Agricultural Policy Monitoring and Evaluation 2020

18. Korea

Support to agriculture

Korea’s level of support to agricultural producers gradually decreased during the last two decades due to continued efforts towards market-oriented reforms, but in spite of these reductions, support levels remain well above the OECD average and potentially most distorting forms of support predominate. Producer support as a share of gross farm receipts (%PSE) decreased from 60.9% in 2000-02 to 47.9% in 2017-19, compared to an OECD average of 17.6% In the context of reforms, a range of direct payment programmes and an agricultural insurance scheme were introduced in the late 1990s and in 2005, respectively. Since the rice tariffication in 2015, all import restrictions on agricultural products have been applied in the form of tariffs and tariff rate quotas (TRQs). Market Price Support (MPS) is the dominant component of the PSE, accounting for 89% of PSE over the period 2017-19, maintained mainly through tariff rate quotas with high out-of-quota tariffs.

Budgetary payments to general services directed at the sector as a whole (GSSE) averaged 14% of total support to the agricultural sector (TSE) in 2017-19. The main elements are expenditure on infrastructure, representing 62% of the GSSE, while government funding for the agricultural knowledge and innovation system accounts for 18%.

Main policy changes

A new direct payment programme, integrating payments for rice, upland crops and less favoured areas, is to be implemented in 2020. The new scheme aims to further decouple payments from production and reinforce cross-compliance of farmers. As a method to alleviate the current high dependence on rice direct payments, the government continues to offer incentives for crop diversification in the form of support to drainage, seeds and agricultural machines. The subsidised agricultural insurance programme increases its commodity coverage to 83 agricultural products in 2020.

To improve the sustainability of agriculture, the second version of the Climate Change Response Plan (2020-40) was released in October 2019, in line with the Paris Agreement on Climate Change and the National Roadmap for the reduction of greenhouse gas (GHG) emissions. The new version of the basic plan covers a reduction target to decrease GHG emission by 37% from the business-as-usual (BAU) level by 2030, which is 24% lower than the 2017 level, and action plans across all economic sectors, including agriculture. The agricultural sector was tasked with reducing GHG emissions by 7.9% from the BAU level by 2030.

The government increased its investment in the Smart Agriculture Project with the aim to promote the application of information and communication technology at the farm level, while attracting young innovative farmers. The project also includes the construction of agro-food complexes that cover the entire value chain from research and development institutions to agro-food firms.

Assessment and recommendations

• Although Korea has made progress in agricultural policy reforms, producer support remains high and policy measures linked to individual commodity production, notably border protection, still dominate agricultural support. To enhance long-term productivity and sustainability in the sector, the policy mix should be re-balanced to allow farmers more freedom to make production decisions and to put a stronger focus on general services that enable the sector to improve its productivity, sustainability and resilience.

• In this context, current reforms of direct payment programmes will play a key role in changing agricultural policy schemes and reallocating public resources. Careful planning and implementation is needed to make reforms socially acceptable, and the government should provide consistent signals to stakeholders during the reforms.

• The success of the Smart Agriculture Project depends on the development of applicable Information and Communication Technology (ICT) solutions to meet the demands of producers and markets. To facilitate the adoption of ICT along the value chain, demand-driven technologies should be developed based on partnership and collaboration among producers, retailers, research and development (R&D) institutions and ICT industries.

• Limited employment opportunity and lack of rural infrastructure have led young and skilled labour to leave the sector. To attract more people and investments to agriculture and rural areas, the remaining restrictions on investments should be reduced and living conditions need to be improved. Decentralised extension services could help to improve livelihoods in rural areas.

• The agricultural insurance system has increased its coverage over the last two decades, but a considerable part of the scheme continues to be financed by government subsidies. Insurance subsidies impede on-farm risk management, in turn transferring a part of risks from farmers to taxpayers. For private insurance providers to develop market-based solutions, the government should facilitate better access to data, and gradually reduce subsidy rates.

