Agricultural Policy Monitoring and Evaluation 2024

18. Korea

Main findings

Support to agriculture

Korea has gradually reduced its support to producers relative to gross farm receipts. Despite these reform efforts, Korea is one of the countries with the highest level of relative support to producers. Producer support for agriculture (Producer Support Estimate, PSE) in Korea amounted to 44% of gross farm receipts in 2021-23, down from 53% in 2000-02, but much higher than the OECD average.

Market Price Support (MPS) remains the main component of producer support, representing 86% of support to farmers in 2021-23 and covering key imported commodities such as rice, soybeans, barley, garlic, red peppers, and pig meat. These market-distorting transfers result from the maintenance of tariff rate quotas (TRQs) with high out-of-quota tariffs. On average, domestic producer prices are 63% higher than comparable world prices but the price gap has gradually decreased over the past decades.

Budgetary support mostly consists of direct payment programmes, agricultural insurance schemes and subsidies based on variable input use. This support accounted for 6% of gross farm receipts in 2021‑23. Budgetary support increased by nearly 80% over the last two decades, but the proportion is relatively small, 0.38% of Gross Domestic Product (GDP).

General services expenditures (General Service Support Estimate, GSSE) declined from 10% in 2000-02 to 7% in 2021-23 relative to the agricultural value of production but remains higher than the OECD average of 3.4%. The majority (53%) of GSSE goes to developing and maintaining infrastructure, particularly irrigation facilities. Agricultural knowledge and innovation system (26%), public stockholding (11%), and inspection and control (10%) are the next largest GSSE components.

The share of Total Support Estimate (TSE) relative to GDP declined from 7.6% in 1986-88 to 2.9% in 2000-02, and further to 1.5% in 2021-23, though it remains higher than the OECD average of 0.6%.

Key recent policy changes

In July 2023, the Act on Fostering and Supporting Smart Farming set out the policy direction for infrastructure development, distribution, expansion, and support for smart agriculture. The act mandates five-year basic plans and annual implementation plans and requires provincial governors to create locally tailored plans. The act also designates institutions for smart agriculture education, introduces the “Smart Agriculture Manager” system, supports AI and robotics development, and standardises equipment and data. A smart agricultural data platform will be established for efficient data use.

The First Agricultural Disaster Insurance Development Basic Plan (2023-27) was established in January 2023. It aims to expand agricultural disaster insurance, targeting 60% farm enrolment and 95% coverage of production by 2027. The plan seeks to minimise insurance blind spots, increase payouts, and address institutional deficiencies. Premiums will be calculated based on detailed farming information, and a streamlined enrolment and payout using smart technologies will be implemented.

The Third Comprehensive Seed Industry Development Plan (2023-27) was announced in 2023. This plan aims to grow the Korean seed industry to KRW 1.2 trillion (USD 919 million) and expand exports to USD 120 million by 2027. The plan supports developing seeds for crops and vegetables suitable for smart and vertical farms, mechanisation, and policy demand. It also includes training data experts for digital breeding, enhancing corporate breeding links, and opening government genetic resources to private companies.

In August 2023, the Act on Revitalisation of Economic and Social Services in Rural Areas Based on Rural Community was enacted to address service shortages and support sustainable development in rural communities. The act provides a legal basis for supporting local communities and social enterprises. It offers administrative and financial support, as well as education, training, and counselling for rural residents. Additionally, the act supports consulting, information provision, promotion, programme management, and facility improvement.

The 2030 Greenhouse Gas Reduction and Green Growth Strategy in the Livestock Sector was announced in January 2024. The strategy aims to enhance sustainability and reduce greenhouse gas emissions in the livestock sector. The strategy includes expanding manure digesters, enhancing wastewater purification, and improving low-carbon breeding management as well as investing in facilities to convert livestock waste into biochar. It also supports the development of greenhouse gas reduction technologies, promotes a low-carbon certification system, and provides incentives to farms that feed low-methane and low-protein feed.

Assessment and recommendations

• As part of efforts to enhance sustainable productivity growth, the spread of smart agriculture is being emphasised in Korea. While some progress has been made such as the development of smart farm technologies by leading companies, it remains in the early stages of government-led dissemination using Smart Farm Innovation Valleys. Stronger partnerships with the private sector can accelerate development and dissemination of smart farm technologies.

