Rice Policy Reform and Response from Producing Areas in Korea

Abstract

Korea, which completed its tenth year under the WTO system, in 2005 abolished the traditional dual price system and introduced a "Rice Income Compensating System". In addition, in 2006, it enforced a new method of rice selling, a "Rice Consignment Sale System". The former was uniformly established over the whole country as a capital management system in order to support the expected fall in rice prices. The latter recognized the autonomy of the capital management as a system to activate the faculty of private distribution. This paper considers these two systems and studies their influence on producing areas regarding the results and objectives of the enactment and the structure and the main guidelines. Specially, this paper analyses the level of income compensation in the producing areas under respective rice compensating systems and examines the application of the capital financing in the producing areas regarding the consignment system. The changes in the rice policy in Korea have favored the good producing fields of rice, which would constitute reconstruction of the rice production according to the theory of a market economy. The scope of this analysis characterizes the policies supporting the sales expansion and the encouragement of the good rice field production areas.