The primary crop in South Korea is rice. About 80 percent of farms cultivate it. Domestic production is sufficient to supply the nation and remains a political priority. Rice is the main crop and rice fields cover about half of South Korea’s farmland. Areas long the coasts, in reclaimed tidal areas, and in river valleys are the main rice-growing areas.
Double-cropping is common in the southern provinces. Rice production in 2004–05 was 5,000,000 tons. In 1999, rice production was 5,975,000 metric tons, a large increase from 5,060,000 metric tons in 1995. Self-sufficiency has been attained in rice production, but at a cost of nearly US$2 billion per year in direct producer subsidies.

Rice has been a leading grain in Korea for over a thousand years (Crawford and Lee, 2003), and currently is the staple grain and largest starch source in Korea. Rice provided 64 percent of the starch-based calories and 28 percent of total calories in 2011 (FAOSTAT, 2015). Consumption has varied greatly over many centuries. In times of poverty and foreign rule (for example, during the Japanese empire, 1910-45), Koreans have relied on other domestically produced traditional grains and seeds in addition to rice: wheat, barley, millet, sorghum, and buckwheat. In times of prosperity, white rice has been the dominant grain. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016 ~]

White rice, cooked or steamed, is typically served and eaten in a bowl. Sometimes the rice is mixed with other grains or ingredients like seasonings, vegetables, etc. Another longstanding use has been for making alcoholic beverages. These include makkoli, a fermented rice wine with alcoholic content under 8 percent. Makkoli was traditionally produced in farm households using simple methods. It is now widely available as a bottled product. Soju is a distilled beverage that has often been made from old rice, but is also made from imported tapioca, other grains, sweet potatoes, or potatoes. Its alcohol content varies from under 20 percent to over 40 percent. The Government has promoted rice use in processed foods since the mid-1990s. Besides makkoli and soju, rice has been used in bakery applications. ~

Rice was the most important crop in the 1980s and yields were impressive. As noted by Donald S. Macdonald, however, rising wage levels and land values have made it expensive to produce. Rice represented about 90 percent of total grain production and over 40 percent of farm income; the 1988 rice crop was 6.5 million tons. Rice was imported in the 1980s, but the amount depended on the success of domestic harvests. The government's rice support program reached a record US$1.9 billion in 1986, as compared with US$890 million in 1985. By raising procurement prices by 14 percent over the 1986 level, Seoul achieved a rice price structure that was about five times that of the world market in 1987. [Source: Andrea Matles Savada and William Shaw, Library of Congress, 1990 *]

South Korea 513 Percent Tariff On Rice Imports

South Korea has 513 percent tariff on imported foreign rice. From the mid 1990s to the mid the mid 2010s, it maintained quotas on foreign rice imports under a deal worked out with the World Trade Organisation (WTO). In 2014, South Korea announcing it would scrap rice import caps and proposed a 513-percent tariff to soften the impact on it domestic rice market.

In 2015, Korea changed its treatment of rice imports and established a tariff-rate quota (TRQ). However, by instituting an over-quota tariff so high that it effectively precludes significant imports and announcing its intention to tightly manage the disposition of government-imported rice in the TRQ, Korea maintained its isolation from world rice markets. The high protection of rice contrasts with the success of many other Korean products that compete in the world economy. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

In 2019, Pulse News reported: “South Korea has received consent for its 513-percent rice import tariff from global farming majors after five long years of negotiation and World Trade Organization’s verification process, according to the Ministry of Agriculture, Food, and Rural Affairs on Tuesday.

“The ministry said its trade partners agreed with WTO on closing the verification process for Korea’s proposed 513 percent tariff on foreign rice. In 2014, Korea proposed levying 513 percent tariff on rice imports to WTO. Its proposal was met with complaint from world’s five major rice exporters – the U.S., China, Australia, Thailand, and Vietnam, leading WTO to verify Korea’s 513-percent tariff.