• Korea has reformed agricultural support policies over the past decades. However, the level of support to producers remains higher than the OECD average. Commodity-specific support is still the dominant type of support. This type of support, by encouraging production of specific commodities, can reduce farmers’ incentives to try new products. Support that is not commodity specific can give a better enabling environment for farmers that lets them more quickly adapt and react to new challenges and opportunities.

• Korea’s agricultural innovation system is characterised by the dominance of public actors such as public research institutions and public extension services. Public agricultural R&D should be redefined and concentrated more on basic and preliminary research, which are complementary to private R&D. A more collaborative and demand-driven system between public and private sectors including higher education institutions can help guide public research and make private R&D more successful.

• Agricultural disaster insurance has helped stabilise the income of farmers by expanding the eligible commodities and coverage. Government support for insurance premiums have helped increase the use of insurance by farmers. However, it is necessary to evaluate whether agricultural insurance premium subsidies are affecting farmers' other risk management efforts or hindering the development of the agricultural insurance market. In the long term, the subsidy should be gradually reduced to increase the role of the private sector.

• Korea has reduced the use of chemical fertilisers over the past two decades, but the rapid expansion of intensive livestock production has offset the improvement in nutrient balance. Nitrogen and phosphorus surpluses remain well above the OECD average. The livestock sector is one of the main agricultural sources of water and soil pollution. Proper manure management is essential for sustainable livestock development, and policies should encourage environment-friendly manure management.

• Climate change is likely to have a negative impact on agricultural productivity and output. Extreme weather events are causing increasing volatility in agricultural production. Strengthening systemic preparedness is needed to maintain agricultural productivity and ensure food security. In order for the early warning system to effectively reduce damage in the field, efforts to enhance disaster response capabilities should be made in conjunction with agricultural extension services and other related support.

• The livestock sector will play an important role in Korea’s climate-mitigation policy as it accounts for 40% of agricultural greenhouse gas emissions as of 2018. Technologies that reduce greenhouse gas emissions and other environmental impacts will be crucial for sustainable growth in the livestock sector. Government support can help livestock farmers adopt these best practices. In the long term, the livestock industry needs to transition to a flexible structure that can adapt to changes in consumer diets.

Development of support to agriculture

Figure 18.1. Korea: Development of support to agriculture

Table 18.1. Korea: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	16 985	26 360	47 517	51 730	44 838	45 982
of which: share of MPS commodities (%)	74.33	63.27	59.49	61.11	60.89	56.47
Total value of consumption (at farm gate)	17 247	33 199	63 639	67 835	60 419	62 665
Producer Support Estimate (PSE)	10 682	14 466	22 340	26 491	20 123	20 407
Support based on commodity output	10 562	13 505	19 233	23 285	17 367	17 046
Market price support¹	10 562	13 505	19 233	23 285	17 367	17 046
Positive market price support	10 562	13 505	19 233	23 285	17 367	17 046
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	534	549	476	576
Based on variable input use	29	207	321	312	277	374
with input constraints	4	34	45	45	44	47
Based on fixed capital formation	57	246	151	149	150	154
with input constraints	0	18	36	44	34	30
Based on on-farm services	4	17	62	88	50	48
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	29	490	602	613	496	697
Based on Receipts / Income	29	292	153	231	74	153
Based on Area planted / Animal numbers	0	198	449	382	421	544
With input constraints	0	160	0	0	0	0
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	1 972	2 045	1 784	2 088
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	1 972	2 045	1 784	2 088
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 (%)	62.26	52.66	43.94	48.22	42.28	41.36
Producer NPC (coeff.)	2.50	1.97	1.63	1.75	1.61	1.55
Producer NAC (coeff.)	2.65	2.11	1.78	1.93	1.73	1.71
General Services Support Estimate (GSSE)	1 066	2 676	3 414	3 541	3 326	3 375
Agricultural knowledge and innovation system	67	243	884	886	846	922
Inspection and control	26	126	339	357	319	342
Development and maintenance of infrastructure	467	1 811	1 794	1 925	1 744	1 713
Marketing and promotion	0	26	37	42	35	34
Cost of public stockholding	505	471	360	332	383	365
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	8.92	15.62	13.30	11.77	14.15	14.17
Consumer Support Estimate (CSE)	-10 147	-15 375	-23 985	-28 301	-22 033	-21 621
Transfers to producers from consumers	-10 015	-12 814	-18 217	-21 662	-16 917	-16 072
Other transfers from consumers	-205	-2 654	-5 813	-6 680	-5 168	-5 591
Transfers to consumers from taxpayers	73	93	45	41	51	43
Excess feed cost	0	0	0	0	0	0
Percentage CSE (%)	-58.95	-46.08	-37.53	-41.75	-36.50	-34.53
Consumer NPC (coeff.)	2.45	1.86	1.60	1.72	1.58	1.53
Consumer NAC (coeff.)	2.44	1.85	1.60	1.72	1.57	1.53
Total Support Estimate (TSE)	11 821	17 235	25 800	30 073	23 500	23 825
Transfers from consumers	10 220	15 468	24 030	28 342	22 085	21 664
Transfers from taxpayers	1 805	4 421	7 583	8 411	6 584	7 753
Budget revenues	-205	-2 654	-5 813	-6 680	-5 168	-5 591
Percentage TSE (% of GDP)	7.64	2.93	1.48	1.65	1.40	1.39
Total Budgetary Support Estimate (TBSE)	1 258	3 731	6 567	6 788	6 133	6 780
Percentage TBSE (% of GDP)	0.81	0.64	0.38	0.37	0.37	0.40
GDP deflator (1986-88 = 100)	100	209	309	305	308	314
Exchange rate (national currency per USD)	812.03	1 224.03	1 247.29	1 144.46	1 291.41	1 306.01

