Government intervention in South Korean agriculture

World Agriculture, June, 1991 by J. Albert Evans

The NLCF controls the Livestock Development Fund (LDF) and is authorized to make development and production loans to cooperative members. The LPMO marks up resale prices of imported beef to hotels and for general consumption, depositing the net proceeds beyond handling costs into the LDF.

Expenditures from the LDF, approved by the MAFF, support activities such as livestock research, and infrastructure improvement loans to farmers. Other functions of the NLCF include extension work and agribusiness development. The NLCF imports and exports livestock products (except beef), as determined by the MAFF.

The South Korean Government set the LPMO up in late 1988 as the sole state trading organization for importing beef. According to its bylaws, the purpose of the LPMO is to increase livestock farmer incomes and stabilize livestock product prices through smooth adjustments in supply and distribution (12, 17).

Individual Product Laws - Individual product laws, an issue in recent U.S.-South Korean trade talks, underpin domestic subsidies and import protection. These laws are often vaguely worded but are the basis for regulations or guidelines which frequently are not publicized and allow wide administrative discretion. Commodity-specific individual laws include, among others, the Food Grain and Feed Management Acts of 1950, the Livestock Law, and the Animal Quarantine Act.

The grain management laws of 1950 are still the basic legal authority that is central to government farm policy. Under these laws, the Government is the ultimate authority to approve or deny import licensing.

Budgetary Programs - Aggregate outlays for 10 budgeted programs of assistance to agriculture increased 37 percent between 1987 and 1989, continuing the strong uptrend of recent decades. Budget allocations for development programs designated as "Agricultural Development," "Irrigation Development," and "Agricultural Infrastructure Development" amounted to 76 percent of the 1989 total budget of 1.12 trillion won ($1.67 billion) and reflected the greatest areas of growth in 1987-89 (table 1). (In tables 2 and 3 showing calculations of PSE's and CSE's, government budget assistance under these 10 programs is aggregated into four generalized categories (inputs assistance, marketing assistance, infrastructure support, and regional support) under the heading "Policy Transfers.")

Merchanization, through credit supplied by the NACF, is still strongly encouraged, primarily because it enhances the productivity of labor for rice and allows time to establish a supplementary crop of winter barley or greenhouse vegetables. The Government has maintained a dominant role in large and medium-scale projects that include forest land reclamation, tidal land development, irrigation and drainage facilities, and farmland rearrangement of small fragmented fields after the land is leveled.

Under the Saemael (New Community) initiative, investment projects continue to be undertaken to improve rural living conditions by providing sanitary water supply systems, better sewage systems, housing, and village reconstruction. Other projects include paving roads and rural electrification. To enable the marketing network to handle the increased volume and variety of agricultural products, the Government is modernizing markets while seeking increased private ownership of wholesale outlets.