“With the verification process finally settled, Korea will levy 513 percent tariff on imported rice and also maintain tariff rate quota of 408,700 tons. The tariff rate quota refers to the amount of rice the country must import on low tariff rate. Of the total rate quota of 408,700 tons, 388,700 tons will be applied to the five countries based on their rice export volume to Korea from 2015 to 2017. The largest 157,195 tons will go to China, followed by the U.S. with 132,304 tons. Vietnam will get 55,112 tons, Thailand 28,494 tons, and Australia 15,595 tons.

The new quota went into effect on January 1, 2020. Upon joining WTO in 1995, Korea has employed tarriffcation on all agricultural products, meaning any produce could be imported when tariff is paid. But rice was given an exception, with tarriffcation deferred twice since then. After moratorium period for rice ended in 2014, Korea decided to include rice in the tarriffcation and informed WTO it would impose 513 percent tariff on rice imports.

Rice Farming in South Korean

Donald N. Clark wrote in “Culture and Customs of Korea”: “When we speak of the Korean agricultural economy we are speaking of rice agriculture. In a way, it is ironic that Koreans should be so attached to rice, since their country is so mountainous. After all, since Korean-style rice has to spend much of the growing season in flooded paddy fields, it takes flat land to maintain rice culture. Yet rice has always been the farmer's crop of choice. [Source: “Culture and Customs of Korea” by Donald N. Clark, Greenwood Press, Westport, Connecticut, London, 2000]

“In order to grow it, Koreans construct elaborate stair-steps of terraces up the sides of mountains, making different levels of flat land to grow rice even where the land is hilly. There only has to be a mountain stream to provide water. Part of the water can be diverted into the top level of the paddies and then allowed to flow slowly down the valley, step by step, until it reaches the bottom. The carefully controlled flow of water can thus irrigate dozens of paddy fields as it makes its way down the mountainside.

“The demands of rice agriculture have played an important part in shaping Korean history and social organization. A farmer cannot grow rice by himself or even with the help of just his own household. The entire village has to cooperate, whether the villagers are all members of the same two or three clans or completely unrelated. They help each other clear the fields. They line up to transplant the rice seedlings in orderly rows. They work in teams to harvest the rice. And they thresh the grain and weave the straw together, when the harvest is done. Agriculture is an intensely social kind of work, and the closeness of the communities is one reason why Confucian social ethics, with their emphasis on harmonious social relations, have always been so prevalent.

History of Rice Farming in South Korea in the 20th Century

In 1910, Japan annexed Korea. Under Japanese rule, South Korea became a source for rice sent to Japan and to North Korea, which was developed by the Japanese for mining and industry. After liberation from Japan in 1945, South Korea ceased to export much rice, and imported U.S. rice donated as food aid. Sporadic exports for the most part ended after 1966 for the remainder of the century, with a few minor exceptions (FAS/USDA, PS&D). [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

As the Korean population grew and consumers switched from barley and millet to rice, demand in Korea outpaced production in the late 1960s and 1970s. The Government’s rice self-sufficiency campaign succeeded in ending rice imports in one year, 1978. However, concerned about possible food shortages after the serious reduction in production in 1980, the Korean Government turned to imports on an unprecedented scale.

A major government attempt throughout the 1970s to switch consumption and production to a new high-yielding variety failed. The Korean government’s drive for self-sufficiency ultimately succeeded in the 1980s, however, as yield increases among traditional rice types and declining consumption of rice for table use, combined with a total ban on imports, brought the domestic market into balance. The cost, both to consumer prices and to budget outlays, has been high.

The Korean Government imported well over 3 million tons in its effort to avoid a shortage after the bad 1980 harvest (3.3 million mt 1980-83, according to FAS/USDA, PS&D; 3.6 million mt according to Customs Office, Yearbooks, 1980 and 1981). The sudden surge of imports roiled the world rice market, and caused rice prices to spike. The Korean Government purchased mostly medium- and short-grain rice. Long-grain rice prices in the world market also rose as long-grain rice was purchased for use as a replacement for medium-grain rice that was diverted to Korea. Of the rice purchased by Korea in 1980-83, 2.096 million tons, or about 58 percent of the total imports, was imported from the United States (Box: Rice Imports After Korea’s 1980 Harvest Problem) (Customs Office, Yearbooks, 1980 and 1981).