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 (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

The Framework Act on Agriculture, Rural Community and Food Industry, enacted in 2007, establishes Korea’s agricultural policy framework. It requires the government to establish a national policy plan every five years with the purpose of providing direction for national policies to pursue the sustainable development of agriculture and rural communities, to ensure the stable supply of safe agricultural products and quality food, and to enhance the level of income and quality of life of farmers. The 3^rd National Plan to Develop Agriculture, Rural Communities and the Food Industry (2023-27) was established in 2023, reflecting the national policy agenda and the agricultural policy goals of the government newly formed in 2022. This recent plan includes five policy objectives: 1) securing food sovereignty; 2) fostering the agro-food industry as a growth engine; 3) strengthening the safety net for farm households; 4) enhancing food safety in the supply chain; and 5) creating comfortable and attractive rural areas.

The public stockholding scheme for rice, known as the Public Storage System for Emergencies, was established in 2005. One of its objectives is to guarantee food security in times of natural disaster or temporary shortages driven by a mismatch between supply and demand. Under the scheme, the government purchases rice from farmers at prevailing market prices during the harvest season and resells into the market at a later date. The size of the stockpile is determined through consultation with relevant ministries, considering recommendations from international organisations and domestic research. The timing of releases is managed in a rotating manner, linked to the volume of the purchase, to maintain a constant stockpile. The government has a similar purchasing programme for soybeans.

The Direct Payment System, revised in May 2020, aims to stabilise the incomes of small to medium-sized farms and to improve farm compliance with regulatory obligations in order to promote public good in agriculture and rural communities. Farmers must comply with 17 regulatory obligations covering environmental protection, food safety, and farm management standards such as standards for pesticide application. There is also a direct payment for the transfer of the farm management rights to enable retired farmers to sell or lease their farmlands while maintaining their incomes and to create more opportunities for young farmers.

Agricultural disaster insurance, revenue insurance and work safety insurance are provided by private companies with government subsidies covering 50% of the insurance premiums. The agricultural disaster insurance scheme, which covers 70 crops and 16 livestock products including apples, pears, grapes, onions, and garlic., protects farmers against losses in crop yield and livestock. Agricultural revenue insurance covers seven crops: grapes (coverage began in 2015), onions (2015), soybeans (2015), garlic (2016), potatoes (2017) sweet potatoes (2017), and cabbage (2018). Work safety insurance covers injuries, illnesses and accidents, or deaths of farm workers that occur during on-farm work and contributes to stabilising farm income.

The Act on Support for Restructuring and Regeneration of Rural Spaces was passed by the National Assembly in February 2023 and laid the legal foundation for the systematic management of rural spaces. It aims to help meet the challenges in rural areas linked to rapid economic growth, which has exacerbated the urban-rural gap in terms of living conditions and community services, resulting in rural out-migration. The Spatial Plan for Rural Communities aims to address this gap via improved land use management systems, restructured rural areas, and enhanced daily services such as housing, transportation and employment in rural areas. The Ministry of Agriculture, Food and Rural Affairs (MAFRA) aims to help improve rural residential areas, relocate locally unwanted facilities and provide necessary social services.

