea Free Trade Agreement (<\/span>KORUS FTA<\/span><\/a>) signed in 2012. Instead, Seoul agreed to provide Washington with a country-specific rice quota under its World Trade Organization (WTO) obligations \u2014 worth approximately $110 million annually \u2014 in 2019.<\/span><\/p>\n

South Korea also imposes extremely high tariffs of <\/span>513%<\/span><\/a> on rice imports.\u00a0<\/span><\/p>\n

After becoming a WTO member in 1995, South Korea delayed liberalizing its rice market for 20 years. When its special treatment for rice market access under the WTO expired in 2014, five countries \u2014 the U.S., Australia, China, Thailand and Vietnam \u2014 entered into negotiations with South Korea.<\/span><\/p>\n

As a result of these negotiations, the ROK <\/span>agreed<\/span><\/a> to an import quota of 408,700 tons of rice from those countries with a tariff of 5%. Any imported rice that fell outside that designated quota would face the 513% tariff.<\/span><\/p>\n

Although Seoul suggested the compromise in 2014, the WTO only issued its certification approving the plan in 2020 after the five countries completed the verification of rice tariffs and withdrew their objections.<\/span><\/p>\n

Aside from protection from foreign competition, the ROK government provides subsidies to help preserve rice farmers\u2019 profits. When the market price during the harvest season does not reach a government-set goal price, Seoul offers farmers up to <\/span>85%<\/span><\/a> of the price gap between the market price and the government-set price.<\/span><\/p>\n

The South Korean government has spent <\/span>trillions<\/span><\/a> of won to stabilize rice prices for years, through subsidies to rice farmers and purchasing oversupplied rice. The market distortions caused by these protectionist policies have incentivized excessive supply in the rice market.<\/span><\/p>\n

\"\"

Members of the Korean Peasants League protest against the Yoon administration over falling rice prices, Dec. 4, 2022 | Image: Facebook<\/a><\/em><\/p><\/div>\n

POLITICAL CALCULATIONS<\/b><\/p>\n

DP lawmakers have argued that the bill is needed to stabilize prices. Some in the party have <\/span>characterized<\/span><\/a> the bill as a way to \u201cstructurally prevent overproduction of rice and provide a minimum safety net to farmers.\u201d\u00a0<\/span><\/p>\n

But some members of the ruling People Power Party (PPP) have <\/span>argued<\/span><\/a> that while the bill might initially help secure farmers\u2019 livelihoods, it will have the effect of lowering the price of rice in the long term. Agriculture minister Chung Hwang-keun strongly endorsed the PPP\u2019s view, voicing his <\/span>opposition<\/span><\/a> to the bill on the grounds that he is trying to maintain rice prices.<\/span><\/p>\n

The PPP\u2019s opposition to the bill rests on the disagreement between the country\u2019s two different lobbyist groups that represent rice farmers. The <\/span>Korea Rice Professional Farmers Association<\/span><\/a> opposes the bill, while the <\/span>Korean Peasants League<\/span><\/a> actively supports it.<\/span><\/p>\n

However, rice has long been a sensitive topic in South Korean politics, as both the ruling and opposition parties have significant rice-producing constituencies.\u00a0<\/span><\/p>\n

Cheorwon County in Gangwon Province, a major rice-farming region, provides a good case study in the politics of rice. The county <\/span>produced<\/span><\/a> 75,000 tons of rice in 2021, a 27% surge compared to the previous year, and even though the government preemptively purchased 2,600 tons of it to offset the impact of falling prices on farmers, more than 5,400 tons still remained in stock.<\/span><\/p>\n

Given this situation, the PPP risks seriously undermining support for the party in the province if it does anything that hurts rice farmers, or just appears to do so. The PPP won <\/span>12 out of 17 key races<\/span><\/a> for big city mayors and provincial governors in last year\u2019s local elections, including the governorship of Gangwon. But the PPP\u2019s hold over the province is shaky due to Governor Kim Jin-tae\u2019s <\/span>mishandling<\/span><\/a> of the <\/span>Legoland Korea fiasco<\/span><\/a>.<\/span><\/p>\n

Although Yoon Suk-yeol might have <\/span>characterized<\/span><\/a> the bill as DP lawmakers\u2019 attempt to rescue Lee Jae-myung, rank-and-file PPP lawmakers might not be so quick to side with the president against the rice surplus bill with parliamentary elections a year away.<\/span><\/p>\n

Edited by Bryan Betts<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

In late January, the opposition-controlled National Assembly introduced a bill to amend the country\u2019s Grain Management Act, with the stated goal of stabilizing the rice market by forcing the government to purchase surplus rice from the market. This bill is waiting for a plenary session vote, which Democratic Party (DP) floor leader Park Hong-geun says […]<\/p>\n","protected":false},"author":7824,"featured_media":2200230,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[24],"class_list":["post-2200227","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-business-economy"],"yoast_head":"\nSouth Korea struggles to tackle its growing rice supply glut - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2023\/02\/south-korea-struggles-to-tackle-its-growing-rice-supply-glut\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea struggles to tackle its growing rice supply glut - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"In late January, the opposition-controlled National Assembly introduced a bill to amend the country\u2019s Grain Management Act, with the stated goal of stabilizing the rice market by forcing the government to purchase surplus rice from the market. 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