Government intervention in South Korean agriculture

World Agriculture, June, 1991 by J. Albert Evans

Soybeans - Almost all of the domestic soybean output is for human use. About 80 percent of soybeans consumed are imported under quotas, subject to a 3-percent tariff that began in 1988. Assistance to South Korean soybean producers in 1987-89, indicated by a PSE of 86 percent (table 4), was essentially the same as levels for rice and barley. Budgetary subsidies provided about 10 percent of total assistance, primarily for inputs such as seed and fertilizer, for marketing assistance, and regional and infrastructure support. The MAFF emphasizes soybean production through high price supports, budgetary assistance, and border policies (27).

Consumer taxes on soybeans were relatively high in 1987-89 at 79 percent of total consumer cost, about the same as on rice and barley. The cost of domestic soybean price support programs and the effects of import quotas and restrictions are passed on to consumers, which keeps prices for soybeans very high.

Refined Sugar - South Korea does not produce raw sugar, and relies entirely on imports for its processing industry. Domestically refined sugar satisfies internal needs and enters export channels around the world. Domestic consumers of refined sugar were taxed in 1987-89 to the extent of 54 percent of their total product cost, benefiting domestic processors and companies that trade sugar products in South Korea and in export markets.

Assistance to Livestock Producers

As measured by PSE's, government assistance to producers of meats, milk, and eggs in 1987-89 was well below levels for rice, barley, corn, and soybeans (table 4). The lower rates to livestock producers is partly explained by the dominant food security focus on food grains. In addition, there are far fewer livestock producers than grain producers, and consequently they have less political clout.

Producer assistance for beef (67 percent) and milk (64 percent) was about three-fourths the rates for rice and barley, and about double those for chicken and eggs. Assistance to producers of pork, an export commodity, was lowest. Overall, government assistance to livestock producers averaged 45 percent in 1987-89, somewhat more than consumers were taxed (38 percent).

Despite high prices, South Koreans have increased their dietary intake of meats (20). Per capita meat consumption, 17 kilograms per year in 1987-89, was 72 percent more than in 1977-79. Pork's 59-percent share of total meat use in 1987-89 was about triple that of beef (the preferred meat) and chicken. Per capita pork consumption doubled during the decade, far exceeding growth for chicken (52 percent), and beef (25 percent). Milk use per capita more than tripled and eggs gained 58 percent.

Beef - Of 1987-89 government assistance to beef, 91 percent reflects various price intervention policies (table 4). These include a 20-percent tariff, beef import quotas that have been increased since mid-1989 following a 4-year virtual ban, State trading through the NLCF and later the LPMO, and parastatal control of beef marketing and distribution. A cattle price stabilization program was implemented in July 1988, also administered by the LPMO (29).