After the 1980 setback, the Government turned its attention to conventional varieties of rice. After yields of conventional rice varieties proved resilient and were raised through breeding and improved agricultural practices, the Korean Government resumed its insistence on rice self-sufficiency after 1983, and ceased importing large amounts of rice. Korea actually exported some rice to repay loans made in the 1980-83 crisis by Japan and Indonesia. Since 1995, Korea has been obliged to import a minimum amount of rice in order to be part of the WTO and benefit from lower barriers to its nonfood exports to other countries. Korea’s use of a special mechanism to ban rice imports outside of the minimum access quota was renewed in 2004, with the introduction of a special quota share to be auctioned for table use. Most imported rice since 1995, however, has been used for processing food and beverage products. Korea decided in 2014 not to renew the absolute quota and switched to a tariff-rate quota in which imports above the quota are permitted. The Korean Government retained its complete market control of in-quota imports, and imposed an extremely high tariff (513 percent) that will in practice preclude over-quota imports.

Rice Production in South Korea

South Korea’s rice area peaked in 1987, at 1.26 million hectares. It has declined since then by over one third, to 799,000 hectares (2015; FAS/USDA, PS&D). Lack of demand for rice contributed to the decline. Some of the area taken out of rice production has not been used for other crops or purposes, but is vacant. Korea’s cultivated land area has also gradually declined over time. The rice area accounts for about 50 percent of total cultivated land. Since 2006, rice area has dropped slightly faster than total area, and was 47.5 percent of the total in 2015 (MAFRA, yearbook, various issues and Korean Statistical Information System (KOSIS) database). [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

Rice has been grown in Korea for 3-4,000 years (Crawford and Lee, 2003). Rice can be grown both as a heavily irrigated crop, in paddy fields, and as a so-called upland crop, which is not irrigated and in which the field is not bounded by bunds (low walls) to form a paddy. Over time, upland rice farming has declined in Korea and throughout Asia. In paddy rice production, the paddy is flooded before rice is transplanted into the field. The field can then be drained and reflooded during the growing season, for several reasons: 1) To provide moisture for the growing plants 2) To control pests and weeds 3) To regulate temperature, especially in periods when abnormally cold weather can affect the development of the kernels. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

Before harvest, the paddy is drained so that conditions are dry while the grain ripens. looding and draining the paddies requires that a water source be available and that the land slopes enough so that water flows in and out when gates are opened to access the water source or to drain the field, while maintaining a relatively even depth across the field. Periodic work to maintain the bunds around the paddy; to keep the paddy level; and to provide access to the water source has always been required. Over time, water control has become a larger-scale undertaking. Reservoirs have become larger, serving more area and using longer networks of channels to send water to the paddies and to drain them. In addition to gravity, pumps have been used to lift water into and out of irrigated fields. Old systems of farmer cooperation to maintain water supplies to a large number of heterogeneous paddies have given way to large systems using machinery and regularly shaped, homogeneous paddies, organized by specialized government agencies. Labor has been replaced by machines that require fuel. Paddy fields have been consolidated, so that they are uniform (usually rectangular) and much larger in extent. This reduces labor in maintaining bunds, keeping the fields graded, and getting water into and out of the paddy. It also facilitates the use of larger machinery.

Over the decade between 2002 and 2013, the proportion of paddies deemed “fully irrigated” rose from 77 to almost 81 percent, and the proportion of fully irrigated paddies with irrigation managed by the Korea Rural Community Corporation rose from 60 percent to 68 percent (MAFRA, Yearbook, various issues).

