Oversupply of riceThe government plans to purchase about 450,000 tons of rice harvested this fall to prevent prices from plummeting due to oversupply.
The stopgap rice surplus program takes place every year. The time has come to overhaul the rice industry to resolve persistent gluts amid declining consumption of the staple crop. If left unresolved, valuable rice will go to waste in state silos.
Most urgently in need of an overhaul is the tariff system on rice imports. Under minimum market access agreements with rice-exporting countries, Korea must import 320,000 tons of rice every year. The quota raises 20,000 tons annually up to 2014.
International crop prices have already risen substantially, and with a rational tariff system they would not likely pose a great danger to local produce. To stop an increase in minimum market access supplies, we must reach a local consensus to notify exporters by the end of this month.
Secondly, authorities must become more resolute in production control. The government should first think about revising the rice subsidy program. Farmers are compensated with subsidies even if rice prices fall.
The problem with the system is that farmers make more money by boosting output, which generates a vicious cycle of oversupply and plunging prices. In order to spur a reduction in production, subsidies should be paid if a harvest fails to meet an income target rather than a price target. Farmers producing other crops should be given greater incentives to encourage diversification in crop produce.
In the long run, the government should change the framework of the agriculture industry. Farmers cannot continue living on a lifeline from the government. To allow greater self-sufficiency, they must gradually apply market competition and principles within the industry.
New Zealand, for instance, got rid of subsidies starting in 1984 and applied market principles. As a result, the farm industry there has become competitive. President Lee Myung-bak was impressed by the advancements in the farming industry when he visited New Zealand last year, but policy at home remains unchanged.
It is unreasonable and is not good business practice to import an immense amount of rice even though we have an oversupply at home. We can send some of it to North Korea as humanitarian aid, but that, too, is a makeshift measure.
First of all, we must do away with the mindset that the government will always pay a high price if too much rice is produced.
Politicians should rack their brains to come up with a fundamental solution if they really want to help farmers and save the agriculture industry.