[VIEWPOINT]Farm policy reforms are overdue

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[VIEWPOINT]Farm policy reforms are overdue

The people are hardly aware that Nov. 11th is Farmers' Day. That reflects our society's declining interest in agriculture. But agricultural issues are the most serious obstacles for South Korea as it tries to draw up a new national development plan and adapt itself to the new order of the world economy, symbolized by the World Trade Organization and free trade agreements.

Prime Minister Kim Suk-soo attended a meeting of leaders of the Association of Southeast Asian Nations and three other countries early this month in Phnom Penh, Cambodia. The Singapore Prime Minister asked him why South Korea is so passive about free trade, and Mr. Kim reportedly told him that the main reason was the difficulty of handling agricultural issues.

On Nov. 13th, about 70,000 farmers gathered in front of the National Assembly to demand a freeze on minimum market access levels for imports and an extended tariff grace period during the 2004 renegotiation of a WTO agreement on rice market opening.

The farmers also urged the National Assembly to reject the free trade agreement between South Korea and Chile. Those demands are unfair and unreasonable.

Our survival depends on participating in the world trading system. We also have to cooperate in order to have some influence in the formation of a regional economic community in Northeast Asia. Even though our task is clear, we have no national consensus and the situation is critical. Farmers fear the future and no longer trust the nation's agricultural policy; the government and politicians are standing in the middle.

After the Uruguay Round, the government poured significant financial resources into solving the structural problems of our agricultural sector, but total farm debt has continued to rise and now exceeds farmer's total income. The average income of a Korean farm household has dropped to 76 percent of that of an urban working household. Almost all agricultural products are being produced here in surplus and prices are plunging rapidly. The farming sector is unprofitable and is becoming more so every day.

The crisis stems from the government's unbalanced agricultural policies. The government has been focused on price stability of farm products, and that policy has had several ill effects on our economy. The government has failed to react to the rapid changes in international trade policy for agricultural products.

Agricultural negotiations in the Uruguay Round were based on a consensus that overprotected national farm product markets should be changed to stimulate a free market. The protective policies led to an international production glut, the diversion of resources into economically unproductive agricultural projects and other distortions in international food trade.

The reform of agricultural policies in leading nations in the 1990s, including the 1996 U.S. farm bill and the European Union's Common Agricultural Policy of 1992 are market-oriented and seek to cut subsidies and increase international trade. These free-market policies were developed in order to decrease the trade distortions of old support policies, by using direct payments to farmers, for example.

Another trend in agriculture in the 1990s was to not focus on agriculture as a policy target but on rural communities and their development. The EU has been a leader in this area; it is changing its Common Agricultural Policy to a Common Agriculture and Rural Policy.

Our country focused on urban areas and industrialization in the past in order to accumulate surpluses for further development spending. Now the reverse situation has appeared; our farm sector could be a big obstacle to further economic development unless we look for ways to balance economic growth and form more urban-rural links.

Ninety percent of our population is crowded into cities. It is time to spread our industry around and make the rural areas of our country, the majority of our land area, into productive areas as well.

When we approach the development question as one of development of rural communities and not of the farm economy, we can find the right solution to our agricultural problem.

I hope that every political party's policy-makers will stop making rosy promises in order to win votes and instead devote themselves to implementing a win-win agricultural policy, in which farmers and the rest of the national economy can survive together.

* The writer is a professor of economics at Seoul National University.

by Chung Young-il

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