Traditional Rice Cycle in South Korean

Donald N. Clark wrote in “Culture and Customs of Korea”: “The "rice cycle" begins in March or early April when rice seeds are spread in seedbeds of very wet earth. There the seeds germinate and develop into rice seedlings, little rice plants that grow to a height of eight to ten inches. The seedlings grow so thickly that they soon resemble a lawn that needs mowing, and they cannot grow to maturity unless they are separated and given more space. In June, therefore, they are transplanted into large flat paddy fields. To prepare the paddies to receive the seedlings the farmers first harvest whatever winter crops might have grown there (e.g., winter wheat or barley). Then they plow the earth, fertilize it, and flood the fields with water, making them look like square ponds. [Source: “Culture and Customs of Korea” by Donald N. Clark, Greenwood Press, Westport, Connecticut, London, 2000]

“Then the farmers gather bunches of seedlings from the seedbeds and toss them into the irrigated paddies, where the villagers work in groups transplanting the seedlings into the paddies. They stretch a string across the field to guide them as they plant the seedlings a foot apart in row after row, bending over and reaching down into the water to press one plant at a time down several inches into the soft mud. It is backbreaking work, and to help pass the time the villagers sing, gossip, and tell jokes. Men, women, old, and young all do this work together. Students also show up to help, and schools usually cancel classes on this vitally important day in village life.

“The schedule for growing and transplanting the seedlings varies with latitude and altitude. Near the southern coast it is warm enough to permit double-cropping, and there are two rice cycles in a year. Farther north, however, rice is a summer crop, and farmers try to grow a barley crop that is harvested in the late spring just as the rice seedlings are getting ready for transplanting. This means that the fields are engaged in growing something nearly all the time and farmers have to worry about using up all the nutrients in the soil. This kind of farming cannot happen without generous applications of chemical fertilizer.

“Korea's weather pattern is ideal for rice culture. Late in June, just after the transplanting is completed, warm monsoon winds carry humid ocean air across Korea and generate a rainy season that keeps the country wet and enables the seedlings to resume growing in the paddies. By late July when the rainy season ends, the plants are two feet high and ready to make the transition from wet paddy ground to dry field growth. The fields are drained and the villagers spend their time pulling weeds and fighting insects.

“By September the fields have started turning yellow and heads of grain have appeared, bending the tops of the plants with their weight. In early October comes the harvest. Until recently, when many villages began depending on machines to do the cutting, the farmers themselves would take razor-sharp sickles and squat down in the fields cutting the rice plants one by one as close to the ground as possible. As with the transplanting of seedlings, which is a village project, the harvesting is done by teams of neighbors helping each other, field by field, assisted by hired male laborers. It is exhausting and dangerous work, since the sickles can do serious injury to hands and fingers.

After South Korea’s 1980 Harvest Problem

The rice crop was affected by a period of cold weather in June 1980. Kim and Sumner (2006) note that the leading rice variety, tongil, was also under pressure from rice blast disease from 1978 on. The 1980 crop was widely affected by rice panicle blanking — rice kernels were empty — as a result of the cold weather early in the season. According to Korean Government data, the harvest in fall 1980 was 2.016 million tons less than in 1979, a decline of 36 percent (Kim and Sumner, 2006). Yields of all varieties of rice fell, but the tongil yield fell the most, to a level just below that of conventional rice varieties. Confidence in national rice supplies 20 was doubly shaken, first by the magnitude of the production decline in 1980, and second by the poor performance of the Green Revolution tongil rice, which had been seen as the primary variety to increase Korean rice yields going forward. Thus, there was uncertainty about production in future years. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

Korea’s government took swift action to import rice (only the government could import rice). In late 1980, world rice production in Northern Hemisphere rice-producing regions had already been harvested, with no chance for foreign producers to plant more to satisfy increased Korean demand. Korea had imported 220,000 tons of rice in 1979 (calendar year, milled basis) (Customs Office, 1979). According to USDA’s Production, Supply and Distribution database, Korean imports in the rice year (November-October) of 1978/79 were 4.3 percent of total world imports. The 2-million-ton shortfall in Korea’s 1980 harvest represented about 17 percent of world rice imports in the previous year. To import so much more rice in a short timespan was a shock to world rice trade. Two benchmark prices for exports (the Thai export price and the price for California medium-grain rice) rose by about 40 percent, 1981 compared to 1979.