• To establish a solid framework for agri-environmental policies, a wide set of measures to promote environmentally-friendly agricultural production need to be considered. Given the new Climate Change Response Plan released in 2019, specific policy instruments to achieve a GHG emission reduction target, including enhancing water and animal waste management, should be implemented, especially for the main agricultural activities such as rice cultivation and livestock.

• Despite continued efforts to promote private R&D investment in the agricultural sector, the contribution of private R&D in the sector remains relatively low. The high intensity of public investment in agricultural R&D may crowd out innovation initiatives in the private sector. Public R&D should increasingly focus on basic and long-term research or on areas of public interest, complementary to private R&D.

Policy responses in relation to the COVID-19 outbreak

Agricultural policies

The government provided emergency funds to farming households to address liquidity problems. Within this initiative, farming households were able to benefit from low interest loans at favourable payment schedules. Leasing fees for agricultural machinery and equipment were also temporarily decreased. In particular for farmers and wholesalers in horticulture and floriculture, one of the most affected sectors, additional budgetary support is expected to be provided to lower wholesale transaction fees or rents, and to increase public procurement (Korean Government, 2020[1]).

To address shortages of migrant seasonal workers caused by the restriction on movement, the government implemented several policy measures to increase the sector’s attractiveness and reduce short-term mismatch of labour force in the sector. Visa regulations were temporarily alleviated to allow foreign visitors or migrant workers from other industries to work in the agricultural sector. In efforts to attract seasonal workers and volunteer workers, the government also increased the number of agriculture job-matching centres.

Both public and private sectors made additional efforts to recover the consumption level of horticultural and floricultural products. Promotion campaigns have been rolled out at the national level, and large companies, governments (including the central and local governments), and public institutions increased their purchase of flowers and pot plants to decorate offices.

With regards to exports, the government is strengthening market monitoring, and trying to help finding alternative export markets. It is also actively supporting export promotions and maintaining access to logistics services given current constrained air freight services.

Agro-food supply chain policies

Food service providers and catering companies are severely affected by movement restriction, social distancing and school closures. To facilitate the purchase of agro-food products and ease companies’ liquidity constraints, the government expanded funds for these companies and further lowered interest rates. Considering that public catering companies were key consumers of organic products, finding alternative distribution channels is being encouraged. Companies are making efforts to sell directly to final consumers via online and other promotions, through active co-operation with local governments and agricultural co-operatives.

Consumer policies

The government is closely monitoring food stocks in domestic markets, and ensuring food accessibility for low income households. Emergency food supplies will be prepared through discussion with agro-food firms if necessary.

Figure 18.1. Korea: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2020), “Producer and Consumer Support Estimate”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Support to producers (%PSE) has declined from 60.9% of gross farm receipts in 2000‑02 to 47.9% in 2017-19, 2.7 times higher than the OECD average. The share of potentially most distorting transfers, mostly in the form of MPS, dominated at 90% of total PSE in 2017-19 (Figure 18.1). In 2019, the level of support fell by 8.2% compared to 2018, mainly driven by a reduced gap between domestic and border prices. This decrease was due to exchange rate movement and reduction in domestic prices for some products such as soybeans, poultry meat and garlic (Figure 18.2). Prices received by farmers in 2017-19, on average, were 80% higher than those observed in world markets. Transfers to specific commodities represented 93% of total support to farms in 2017-19. Soybeans, red peppers, barley and garlic had the highest share of the Single Commodity Transfers (SCT) in commodity gross farm receipts (Figure 18.3). Expenditures for general services (GSSE) were equivalent to 11.3% of agricultural value added in 2017-19, slightly down from 11.7% in 2000-02. Total support to agriculture (TSE) as a share of GDP has declined significantly from 8.3% in 1986-88 to 1.6% in 2017-19, but it still remains 2.5 times higher than the OECD average.