The Enhanced Update of its First Nationally Determined Contribution for achieving the Net-zero across all the sectors was announced in November 2021. This requires GHG emissions in agriculture and fisheries to decline 27.1% relative to 2018 levels by 2030 and 37.7% by 2050. Accordingly, the 2050 Agri-Food Carbon Neutrality Strategy was revealed in December 2021. This sectoral strategy contained a detailed implementation plan for GHG emission reduction for food production, distribution, consumption and energy conversion. Moreover, as a member of the Global Methane Pledge, Korea is working to reduce methane emissions in the agricultural sector by 20.6%.

Tariffs and tariff rate quotas (TRQs) are the main agriculture trade policy measures. A total of 63 agricultural products are subject to TRQs, including rice, corn and soybeans. In-quota tariff rates range from 0% to 50% with out-of-quota rates between 9% and 887%. A TRQ volume of rice (408 700 tonnes, about 10.7% of annual rice consumption) has been maintained at a 5% tariff rate (the out-of-quota tariff is 513%).

Korea is engaged in 21 bilateral and regional free trade agreements (FTAs). Some of these agreements include significant tariff reductions for livestock and fruit products, but rice is excluded from tariff concessions Import tariffs on various meats from major exporting countries such as the United States, Australia, Canada and the European Union are being progressively phased out over periods between 10 and 15 years from the entry into force of the respective agreements.

Innovation for sustainable productivity growth

Korean agriculture achieved a substantial improvement in total factor productivity during the past three decades, despite a persistent decrease in the agricultural labour force and farmland. The agricultural TFP growth in Korea has been historically higher than the OECD average. The growth of output was the highest in the 1970s but slowed down to nearly zero in recent years. In the last two decades, feed and capital inputs have grown and fertiliser and land inputs declined, reflecting Korea’s structural change from crop to livestock production (OECD, 2018[1]).

Korea has a particularly well-developed information and communication technology (ICT) infrastructure, but fragmentation of farmland and dominance of small-scale farms are a major constraint to improving the productivity of land-intensive agriculture. MAFRA is fostering smart agriculture to enhance sustainability and improve resilience against climate change and natural disasters. Smart agriculture1 is expected to contribute to addressing the decreasing workforce in rural areas and minimising the environmental impacts while continuing innovation and increasing productivity in the agricultural sector.

In 2018, MAFRA announced the Smart Farm Expansion Plan to strengthen the overall competitiveness of the smart farming industry by going beyond the conventional distribution of smart farms at the individual farm level. The plan focuses on establishing basic infrastructure and creating innovative models of smart farming suitable for the Korean conditions and allows the government to expand its policy targets to include young farmers and upstream and downstream industries. It aims to foster smart farming expertise by promoting the establishment of diffusion hubs with integrated functions for education, research, and production. This includes programmes such as strengthening the training of smart farm experts, creating lease-based smart farms for young farmers, and establishing demonstration sites for research and commercialisation for food companies, research institutions and farmers.

Following the plan, the government selected four regions as Smart Farm Innovation Valleys, including Gimje and Sangju in the first phase (2018) and Goheung and Miryang in the second phase (2019). Between 2019 and 2022, the Smart Farm Innovation Valleys were constructed and equipped with Smart Farm Youth Startup Incubation Centres, Smart Farm Demonstration Sites, and Big Data Centres.

The Smart Farm Youth Startup Incubation Centre supports prospective young farmers with 20 months of theoretical and practical training to settle in agriculture areas through smart farms. Additionally, exceptional students are provided with the opportunity to lease a smart farm for three years to enhance their management and cultivation capabilities. The Smart Farm Demonstration Site offers various facilities, equipment, and support services for technology verification to participating companies. The Big Data Centre aims to collect smart farm data produced in the Smart Farm Innovation Valley. This data will serve as basic information for enhancing productivity within the Innovation Valley and across the country.

In July 2023, the government enacted the Act on Fostering and Supporting Smart Farming, outlining the policy direction for infrastructure development, distribution, expansion, and support for smart agriculture. To foster and support smart agriculture, five-year basic plans and annual implementation plans are to be established. The act commits provincial governors to formulate plans tailored to local conditions. It also allows MAFRA to designate public institutions with expertise in smart agriculture as Smart Agriculture Support Centres capable of carrying out major projects related to smart agriculture.