The large imports of 1980-83 shed light on the relationship of Korean rice consumption to world market supplies. For almost the entire 20th century, Korea’s rice trade was controlled by the Japanese Empire and then the Korean Government. Under the former regime, exports were required, and, under the latter, imports were either discouraged by the Government or subsidized by the United States as food aid. While the 1980-83 episode was not commercial under the URA, Korea availed itself of Annex 5 (Section B) to the agreement, which states that “a primary agricultural product that is the predominant staple in the traditional diet of a developing country Member” can receive special treatment for a limited period (WTO, legal texts).

Machinery, Fertilizers and Pesticides Used in Rice Agriculture in South Korea

Machinery and chemical applications replaced much human labor and most animal power use in Korea’s rice farms by the 1970s. At first, small farms invested in power tillers to replace cattle. The number of tillers rose until 1998, and has decreased since then, to about two-thirds the number reached in 1998 (MAFRA, Yearbook, various issues). Similar reductions have occurred in the number of rice transplanters and binders. At the same time, the number of larger machines, like tractors, has increased. This also coincides with the rise of custom, or contract, farming (MAFRA, Yearbook, various issues). Increasingly, the individual farm household is doing less of the work involved in rice farming, and contractors who work for several farms are doing more of it. The average labor time in rice cultivation fell from 130.5 hours per 10 ares (10 ares = .25 acre) in 1980 to 16.3 hours in 2009 (KREI, 2010). [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

Rice yields (rough or unmilled basis) rose by 87 percent from 1960 to 1977, to 6.9 tons per hectare (, bolstered by new seeds that had greater yield potential and by the increasing use of fertilizer and other agricultural chemicals. Yields then dropped after 1979, as high-yield varieties were replaced by traditional varieties that were better-suited to the Korean climate and Korean tastes. After a period of gradual growth from 1981 to 1996, yields in 1996-2014 fluctuated between 6 and 7 tons per hectare, with little tendency to grow. However, the three most recent years (2013-15) have shown strong yield growth (FAS/USDA, PS&D).

The use of inorganic fertilizers and pesticides has decreased markedly. Inorganic fertilizer use in Korea peaked in 1990, and is now less than half the peak level. Insecticide use peaked in 1991, fungicide use in 1993, and herbicide use in 2001. Total pesticide application by weight in 2012 was 62 percent of the peak in 2001 (MAFRA, Yearbook, various issues). The decrease in chemical fertilizer and pesticide use is related both to the decrease in the area used for rice farming and to the intensity of chemical applications. Consumption of pesticides per hectare in 2012 was less than one-third the level in 1991, when use per hectare (for all crops) peaked (MAFRA, Yearbook, various issues). The reasons for the decreasing amount of chemical application, per hectare, may include the advice of extension agents that fertilizer and other chemical use had risen to such high levels that the marginal effectiveness of the additives was zero or negative, and the overuse of chemicals was a needless cost to farmers. Farmers may have observed this phenomenon themselves, as well. The Korean Government also discouraged chemical use because of water pollution problems in ground water, streams, and coastal marine areas, and because chemical fertilizer application has exacerbated soil acidification (KREI, Agriculture in Korea, 2010). Consumers have expressed worries about chemical contamination of food. Finally, chemicals have increased in cost.

Aggregate rice production almost doubled from 1960 to 1977, chiefly because of rising yields; rice area changed little in this period. Production plunged in 1980, as a result of an episode of cold weather, but then rose again, reaching an all-time peak of 6.053 million tons in 1988 (milled basis; FAS/USDA, PS&D). Increased yields resulting from breeding research on traditional varieties were responsible for the production rebound. Since 1990, production has declined along with decreasing rice area, with yields remaining fairly steady.