Figure 18.2. Korea: Drivers of the change in PSE, 2018 to 2019

Source: OECD (2020), “Producer and Consumer Support Estimate”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 18.3. Korea: Transfer to specific commodities (SCT), 2017-19

Source: OECD (2020), “Producer and Consumer Support Estimate”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Table 18.1. Korea: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2017-19	2017	2018	2019p
Total value of production (at farm gate)	16 985	26 360	43 784	42 605	45 493	43 253
of which: share of MPS commodities (%)	73.0	63.1	60.0	60.3	59.7	59.9
Total value of consumption (at farm gate)	17 667	31 381	59 869	54 907	64 066	60 635
Producer Support Estimate (PSE)	11 908	16 694	22 124	21 498	24 043	20 831
Support based on commodity output	11 788	15 733	19 766	18 583	21 794	18 920
Market Price Support1	11 788	15 733	19 766	18 583	21 794	18 920
Positive Market Price Support	11 788	15 733	19 766	18 583	21 794	18 920
Negative Market Price Support	0	0	0	0	0	0
Payments based on output	0	0	0	0	0	0
Payments based on input use	90	470	610	545	651	634
Based on variable input use	29	207	220	188	278	193
with input constraints	4	34	47	51	46	44
Based on fixed capital formation	57	246	188	180	185	198
with input constraints	0	18	37	39	34	37
Based on on-farm services	4	17	203	178	189	242
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	29	490	984	1 596	813	542
Based on Receipts / Income	29	292	71	64	70	78
Based on Area planted / Animal numbers	0	198	913	1 531	743	465
with input constraints	0	160	39	38	41	40
Payments based on non-current A/An/R/I, production required	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	765	774	785	736
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	0	765	774	785	736
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	0	1	0	0	0	0
Based on long-term resource retirement	0	1	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	69.3	60.9	47.9	47.2	50.4	46.1
Producer NPC (coeff.)	3.23	2.46	1.82	1.77	1.92	1.78
Producer NAC (coeff.)	3.26	2.56	1.92	1.90	2.01	1.86
General Services Support Estimate (GSSE)	1 066	2 676	3 667	3 571	3 768	3 661
Agricultural knowledge and innovation system	67	243	649	646	683	617
Inspection and control	26	126	321	290	355	318
Development and maintenance of infrastructure	467	1 811	2 280	2 290	2 327	2 221
Marketing and promotion	0	26	38	38	40	37
Cost of public stockholding	505	471	379	306	364	467
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	8.1	13.8	14.2	14.2	13.5	14.9
Consumer Support Estimate (CSE)	-11 656	-17 342	-26 607	-23 654	-29 692	-26 474
Transfers to producers from consumers	-11 511	-15 342	-19 191	-17 831	-21 329	-18 412
Other transfers from consumers	-218	-2 093	-7 452	-5 859	-8 400	-8 097
Transfers to consumers from taxpayers	73	93	36	35	37	35
Excess feed cost	0	0	0	0	0	0
Percentage CSE (%)	-66.1	-55.1	-44.4	-43.1	-46.4	-43.7
Consumer NPC (coeff.)	2.97	2.23	1.80	1.76	1.87	1.78
Consumer NAC (coeff.)	2.95	2.23	1.80	1.76	1.86	1.78
Total Support Estimate (TSE)	13 047	19 464	25 827	25 105	27 849	24 528
Transfers from consumers	11 729	17 435	26 643	23 689	29 730	26 509
Transfers from taxpayers	1 536	4 121	6 637	7 274	6 520	6 116
Budget revenues	-218	-2 093	-7 452	-5 859	-8 400	-8 097
Percentage TSE (% of GDP)	8.3	3.3	1.6	1.5	1.6	1.5
Total Budgetary Support Estimate (TBSE)	1 258	3 731	6 061	6 521	6 055	5 608
Percentage TBSE (% of GDP)	0.8	0.6	0.4	0.4	0.4	0.3
GDP deflator (1986-88=100)	100	211	295	294	296	294
Exchange rate (national currency per USD)	812.03	1 224.03	1 132.04	1 130.64	1 100.19	1 165.29

