[Column] Why mandatory purchase doesn’t make sense

Kim Won-bae

The author is an editorial writer of the JoongAng Ilbo.

Rice carries special meaning for Koreans as they eat it every day. A 50-won coin has a picture of a grain of rice. The coin has been in production since 1972 to reflect the national aspiration of richer harvests through the invention of a new breed of rice. The “Tongil” rice was developed to bolster annual output by a whopping 30 percent. The government went all-out to support rice production, and by 1977, South Korea had become self-sufficient in staple food production.

But today, a rice glut poses a big problem due to the shriveling consumption. In 1992, Koreans consumed 112.9 kilograms (249 pounds) a year on average, but the amount has halved over the last three decades. In theory, the price should fall on reduced demand. But rice was made an exception to subsidize farmers because it is their primary source of their income.

The face-off between the People Power Party (PPP) and Democratic Party (DP) has intensified after President Yoon Suk Yeol vetoed a revision to the Grain Management Act that the DP railroaded through the National Assembly.

The revision calls for a mandatory government purchase of rice when its overproduction exceeds a certain limit while providing subsidies for other crops in the paddy at the same time. The DP claims the obligatory buyback provision is necessary as the purchase at the government’s discretion was not sufficient to help rice farmers when rice prices fell 20 percent last year. The opposition claims that the revision is fair because the subsidy for other crops will help farmers grow less rice than before. But the Ministry of Agriculture, Food and Rural Affairs contends that the mandatory rice purchase contradicts its policy of encouraging farmers to grow other grains due to the rice glut.

Mandating the government to buy surplus rice and encouraging farmers to cultivate other crops is contradictory. Financial aid for converting to crops other than rice can help reduce rice farming, but if the subsidy is not sufficient, farmers will likely keep to rice farming. Even if the size of the rice farming field dwindles, the total output can increase thanks to improved yields per paddy plot. In that case, money spent may not achieve the desired goal.

Farmers would want to see a reliable system to stabilize rice prices. Still, imposing a statutory system in an area in need of an overhaul is not desirable.

The cost of storing excess rice is not small. The stock ends up selling at 10 to 20 percent cheaper prices a few years later to go into the processed snack or animal feed. Storing oversupplies does not make economic sense as it disposes rice at lower prices. Can such ideas really help rice farmers?

Subsidizing farmers is inevitable as rice remains the staple food for Koreans even though they eat less rice than before. As the ongoing war in Ukraine shows, self-sufficiency in staple food should be sustained. But the government and politicians must deliberate harder on the optimum level of subsidization.

Wheat consumption per capita has grown to exceed 30 kilograms in Korea, but the self-sufficiency rate is less than one percent. Japan has a nutritious habit similar to Korea, but it has raised the self-sufficiency rate of wheat to over 10 percent, thanks to continuous support.

The government is partly at fault for worsening the situation. The DP has been campaigning for the revision to the Grain Management Act since last year, but the government only adhered to its opposition to the revision and failed to persuade farmers. The Agriculture Ministry hurriedly came up with an action plan on April 6 after President Yoon vetoed the revision. The ministry proposed to support rice prices at 200,000 won ($153) per 80 kilograms this year and expand direct subsidies to 5 trillion won by 2027. If the plan had come out earlier, the legal revision would have invited more meaningful discussions.

A country must set a mid-to long-term roadmap for grain production. The budget must be spent efficiently — and for long-term results. The DP also must present more practical countermeasures in further detail.

On university campuses, a 1,000-won breakfast is gaining popularity. If the Agricultural Ministry supports 1,000 won per meal to help boost rice consumption, university adds its own funding to provide breakfast at 1,000 won at the school cafeteria. The idea that started out at Soonchunhyang University spread to other universities after the ministry started to finance the project. Both the PPP and DP have cheered the project.

The campaign could give some ideas to solve the rice conundrum at the legislature. Voluntary participation and burden-sharing can save the budget. Policymakers and legislators must strenuously seek out effective measures that can buy confidence from farmers and consumers.