Rice Production Policy in South Korea

Since both consumers and farmers depend on it, rice has been important to policymakers in Korea for many centuries. Korea, which used to be nicknamed the Hermit Kingdom, was isolated from world trade for long periods of time by geography and politics. By the 21st century, much had changed.The significance of rice in the diet has been steadily diminishing, and Korea has become a leading participant in world trade in goods and services and multinational investment. Korean farmers have maintained high yields with less use of costly inputs. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

From 1948-2005, the Korean Government influenced domestic rice prices by purchasing much of the country’s output. In the 1970s and afterward, as part of the effort to attain national self-sufficiency in rice, the Government paid more for the rice that it purchased than it received when it sold the rice to consumers. This subsidy to rice farming was helped by the ban placed on imports in most years, which allowed Korean prices to remain at levels above world trade prices. The support continued through the 1980s and 1990s, but was constrained in 1995 by the URA that established the WTO.

Under URA rules, each country was supposed to reduce its agricultural subsidies from their average level in the base period of 1986-88. However, South Korea, alone among the signatories to the URA, unilaterally declared that its base period would be 1988-90, a period in which its support was higher than in 1986-88. Furthermore, it used actual support for 1993 (2,182.5 billion won) as its amount for the first implementation year, 1995. Support through the rice purchases was in the so-called “amber box,” and thus subject to reduction by 13 percent over the period 1995-2004 (WTO, UR schedules). Because Korea had raised its support for rice substantially by 1993, the reduction it finally committed to (to 1,490 billion won in 2004) was equivalent to almost 32 percent (the difference between 1993 support and the average for 1988-90, in addition to a 13-percent cut from the 1988-90 level; WTO, 1995) — i.e., cutting from 2,182.5 billion won to 1,490 billion won, rather than from 1,695.74 billion won to 1, 490 billion won. Thus, the Korean Government was obliged to reduce its spending on rice purchases at a time when it was under farmer pressure to increase it.

The Korean executive branch generally tried to reduce the rice price for its purchases in order to reduce spending on its domestic programs. However, the Korean legislature sometimes blocked the price reductions (Choi and Phillips, 2005). This meant that the quantity purchased needed to be reduced in order to remain below the spending limit imposed under the URA. The subsidies per ton were high. In 1990-94, the prices received by farmers when the Government purchased their rice were about 180 percent of their costs of production. These prices were also equivalent to 120 percent of harvest season market prices (KREI, Agriculture in Korea, 2010).

Other kinds of support for rice farmers were introduced in the aftermath of the URA. The Korean Government continued to try to boost the income of farm households, and designed policies that would do so without being “coupled” — tied to current production output. In most cases, these 3The Republic of Korea declared itself a developing economy, and thus was committed to a 13-percent, rather than a 20-percent, reduction, spread over a longer period. Developed economies implemented their commitments by 2000, rather than 2004. Policies were directed to the core of the farm population, rice farmers. Other motivations were to increase the scale of rice farming by reducing the number of farmers while keeping rice land in production; and in mitigating environmental damage caused by rice farming. Often these post-UR policies were called “direct payment” programs. Instead of paying farmers through higher prices for their harvest, the programs sent money directly to households, independently of the quantity of rice sold during a season (Lim, 2008).