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Korea are: barley, garlic, red pepper, Chinese cabbage, rice, soybean, milk, beef and veal, pig meat, poultry and eggs.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Contextual information

Korea achieved the fastest growing per capita income among OECD member countries over the past 25 years (OECD, 2018[2]). The level of GDP per capita increased by 27% during 2000-18. The economic growth was significantly led by a strong trade focus: in 2018, trade accounted for 33% of GDP, more than twice the average of all countries covered in this report. The weight of agriculture within the economy is relatively small, accounting for 2% of GDP and 5% of employment in 2018. Agro-food products accounted for just over 1% of all exports in the same year. Arable land per capita was 0.03 hectare in 2018, one of the smallest among OECD countries.

Over the past two decades, the Korean agricultural sector continued to diversify towards livestock, due to a rapid change of dietary patterns. Crops represented 61% of the total value of agricultural production in 2018, down from three-quarters in 2000 (Table 18.2). Rice still dominates crop production, even though its share in total crop production has declined.

Table 18.2. Korea: Contextual indicators

	Korea		International comparison
	2000*	2018*	2000*	2018*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	872	2 175	2.2%	1.9%
Population (million)	47	52	1.1%	1.0%
Land area (thousand km2)	96	98	0.1%	0.1%
Agricultural area (AA) (thousand ha)	1 973	1 677	0.1%	0.1%
			All countries¹
Population density (inhabitants/km2)	473	519	53	62
GDP per capita (USD in PPPs)	18 551	42 136	9 275	21 924
Trade as % of GDP	29	33	12.4	15.3
Agriculture in the economy			All countries¹
Agriculture in GDP (%)	4.3	2.0	3.1	3.6
Agriculture share in employment (%)	10.6	5.0	-	-
Agro-food exports (% of total exports)	0.9	1.1	6.2	7.3
Agro-food imports (% of total imports)	5.2	5.2	5.5	6.3
Characteristics of the agricultural sector			All countries¹
Crop in total agricultural production (%)	75	61	-	-
Livestock in total agricultural production (%)	25	40	-	-
Share of arable land in AA (%)	87	83	32	33

Notes: *or closest available year. 1. Average of all countries covered in this report. EU treated as one.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

Output growth slowed down in recent years, while there was a slight economic upturn in 2017 led by business investment and a continuing boom in construction (OECD, 2018[3]). Inflation rates have declined to levels below 2% since 2013, and reached the lowest level in 2019 at 0.38% (Figure 18.4).

Korea is a net importer of agro-food products, and one of the largest importers in the world. Agro-food exports slightly grew in 2018 but the agro-food trade deficit worsened (Figure 18.5). Key imported agricultural commodities are maize, soybeans, and potatoes, and key exported commodities are red ginseng, strawberries, grapes, and pears. Over 85% of agro-food exports are products for final consumption, notably processed food products and fruit, and less than half of imports are for further processing by Korean industry.

Figure 18.4. Korea: Main economic indicators, 2000 to 2019

Sources: OECD statistical databases; World Bank, WDI and ILO estimates and projections.

Figure 18.5. Korea: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Both agricultural output growth and total factor productivity (TFP) are below the global averages. TFP growth made up for the declining use of primary factors, resulting in output growth of less than 0.1% (Figure 18.6). TFP growth averaged 1.2% per year over the period 2007-16, slowed down compared to the period 1991-2000 (Table 18.3).

Although pressure from agriculture on the environment has declined over the last decade, nutrient surpluses for nitrogen and phosphorus are still well above the OECD averages, resulting from high fertiliser use and intensive livestock production linked to land scarcity. Agriculture accounts for more than half of the country’s water use, due to the high portion of rice paddy fields. The sector’s shares in energy use and GHG emissions have decreased since the 1990s.

