When to put a stop on the weird cycle
Published: 05 Jul. 2023, 20:09
The author is a business news editor of the JoongAng Ilbo.
The government will conduct a “special disposal” of 140,000 tons of rice stored in warehouses within this year. 70,000 tons will be used for livestock feed and the other half is assigned for alcohol production.
The title “special” sounds grand, but it actually refers to getting rid of the surplus rice the government purchased at a higher price. After three years of storage, the rice is sold back at 10-20% of the purchase price.
The Ministry of Agriculture, Forestry and Fisheries bought a record 770,000 tons of rice last year to stabilize the price of rice after it fell sharply. The rice price has stabilized, but the public procurement resulted in a significant increase in government inventory.
As of April, the government rice stock amounted to 1.7 million tons, more than double the recommended stock of 800,000 tons. As storage costs snowballed and space for storage ran out, the government came up with a desperate solution to dispose of it at a bargain price.
This is not the first time. The government has sold the rice stored for more than three years for alcohol making. Despite farmer groups’ resistance against “feeding hand-harvested rice to dogs and pigs,” related laws were revised in 2016 to allow surplus rice to be used for animal feed since.
From 2017 to 2022, the government’s losses from sales of the grain purchased for public stockpiling and market isolation is estimated at 3.3 trillion won ($2.5 billion). The total management cost of the grain inventory until the resale for the same period was 1.1 trillion won, according to People Power Party lawmaker Hong Moon-pyo. The combined total is 4.4 trillion won, an average of 732 billion won annually.
If the Democratic Party (DP)’s unilateral revision to the Grain Management Act was implemented, a lot more tax funds would be needed. The DP is promoting a bill similar to the revision scrapped in April in order to win votes from famers. Last year, Korea’s rice consumption per capita was 56.7 kilograms (125 pounds) — half the level in 1992 and the lowest ever. But rice is still being oversupplied in Korea. Last year, rice production was 3.76 million tons, over 155,000 tons in surplus.
While rice consumption is decreasing, rice continues to be overproduced. That makes us wonder whether it is really right to repeat the farce of buying it at high prices and selling it at cheap prices every year. While farming advancement through agricultural restructuring and smart farming is needed, repeated pork barreling for rice farmers only helps lower our agricultural competitiveness.
In this regard, the government’s newly implemented direct payment for strategic crops — or giving subsidies when farmers grow crops other than rice in rice paddies — is a desirable direction. Korea’s grain self-sufficiency rate is about 20 percent, except for rice which is 92.8 percent self-sufficient. But the rates for other grains are the lowest in the world.
Encouraging crop diversification will help food security. But we still need consistency. Under the past administration, the rice cultivation area increased after the assistance program for non-rice crops was suspended. This kind of mistake should not be repeated.
with the Korea JoongAng Daily
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