Direct Payment to South Korean Rice Farmers

One of these programs, the Direct Payment for Environment-Friendly Farming, continues. Begun in 1999, the program pays farmers of all crops, not just rice, to use environmentally friendly techniques. In 2015, the Environment-Friendly Farming program paid rice paddy farmers 600,000 won/ hectares (US$215/acre) for organic production, 400,000 won per hectare for pesticide-free production, and 217,000 won per hectare for low-pesticide production.4 Total spending on the program in 2015 was 32.8 billion won (US$29 million) (KREI, Agriculture in Korea, 2015). [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

In March 2005, the Rice Income Compensation Act introduced a new system of subsidies for rice farmers, the Direct Payment Program for Rice Income Compensation (Yim, 2006). The Direct Payment Program has two elements. One, the area payment, is paid according to the size of the land on which a farm produced rice in a 1998-2001 base period. This payment, given regardless of current production, is classified by the Korean Government as a decoupled payment, and not as part of the WTO’s “amber box.” The other payment is a deficiency payment to cover most of the difference between the average rice price offered to farmers at harvest time and a target price.

The total payment to farmers under the Direct Payment Program is the deficiency payment, less the area payment on a per-kg basis, plus the area payment. The deficiency payment formula, per kilogram of paddy rice: [(target price in won per kilogram - average harvest price in won per kilogram) x .85] – (area payment per ha/average national yield per ha) For 2015, the various components were: 1) area payment per ha: 998,892 won (US$797), equivalent to US$322 per acre; 2) area on which the area payment was made: 843,752 hectare; 3) target price: 2,350 won per kilogram, or US$2.08 per kilogram, equivalent to US$94 per hundredweight (100 pounds, or cwt); 4) average harvest price: 1,883 won per kilogram, or US$1.66 per kilogram, equivalent to US$75.50/cwt; 5) national yield per ha: 5,040 kilogram, the Olympic average of countrywide yields in 1999- 2003 (i.e., with the largest and the smallest yields excluded). As the former rice purchasing program, designed primarily to prop up prices, was ended in 2005, the Government began the Public Food Grain Stockholding Program (PFSP), designed to provide food security stocks and to assist in stabilizing farm prices, which continued purchases for food security purposes made in earlier years.

The deficiency payment is regarded as encouraging production.In 2015, the deficiency payment calculation per kilogram was 198.6 won per kilogram. The 2015 area payment, 998,892 won per hectare, was increased by 11 percent over 2014 levels. Total deficiency payments were 718.7 billion won (US$635 million) and area payments were 843.1 billion won (US$745 million). The deficiency payment is the same per kilogram for all rice farms. For an individual rice grower, there is no relationship to the quality of rice produced. Only the amount harvested matters. Thus, this policy encourages higher yields, without regard to quality (Choi and Myers, 2015b).

In addition to the Government purchases of rice for public stocks, each year the National Agricultural Cooperative Federation (NACF) purchases a significant share of the rice crop after harvest for resale later in the year when prices are likely to be higher. The NACF lends money at zero interest to Rice Processing Complexes (RPCs), which make the purchases for the NACF. As a share of production, the NACF purchases have been rising. For the 2014 harvest, 53.3 percent of the crop was purchased by either the NACF or a Government program. The NACF is owned and run by farmers and their representatives, but has a close relationship to the Government.

Korean rice farming has also benefited from large expenditures on the entire farming sector. Major waves of spending were triggered by the end of Korea’s quotas based on the Balance of Payments clause in the General Agreement on Tariffs and Trade (GATT) beginning in 1989; by the URA (1995); and by the Korea-United States Free Trade Agreement (implemented in 2012). Other spending had as its impetus the need to deal with the increasing amount of animal waste produced by raising cattle, swine, and poultry and by the desire to reduce the chemical applications to Korean land. Efforts to restructure farming into larger, sustainable units have spent funds to encourage farmers to retire and to sell or rent land; to provide subsidies to contract (custom) farming operations; and to pay for the reconstruction of land and water infrastructure for farming.

The growing concern over the environmental effects of intensive animal agriculture and intensive chemical applications to crop and horticulture farming also led to special initiatives that benefitted rice farms. A major program is the recycling of animal wastes into compost and liquid manures, which are then applied to farmland, including rice paddies. In 2010, the budget for this program was 121.9 billion won (US$105 million). Other programs provide financial assistance to groups of farmers — the environment-friendly agricultural zone promotion project and the project to establish environment-friendly agricultural complexes (KREI, 2010).