To enhance the technical capabilities of farmers, industrial workers and experts, the act provides for the designation of institutions for the education of smart agriculture professionals and introduces the “Smart Agriculture Manager” system to handle education, information technology dissemination and counselling. The act also lays the groundwork for supporting the development of artificial intelligence and robotics, and the standardisation for equipment and data used in advanced smart agriculture. To promote the introduction of developed equipment and services into the field, related regulations for support technology verification, equipment testing, and follow-up management were incorporated in this act.

In addition, the government will support technology and service development by establishing a smart agricultural data platform so that farmers and companies can efficiently utilise and trade data collected through Internet of Things (IoT) equipment.

Recent policy developments

Domestic policy developments in 2023-24

Risk management

The First Agricultural Disaster Insurance Development Basic Plan (2023-27) was established in January 2023, mandated by the revised Agricultural Disaster Insurance Act. The objective of the plan is to ensure a comprehensive and robust safety net by expanding agricultural disaster insurance. MAFRA aims to have approximately 60% of all farms enrolled in agricultural disaster insurance by 2027 and expand the coverage of agricultural disaster insurance to around 95% of the total agricultural and forestry production. As of 2022, crop disaster insurance recorded a 50% enrolment rate and livestock disaster insurance had a 95% enrolment rate, resulting in a total enrolment rate of 54% for all farms.

Since the introduction of livestock disaster insurance in 1997 and crop disaster insurance in 2001, the scope and coverage of insurance have steadily expanded. The coverage of agricultural disaster insurance still remains limited in terms of eligible commodities and insured regions. The plan will minimise insurance blind spots and increase the payout amount.

The plan addresses rare situations where insurance benefits received by insured farms are less than government payments to support recovery costs. The relevant laws will be amended to pay insured farms the difference between recovery cost support payments and insurance benefits when recovery cost support payments exceed the insurance payout. This will ensure that there is no disadvantage for producers to use insurance.

To ensure insurance rates adjusted to farmers’ conditions, premiums will be calculated on the basis of more detailed information on cultivation area, crop varieties, and cultivation characteristics. Moreover, the plan includes creating a streamlined insurance enrolment process and establishing a system for quick and accurate insurance payouts using smart technologies.

Fostering the development of the seed industry

The 3^rd Comprehensive Seed Industry Development Plan (2023-2027) was announced in 2023. This plan envisions the development of seed industry through technological innovation. It aims to increase the size of the Korean seed industry to KRW 1.2 trillion (USD 919 million) and expand seed exports to USD 120 million by 2027

Based on this plan, the government supports the development of seeds for food crops including corn, soybeans, wheat, potatoes and rice as well as tailored seeds for leafy and fruit vegetables, suitable for smart farms and vertical farms with high market growth potential. Emphasis will also be placed on developing:

• wheat and soybean varieties that respond to the transition to mechanisation

• powdered rice varieties for increasing policy demand to promote rice processing industry

• royalty-free vegetable and fruit varieties such as one-person-sized cabbage, and flower varieties.

The plan provides for training the data experts for digital breeding, enhancing the link between corporate breeding and data, and facilitating the collection and analysis of genetic information for seeds by private companies through government research facilities. Additionally, government-held genetic resources will be opened for private companies to directly evaluate traits. The government will concentrate on developing and sharing basic science, while businesses will be responsible for developing seed varieties in a collaborative partnership.

Farm income stabilisation

The direct payment system was modified in 2024 to enhance farm income stability and increase the effectiveness of the policy:

• The rate of the direct payment for strategic crops, introduced last year, was doubled for soybeans and powdered rice to KRW 2 million per ha (USD 1 531), and a direct payment will be newly provided for corn.

• The unit price of the basic direct payment for small-scale farms with less than 0.5 ha was increased from KRW 1.2 million (USD 919) to KRW 1.3 million (USD 995). To mitigate income volatility caused by natural disasters, the coverage of agricultural revenue insurance was expanded from 7 to 10 items.

• A new support programme of retirement direct payments for elderly farmers was introduced to help stabilise their livelihood; land transferred through this programme will be prioritised for allocation to young farmers.

• The target group for support for living expenses (monthly KRW 1.1 million – USD 842) to help young farmers settle in the early stages of farming was expanded from 4 000 to 5 000 individuals.

