Gov’t prepares for losses in agriculture

Home > Business > Economy

print dictionary print

Gov’t prepares for losses in agriculture

The Korus FTA is expected to have a significant impact on Korea’s agricultural sector when tariffs on U.S. beef, pork and fruits gradually come down as the free trade pact is implemented.

The government estimated the sector will suffer some 12 trillion won ($10.7 billion) in losses within 15 years after the FTA takes effect on March 15. Seoul has pledged 24.1 trillion won in loans and subsidies to assist farmers and businesses hit by an influx of U.S. produce.

Livestock farmers are likely to face the most losses after the trade pact’s implementation with potential losses reaching 7.2 trillion won - nearly 60 percent of the entire sector’s estimated damages.

The 40 percent tariff on U.S. beef will gradually phase out in 15 years while duties on U.S. pork will be reduced from as high as 25 percent to zero in 10 years.

Current tariffs on other U.S. produce like fruits and vegetables that range from 25 percent to 50 percent will also gradually disappear in two to five years.

After the Korus FTA was signed in April 2007, the government announced 21.1 trillion won in financial support to help the Korean agricultural sector prepare for the free trade pact. The amount was later raised to 24.1 trillion won.

Seoul affirmed in July 2011 that it would compensate farmers for declines in the price of farm goods if an average price fell more than 10 percent. The government said it would provide up to 50 million won per corporation and up to 35 million won per individual.

The government also said it would provide loans and consulting services to those whose sales or production dropped by more than 20 percent from a year ago due to the FTA.

To maintain a certain level of income for farmers, the government will provide 400,000 won per hectare of farm land annually to those who grow one or more of 19 crops including wheat flour, beans, corn, red beans and garlic.

With a growth in imports of oranges and grapefruits, producers of tangerines are expected to suffer most among fruit farmers. The government plans to provide 38.4 billion won this year in financial support for increasing economies of scale and modernizing tangerine farms.

The government will also increase the number of grains used as animal feeds imported duty-free to 22 from the current 11 to help livestock farmers. All farmers will be able to buy oil products tax-free for the next 10 years.

There are also remedies for small- and medium-sized enterprises and entrepreneurs. The National Assembly passed a law on Dec. 30, 2011, that allows SMEs and large companies to discuss and select areas of businesses and products suitable, or limited to, SMEs through the Commission on Shared Growth for Large and Small Companies.

Another law passed on the same day allows cities, counties and districts to limit business hours of large discount stores and super supermarkets and require mandatory days off. The law is now very controversial as an association of large retailers took the issue to the Constitutional Court.



By Limb Jae-un [jbiz91@joongang.co.kr]

More in Economy

Better to give property than to receive a big tax bill

Border restrictions drastically cut North Korea's trade

Central bank holds rates steady, adjusts up GDP forecast

Restaurant coupons to make a comeback as an app

[INTERVIEW] Korea Forest Service head sees huge opportunity in Indonesia

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now