South Korean Rice Imports and Exports

Over the 1980-83 period, Korea imported over 50 percent of the rice from the United States, primarily medium-grain rice from California and the Southern States. Japan supplied over 25 percent, on a Government-to-Government basis. The rest of the world supplied over 15 percent, including from countries where rice exports are characterized as medium and short grain: Australia, Italy, Spain, Argentina, Brazil, and Egypt. Thailand, the source of the world’s largest rice exports at the time, supplied less than 4 percent of the rice, and most of that (81 percent) was glutinous rice, a specialty rice not used as everyday table rice in Korea. Korea imported very little longgrain table rice from Thailand and other countries, despite the predominance of such rice in world trade. The Korean Government thus chose primarily medium- and short-grain rice types to replace domestic production during this exceptional period. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

Korea is an important market for U.S. rice–the United States has shipped over 1.1 million tons of rice to Korea since from end of the Uruguay Round (UR) in 1995 to 2015.. The United States is currently the world’s largest exporter of japonica rice — the kind of rice Koreans normally eat — shipping around a million tons (milled basis) a year. Korea has a long familiarity with U.S. rice, and medium- and short-grain California rice in particular is acceptable there. This was demonstrated when Korea made large, emergency rice imports in 1980 and 1981, and again under the MMA, when U.S. rice often competed successfully on price and quality with japonica imports from China.

South Korea did provide rice to North Korea in 1995 and in 2002-2007 (Francom et al., 2007) and nearby Japan annually donates rice exports to a number of countries in order to deal with a similar oversupply. Donating rice is expensive, as is holding large stocks. Thus, the USDA Baseline assumes that the Korean market will be balanced by a 517,000 mt decrease in production over the next decade.

Future of Korea’s Rice Market in South Korea

KREI projects that rice consumption per person will continue to fall. Currently estimated at 49.181 million, Korea’s population is projected to rise slightly by 225,000 people by 2023 (0.5 percent), and then begin to decline. In 2050, population is expected to be almost 12 percent below current levels (lower by 5.8 million) (U.S. Census Bureau). With less rice eaten per person and fewer people, Korea’s food demand for rice will continue to fall. [Source: Economic Research Service/USDA United States Department of Agriculture, September 2016]

Given the long-term decline in traditional food use of rice, the projected further decline in direct food use is reasonable. However, other uses for rice might expand. Use in processed foods, as a flour for baking, or in production of beverages, could increase. Until 2016, Korea did not use rice as a feed, although neighboring countries have done so. China uses large quantities of rice for feed each year. Feed use of rice is promoted by the Japanese Government, which, like Korea and China, has subsidized rice production. The use of rice for feed without Government subsidies would only be possible if the prices of feed grains and Korean low-quality rice converged, which would require a large drop in the price of rice available to feeders. However, in February 2016, the Korean Government, for the first time, released brown rice (99,000 mt) from its stocks for sale as animal feed. The rice sales price was 200 won per kilogram, about one-tenth of the amount the Government paid for it, implying a large subsidy for the rice (Choi and Myers, 2016).

Image Sources: Wikimedia Commons.

Text Sources: South Korean government websites, Korea Tourism Organization, Cultural Heritage Administration, Republic of Korea, UNESCO, Wikipedia, Library of Congress, CIA World Factbook, World Bank, Lonely Planet guides, New York Times, Washington Post, Los Angeles Times, National Geographic, Smithsonian magazine, The New Yorker, “Culture and Customs of Korea” by Donald N. Clark, Chunghee Sarah Soh in “Countries and Their Cultures”, “Columbia Encyclopedia”, Korea Times, Korea Herald, The Hankyoreh, JoongAng Daily, Radio Free Asia, Bloomberg, Reuters, Associated Press, BBC, AFP, The Atlantic, The Guardian, Yomiuri Shimbun and various books and other publications.

Updated in July 2021

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