• A new pilot programme for supporting low-carbon farming activities, such as Alternate Wetting and Drying (AWD) and low-methane feed, was introduced. The target area of the direct payment for landscape conservation was significantly expanded from 15 000 ha to 24 000 ha, taking into account the increased demand for landscape crops contributing to local economic revitalisation.

Revitalisation of rural areas

The government enacted the Act on Revitalization of Economic and Social Services in Rural Areas Based on Rural Community in August 2023 to address service shortages in rural areas and to support the revitalisation and sustainable development of rural communities. The act establishes the legal basis for supporting local communities and social enterprise including social farms for rural residents to resolve service shortages.

Under this law, administrative and financial support is provided for local communities established by rural residents to offer services within rural areas. The government also supports these communities by providing education, training, and counselling for rural residents. Additionally, this law allows for support for consulting, information provision, promotion, programme management, and facility improvement.

To implement these measures, the central government is to formulate a National Rural Economy and Social Services Revitalisation Plan based on rural communities every three years. Provincial governors can establish their local Rural Economy and Social Services Revitalisation Plans every three years under the national plan.

Policies to mitigate emissions from agriculture

The 2030 Greenhouse Gas Reduction and Green Growth Strategy in the Livestock Sector was announced in January 2024. The strategy aims to enhance sustainability and contribute to carbon neutrality in the livestock sector, which has recently seen an increase in greenhouse gas emissions. The strategy involves:

• Reducing emissions through the direct management of greenhouse gas emission sources in the livestock sector. To reduce emissions generated during the composting and anaerobic digestion process of manure, this includes expanding greenhouse gas reduction facilities such as manure digesters, and distributing them to farms, as well as enhancing the purification of wastewater generated from the manure treatment. Low-carbon breeding management and improvement of productivity will also be pursued as complementary measures.

• Increasing the number of biogas facilities using livestock manure, to replace fossil fuels in the region’s energy use by electricity and waste heat generated from these facilities. Regulatory improvements and increased investment in production facilities to use livestock waste as biochar are also part of the strategy.

• Transitioning from high-input livestock breeding practices to a low-input and low-emission structure. This involves using smart equipment and solutions and converting more agricultural by-products into feed to further link livestock and crops.

• Developing greenhouse gas reduction technologies and promoting low-carbon certification system for livestock products. Additionally, a low-carbon programme will support farms that feed low-methane and low-protein feed and encourage carbon reduction by farms.

Policies to facilitate climate change adaptation in agriculture

In June 2023, the 3^rd National Climate Change Adaptation Plan (2021-2025), established in December 2020, was revised to strengthen the overall adaptation infrastructure across sectors and enhance action plans applicable on the ground. The goal is to establish a basis for climate change adaptation by creating a sustainable agricultural environment. This includes enhancing agricultural meteorological information services, strengthening the development of climate-adaptive crop varieties, supporting the expansion of public stockholding and securing private overseas supply chains in preparation for extreme weather events.

This supplemental plan reinforces action in several ways:

• Improving climate monitoring and early warning systems and improved accessibility to adaptation information for the public.

• Encouraging increased participation of stakeholders in climate adaptation initiatives. Supplementing regional diagnostics and farm-level assessments to predict productivity changes in crops and livestock. This includes expanding on-site observation teams and using AI technology.

• Developing prevention and pest control technologies to better track, predict, and control sudden pest invasions.

• Establishing new water resources and digitalising irrigation systems to improve the efficiency of water resource utilisation and minimise drought damage.

• Improving and reinforcing drainage facilities to strengthen flood preparedness for agricultural production infrastructure in flood-prone areas.

• Promoting the adoption of smart farming, developing optimised solutions tailored to the region, crop and farming practices, expanding advanced mitigation technologies to prepare for damage caused by extreme weather events, and fostering climate-adaptive crop varieties.

• Better environmental management of cultivation, including water and soil quality to increase resilience.

• Enhancing disaster insurance and recovery measures to improve the capacity to respond to disasters.

• Expanding emergency stockpiles and establishing stable overseas supply chains in times of crisis.

Trade policy developments in 2023-24

Several free trade agreements (FTAs) were recently concluded, including the Strategic Economic Cooperation Agreement with Ecuador (October 2023), the Comprehensive Economic Partnership Agreement with the United Arab Emirates (October 2023) and the FTA with the Gulf Co-operation Council (December 2023). These agreements are scheduled to be formally signed in 2024, with efforts to expedite the domestic approval processes, including ratification, to facilitate their early enforcement. The FTA with the Philippines was finally signed in September 2023, after it was concluded in October 2021.