Figure 18.6. Korea: Composition of agricultural output growth, 2007-16

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

Table 18.3. Korea: Productivity and environmental indicators

	Korea		International comparison
	1991-2000	2007-2016	1991-2000	2007-2016
			World
TFP annual growth rate (%)	3.5%	1.2%	1.6%	1.6%
			OECD average
Environmental indicators	2000*	2018*	2000*	2018*
Nitrogen balance, kg/ha	254.0	212.2	33.3	29.1
Phosphorus balance, kg/ha	50.3	45.9	3.3	2.3
Agriculture share of total energy use (%)	2.9	0.8	1.7	2.0
Agriculture share of GHG emissions (%)	4.3	3.1	8.1	8.9
Share of irrigated land in AA (%)	4.5	5.7	-	-
Share of agriculture in water abstractions (%)	53.4	52.8	46.0	49.0
Water stress indicator	27.1	34.7	9.9	8.9

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Description of policy developments

Main policy instruments

Tariffs and tariff rate quotas (TRQs) continue to be the main policy instruments for market access and related market price support which accounted for 89% of the producer support estimate in 2019. In-quota rates range from 0% to 50% while out of quota rates are between 9% and 887%. In line with the conclusion of the Uruguay Round, trade restriction measures on all agricultural products, except rice, were converted to tariffs. From 1 January 2015, non-tariff measures on rice were also replaced by a tariff scheme, with a tariff rate of 513% applied on imported rice. A TRQ volume of 408 700 tonnes (around 11% of total domestic consumption) is maintained at a 5% tariff rate.

The 2007 Framework Act on Agriculture, Rural Community and Food Industry laid out the principal policy framework for agriculture, on which five-year strategic plans were established. The plan for 2018-22 has four main policy targets: strengthening the income safety net; promoting innovation for sustainable agriculture; enhancing food safety in the supply chain; and improving rural welfare. The main policy instruments to pursue these objectives are presented in Box 18.1. The plan also aims to strengthen a bottom-up approach in agricultural policy.

A public stockholding scheme for rice, also known as the “Public Storage System for Emergencies”, was established in 2005. One of the main objectives for this scheme is to guarantee food security in times of natural disasters or a temporary shortage due to a mismatch between supply and demand. Under this scheme, the government purchases rice from farmers at the market price during the harvest season and releases the stocks at the market prices when necessary. The government purchase programme for soybeans, with similar objectives as for rice, dates back to 1968.

Direct payment programmes have been implemented since 1997. The current programmes include early retirement payments, a rice income compensation, and payments for the promotion of environmentally-friendly modes of production, for maintaining agriculture in less favoured areas, and for rural landscape conservation.

The most important direct payment programme is the rice income compensation scheme introduced in 2005. The scheme consists of fixed and variable payments. While the fixed payment is a decoupled income support, the variable payment is determined according to the difference between a target price and each year’s harvest-period price. If the harvest-period price is lower than the target price, farmers receive 85% of the difference, after deduction of the fixed payment. The target price is adjusted every five years reflecting the five-year price change.

The direct payment programme has undergone a comprehensive reform, decoupling from production of a specific commodity and enhancing environmental cross-compliance of farmers. In 2019, the government revised the laws and regulations related to the implementation of the new direct payment programme.

The agricultural disaster insurance scheme to protect against losses in yield, initially launched for apples and pears in 2001, has been gradually extended to other commodities. Overall, its coverage increased to 67 crops and 16 livestock commodities. The government subsidises 50% of the insurance premium. A pilot project of an agricultural revenue insurance scheme, introduced for onions, soybeans and grapes in 2015, has been extended to cover garlic, potatoes, sweet potatoes, and cabbage in 2018.