Policy context

Key economic and agricultural statistics

Korea’s economy has been growing, having its GDP nearly tripled over the last two decades. However, the growth rate has slowed and is converging with that of advanced OECD economies. Korea is a high-income country in terms of per capita incomes.

As of 2022, Korea’s arable land was 1.6 million ha, accounting for 16% of the total land area. The average arable land per farm was 1.5 ha. Conversely, Korea has one of the highest population densities among OECD countries and is experiencing a rapidly ageing population due to a low fertility rate and increased life expectancy. The ageing of rural communities is much more severe, as young generations have migrated to urban areas.

Trade is an important driver of Korea’s economy. In 2022, trade accounted for 42.3% of the GDP. The remarkable growth of the Korean economy changed the status of agriculture. In the 1970s, agriculture contributed approximately 25% to GDP, but this share declined to 1.8% in 2022. Similarly, the share of agriculture in national employment decreased from 10.6% to 5.4% between 2000 and 2022. Both agricultural exports and imports slightly increased over this period. Korea remains a large importer of agricultural products.

The structure of agricultural production has significantly evolved. While cereal production has declined, the production of fruits, vegetables, and livestock products has increased. Crop production accounted for 56% of the total value of agricultural production in 2022 down from 75% in 2000. In contrast, the livestock sector has experienced the highest growth in recent decades. The share of livestock products in agricultural production increased from 25% to 44% in 2000-22.

Table 18.2. Korea: Contextual indicators

	Korea		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	871	2 598	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	1 603	0.1%	0.1%
			All countries1
Population density (inhabitants/km2)	473	519	52	64
GDP per capita (USD in PPPs)	18 539	50 331	9 363	25 965
Trade as % of GDP	28.9	42.3	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	4.3	1.8	2.9	3.8
Agriculture share in employment (%)	10.6	5.4	-	-
Agro-food exports (% of total exports)	0.9	1.2	6.4	8.0
Agro-food imports (% of total imports)	5.2	5.6	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	75	56	-	-
Livestock in total agricultural production (%)	25	44	-	-
Share of arable land in AA (%)	87	84	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

After the economic downturn caused by the COVID-19 pandemic, Korea’s economy recovered in 2021. Sound health management and supportive policies helped Korea emerge swiftly from the pandemic. However, economic growth slightly slowed from 4.3% in 2021 to 1.4% in 2023. Exports mainly drove real GDP growth in 2023, whereas private consumption was feeble, and investment contracted due to high interest rates (OECD, 2024[2]).

The unemployment rate fell from 2.9% to 2.7%, reaching the lowest over the two decades. The labour market is performing well, with historically high employment and low unemployment. However, the inflation rate peaked at 5.1% in 2022 and slightly declined to 3.6% in 2023. Inflation remains high due to the increase in energy and food prices (Figure 18.4).

Korea is one of the largest net importers of agro-food products. Over the past 20 years, both agro-food imports and exports in Korea have shown a steady increase. The agri-food imports increased more rapidly than exports. In 2022, agro-food imports amounted to USD 40.9 billion, marking a 17.4% increase from the previous year. Meanwhile, the export value saw a modest 3% rise to USD 8.4 billion year-on-year. The agro-food import value is more than 4.8 times bigger than the agro-food export value, with this gap widening further in recent years.

Specifically, over 87% of agro-food exports are products for final consumption, while about 50% of agro-food imports are used for final consumption. Export products comprise a significant portion of processed foods such as noodles, snacks and beverages. Key imported agricultural commodities include livestock products such as beef, pork, and dairy products, as well as grains including maize, soybeans, and wheat (Figure 18.5).

Agricultural output in Korea has annually grown by 0.9% between 2012 and 2021, lower than the world average during this period. This growth has mainly been driven by Total Factor Productivity (TFP) growth, despite a reduction in the use of primary factors, particularly labour force and agricultural land. However, TFP annual growth rate in Korea declined from 3.4% in 1991-2000 to 1.5% in 2012-21, slightly higher than the global average during the period of 2012-21 (Figure 18.6).

The average nitrogen and phosphorus surpluses remain well above OECD averages and have increased by 8.5% and 21.0%, respectively, over the last two decades. The recent increase in nitrogen balance was primarily attributed to livestock manure rather than chemical fertilisers. The share of agriculture in water abstractions experienced a slight decrease compared to the level in 2000, reaching the OECD average level. Korea utilised a significant amount of water for rice paddy fields in agriculture. Meanwhile, water stress has been increasing and remains very high compared to other OECD countries. The annual GHG emissions from the agricultural sector accounted for 3.2% of total emissions, well below the OECD average of 10.1% (Table 18.3)

Table 18.3. Korea: Productivity and environmental indicators

	Korea		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	3.4%	1.5%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	218.5	237.1	32.1	28.2
Phosphorus balance, kg/ha	39.6	47.9	3.3	2.3
Agriculture share of total energy use (%)	2.9	1.0	1.7	2.0
Agriculture share of GHG emissions (%)	4.3	3.2	8.7	10.1
Share of irrigated land in AA (%)	41.0	39.7	-	-
Share of agriculture in water abstractions (%)	53.4	48.9	47.0	49.5
Water stress indicator	27.1	28.1	8.7	..

Note: * or closest available year.

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

Historical trends in agricultural policies

Korea’s agricultural sector has undergone rapid structural change, following the country’s rapid industrialisation and economic growth. After the Korean War, it was vital for Korean agriculture to be able to feed the population. From the 1950s to the 1970s, the focus was on increasing crop productivity and achieving self-sufficiency in staple crops, particularly rice. During the process of industrialisation, the agricultural sector also provided cheap and high-quality labour to the manufacturing sector and laid a foundation for stable economic growth.

Throughout the late 1980s and 1990s, the main policy objectives shifted to restructuring the agricultural sector and improving its competitiveness. The government adopted more market-oriented policy frameworks, and this period was marked by the progressive liberalisation of agriculture and food markets via free trade agreements. In the late 1990s, policy objectives further diversified into areas such as enhancing productivity, improving long-term agricultural sustainability and increasing provision of public goods.

During the late 1990s and 2000s, trade measures on agricultural products were gradually converted into tariffs and tariff rate quotas (TRQs), with the exception of rice as agreed in the Uruguay Round Agreement on Agriculture. In January 2015, the non-tariff measure on rice was also replaced by a TRQ.

Slowed economic growth and demographic changes moved objectives in the 2000s further from growth to broader public policy goals. These goals included revitalising the rural economy, expanding export markets, improving the environmental performance of agriculture and promoting the food industry. A holistic food policy began to take shape that took into account production, consumption, safety, nutrition, welfare and the environment, as well as food availability for low-income groups. This entailed a shift from central government leadership to horizontal governance for participation and collaboration with a larger role for local governments and the stakeholders.

Support to producers in Korea has been gradually decreasing since 1990. However, the share of PSE remains high, accounting for about 41% of gross farm receipts as of 2023. While MPS makes up most of the producer support, the proportion of payments not requiring production has increased since the introduction of the new direct payment scheme in 2020, which was decoupled from the current production (Figure 18.7).

Table 18.4. Korea: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to 1970s	Relatively closed economy Policy focus on productivity and self-sufficiency	Price support and government procurement programmes for crops Subsidies for inputs (including fertilisers and seeds) Land reclamation, land consolidation and water system projects to rearrange the production base R&D and extension projects to enhance productivity (the Rural Development Administration established in 1962) Development of new rice varieties such as Tongil
1980-1990	Exposure of domestic producers to open market Structural adjustment programmes	Non-tariff measures replaced by tariffs and tariff rate quotas (except for rice) Rural restructuring plan (announced in 1991) Government procurement programme for crops Direct payment programmes (early retirement payments from 1997) Agricultural insurance scheme (from 1997) Investment in the renovation of the production base and modernisation of distribution facilities
2000-present	Responding to changing market demands Diversified policy objectives	Tariffs and tariff rate quotas Tariff concession through Free Trade Agreements Public stockholding scheme for major staple crops Direct payment programme for rice (2005-2019) Direct payment scheme reformed (from 2020) Environment-friendly agricultural programmes

References

[2] OECD (2024), OECD Economic Outlook Volume 2024 Issue 1, OECD Publishing, Paris, https://doi.org/10.1787/69a0c310-en.

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

Note

← 1.  Smart agriculture is defined in relevant laws as the integration of advanced technologies, including information and communication technology, into the agricultural sector to enhance productivity and quality, and reduce operational and labour costs (the Act on Promotion and Support of Smart Agriculture).