Box 18.1. Korea: Agriculture and Rural Community and Food Industry Development Plan for 2018-22

1. Strengthening income safety net

• Reduction of rice paddy field areas by providing incentives for other crops such as support to drainage, seeds and agricultural machines

• Reform of rice direct payment scheme to be further decoupled from production

• Strengthened environmental cross-compliance in the direct payment scheme

• Expansion of crop insurance programmes

• Diversification of rural income sources by generating non-farm income (i.e. food industry, tourism) for farmer households

2. Promoting innovation for sustainable agriculture

• Support for young start-up farmers

• Integration of digital technology into agriculture in production, distribution and risk management

• Promotion of renewable energy production on farms, including photovoltaic, biomass and geothermal heat

3. Enhancing food safety in supply chain

• Development of a bio-security system focusing on animal disease prevention

• Support for environmentally-friendly livestock industry practices

• Development of a comprehensive animal-welfare roadmap to provide standards for facilities, maintenance and rearing density

• Development of a labelling system, not only for consumer information but also for animal welfare and health

• Improvement of the pesticide registration and traceability management system

4. Improving rural welfare

• Enhanced direct payment and pension schemes for retirement, encouraging aged or low-income farmers to retire from production

• Support for infrastructure in rural areas (i.e. housing, transport and medical facilities)

• Affordable transportation for the elderly and the financially disadvantaged

• Support for rural rental housing with energy saving facilities and barrier-free design

• Development of a medical outreach service for health check-ups

5. Using a more bottom-up policy approach

• Agricultural governance reflecting local and regional characteristics

• Policy design, based on various opinions of farmers and other stakeholders

Source: Korean Government.

The Promotion Plan for Environmentally-friendly Agriculture (2016‑20) aims to increase the share of pesticide-free cultivation areas (including organic production) and, more generally to reduce inputs of chemical fertilisers and pesticides in crop production. Several measures, including adjustments of direct payments towards environmentally-friendly agriculture and support for organic production, were implemented for this plan.

The government has increased investment in “Smart farms”, using smartphones and remote control to check the crop growth information in real-time. At the same time, a range of policies were offered to attract the younger population to rural areas, with an emphasis on the application of information and communication technology at the farm level.

Regulation for livestock facility management has been tightened in recent years to prevent animal diseases as well as to enhance food safety and pollution treatment. These stricter rules will be immediately applied to new farms, while grace periods will be given to existing farms. The policy efforts involving central and local governments continue to be made to facilitate farmers to get an authorisation, aiming to reinforce long-term sustainability of the livestock sector.

To promote rural development and sustain livelihoods in rural areas, the government has been providing support to people who move to farm villages and join the agricultural industry. This policy covers not only an advisory service on relocation or housing, but also provides education and training programmes on farming and marketing skills.

Korea has sixteen bilateral and regional Free Trade Agreements (FTAs) in force. Rice is excluded from tariff concessions in the existing FTAs, but significant tariff concessions for livestock and fruit products are included in some of the FTAs. Tariffs on beef imported from the United States, Australia and Canada are scheduled to be completely eliminated over a period of 15 years after the respective bilateral FTAs have entered into force (March 2012 with the United States, December 2014 with Australia, and January 2015 with Canada). It is also agreed that tariffs on pork meat from the European Union, the United States and Chile would be phased out over 10 years, and from Canada over 13 years in the respective FTAs. Tariffs on chicken meat originating from the United States and the European Union are to be abolished by items (tariff lines) over a period of 10 to 13 years after the respective FTAs have come into effect.

Domestic policy developments in 2019-20

A new direct payment programme, which combines the direct payments for rice, upland crops and less favoured areas into one scheme, is to be implemented in 2020. In 2019-20, preparations for a new programme began, discussing with stakeholders and revising laws and regulations. The reform aims to further decouple payments from production of a specific commodity (especially rice), and reinforce farmers’ adoption of agri-environmental practices. At the same time, to mitigate the dependence of rice farmers on direct payments, the government has provided incentives for crop diversification since 2018, in the form of support to drainage, seeds and agricultural machines.

In response to the first domestic outbreak of African Swine Fever (ASF) near the border with North Korea in September 2019, measures to block further spread of the disease were deployed, which include pig culling within affected areas, restrictions on transportation of pig and excreta, extensive disinfection, strengthened inspection of pig farms, and nationwide informational campaigns. In addition, R&D initiatives for future control and prevention of the disease were introduced at the end of 2019.

To encourage on-farm risk management, agricultural insurance has increased its commodity coverage to 78 products in 2019 and to 83 products in 2020, by adding walnuts, red beans, barley, spinach, and apricots. The government has made efforts to expand the subscription of farmers, by developing more market-based services reflecting structural changes in agriculture.

To promote the Smart Agriculture Project, the government selected four sites in 2018-19 for the construction of smart farm complexes, “Innovation valleys”, focusing mainly on the horticultural sector. In order to create and exploit synergies, the complexes cover the entire value chain from young startups, research and development institutions to agro-food firms. The project is aimed at promoting high technologies in agricultural production, while attracting young innovative farmers.

In line with the Paris Agreement on Climate Change and the National Roadmap for the reduction of greenhouse gas (GHG) emissions, the second version of the Climate Change Response Plan (2020-40) was released in October 2019. This plan sets a target to reduce the GHG emissions by 37% from the BAU level by 2030, which is 24% lower than the 2017 level, and also contains action plans across all economic sectors, including agriculture; developing GHG monitoring and forecasting mechanisms, improving the current emissions trading system, and investing in infrastructures to adapt to climate change. The agricultural sector was tasked with reducing GHG emissions by 7.9% from the BAU level by 2030, including through enhancing water and animal waste management (Korean Government, 2019[4]).

From January 2019, the regulation on pesticide use has been converted to a positive list system1 and set a maximum residue level (0.01mg/kg) of unauthorised pesticides to prevent overuse or misuse of pesticides. Since its launch, both domestic production and use of unregistered pesticides decreased in 2019.

Exports of fresh products, as well as processed foods, have continuously increased, but are concentrated on a small set of destinations, such as the People’s Republic of China (hereafter “China”) and Japan. The government continues to make efforts for export diversification by facilitating access to overseas markets, providing market information and supporting marketing related activities. In addition, export promotion programmes focus more on commodities with export competitiveness such as strawberries and grapes.

Trade policy developments in 2019-20

The WTO verification procedures with member countries regarding the tariffication on rice was finalised in January 2020. Tariffication on rice was deferred twice based on the results of the Uruguay Round and rice negotiation at the WTO in 2004. Since 2015, tariffication with the rate of 513% (in-quota 5% for a TRQ of 408 700 tonnes) has been implemented; however, the WTO had been undertaking the verification process during the period 2015-19. The rice TRQ is managed by a state trading enterprise, Korea Agro-Fisheries and Food Trade Corporation.

Korea concluded negotiations for three FTAs in 2019, with Israel, the United Kingdom and Indonesia. Korea-RCEP,2 Korea-Mercosur, Korea-India FTA negotiations are ongoing, and negotiations for FTAs with Malaysia, and the Philippines were launched in 2019.

In May 2019, Korea lifted import restrictions on beef and beef products from the Netherlands and Denmark. These restrictions had been in place since 2001 in response to the outbreak of bovine spongiform encephalopathy (BSE) in the European Union. Applications from additional EU Member States3 concerning the lifting of these restrictions are being reviewed.

References

[1] Korean Government (2020), The effects of COVID-19 on agro-food industries and policy responses.

[4] Korean Government (2019), National Climate Change Adaptation Basic Plan 2020-40.

[2] OECD (2018), Innovation, Agricultural Productivity and Sustainability in Korea, OECD Publishing, Paris, https://doi.org/10.1787/9789264307773-en.

[3] OECD (2018), OECD Economic Surveys: Korea 2018, OECD Publishing, Paris, https://doi.org/10.1787/eco_surveys-kor-2018-en.

Notes

← 1.  Only pesticides registered on the list are allowed for use, and the use of unregistered pesticides is prohibited.

← 2.  Regional Comprehensive Economic Partnership is a proposed FTA between the member states of the ASEAN countries and its FTA partners (Australia, China, India, Japan, New Zealand and South Korea).

← 3.  France, Ireland, Germany, Poland, Sweden, Spain, Austria, Italy, Belgium, Hungary, and the United Kingdom.