Agricultural Policy Monitoring and Evaluation 2022

19. Korea

Support to agriculture

Korea reduced support to agriculture over the past thirty years. Producer support declined from 62% of gross farm receipts in 1986-88 to 47% in 2019-21, still well above the OECD average. Potentially most-distorting transfers dominate producer support, mostly in the form of market price support (MPS) from tariff rate quotas (TRQs) with high out-of-quota tariffs. Since 2015, all import restrictions on agricultural products are applied as tariffs and TRQs.

Transfers to specific commodities represented 88% of support to farmers in 2019-21. MPS is also the main component of single commodity transfers (SCT). The share of SCT in commodity gross farm receipts is over 60% for soybeans, red pepper, garlic and barley, and 59% for rice.

Most of the remaining producer support goes to direct payment programmes, which were consolidated into a single programme in 2020. Agricultural insurance schemes and subsidies based on input use make up most of the remaining support, but are considerably smaller than direct payments.

General services expenditures (GSSE) grew in absolute terms but declined in relative terms to 8.3% of the value of agricultural production in 2019-21, and are well above the OECD average. The majority of GSSE went to development and maintenance of infrastructure (54%) with most of the remainder going to agricultural knowledge generation (19%), public stockholding (11%), and inspection and control (9%). Total support to agriculture (TSE) declined from 7.6% of GDP in 1986-88 to 1.5% in 2019-21, still much higher than the OECD average.

Recent policy changes

In 2021, the Korean Government enhanced its monitoring system for the New Direct Payments programme to prevent illegal receipts and increase administrative efficiency. The government expanded the scope of legal obligations for farmers to cover environmental protection and food safety beyond the management of existing farm areas and pesticide usage.

The Fifth Five-Year Plan to Foster Environment-friendly Agriculture (2021-25) was announced in October 2021. It details the government’s efforts to expand environmentally friendly agriculture. Development of the Smart Agriculture Project continued in 2021 with the opening of two Smart Farm Innovation Valleys in Gimje, Jeollabuk-do, and Sangju, Gyeongsangbuk-do, in November and December 2021, respectively

The Ministry of Agriculture, Food and Rural Affairs (MAFRA) developed the Fifth Basic Plan to Support Female Farmers (2021-25). The plan aims to increase the participation of women in farming, promote the rights of female farmers and improve their quality of life. The Act on Fostering of and Support for Next Generation Farmers or Fishers and Young Farmers or Fishers passed in May 2021. The act provides an institutional foundation to help successors and young farmers settle in rural villages, to support sustainable rural development.

The government published Korea’s National Food Plan in September 2021. The plan aims to contribute to the UN’s Sustainable Development Goals by ensuring the stable production and supply of food and responding to a host of issues related to food, such as the environment, health and safety.

New sector-specific targets for greenhouse gas (GHG) emission reduction were announced at COP26 in 2021. The new targets require the GHG emissions in the agriculture and fisheries sectors to decline 27.1% relative to 2018 levels by 2030 and 37.7% by 2050. Korea joined the Global Methane Pledge announced at COP26 and set a target of reducing methane emissions 30% relative to 2018 levels nationally and 20.6% in the agricultural sector by 2030. The 2050 Agri-Food Carbon Neutrality Strategy was announced in December 2021. It includes GHG emission reduction plans for food production, distribution, consumption, and energy conversion, and detailed intermediate reduction goals. The strategy strengthens and expands existing efforts for climate change mitigation and adaptation in the agri-food sector.

Assessment and recommendations

• Korea adopted new sector-specific mitigation targets and a new strategy to reduce GHG emissions. The 2050 Agri-Food Carbon Neutrality Strategy identifies policy options for these targets with the largest reductions expected from reduced use of mineral fertilisers and decreased emissions from enteric fermentation. However, it remains a work-in-progress and the details of how farmers will be incentivised to take up lower emissions practices remain to be finalised. A strong package of incentives will likely be required to ensure the strategy is successful in meeting the GHG emissions reduction targets, but it is important that any new incentives are not distortionary.

• The agricultural sector faces a declining and ageing farm population, pressures to improve productivity and meet societal demands, such as the preservation of natural resources and the environment, including the need to reduce GHG emissions from the sector to meet international commitments. Despite reforms, some agricultural policies do not align with these objectives.

• The high level of support to producers, 2.7 times the OECD average, is dominated by MPS, which distorts producers’ decision-making, increases food prices at a time of inflationary pressure, is likely to harm the environment, and hinders agricultural innovation and the sector’s capacity to adapt to climate change.

• The New Direct Payment Scheme, which integrated previous schemes into a single system in 2020, is a step towards reducing market distortions through less commodity-specific support and more diversification of agricultural production. Improvements to the scheme, through new monitoring systems and new legal obligations for food safety and environmental protection, can make the scheme more efficient and aligned with sector goals. However, these are not expected to change the overall levels or composition of support.

• Spending on knowledge systems and innovation continued to grow and smart agriculture was identified as an engine of innovation and growth in the sector. Co-operation between central and local governments is needed to ensure this investment benefits all stakeholders. Demonstration of new technologies and joint research programmes with the private sector can also help leverage innovation, investment and growth.

• The COVID-19 pandemic continues to impact the agricultural sector and government policies to address its effects expanded in 2021. It is important that temporary support programmes for effected sectors do not become permanent entitlements, which could be misaligned with wider policy goals for the sector.

Figure 19.1. Korea: Development of support to agriculture

 

 

 

 

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Table 19.1. Korea: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2019-21	2019	2020	2021p
Total value of production (at farm gate)	16 985	26 360	43 220	42 721	42 483	44 455
of which: share of MPS commodities (%)	74.33	63.27	63.72	60.63	60.39	70.15
Total value of consumption (at farm gate)	17 247	33 199	59 151	60 087	58 537	58 830
Producer Support Estimate (PSE)	10 682	14 461	21 653	19 945	21 810	23 205
Support based on commodity output	10 562	13 500	18 953	18 100	18 773	19 986
Market Price Support1	10 562	13 500	18 953	18 100	18 773	19 986
Positive Market Price Support	10 562	13 500	18 953	18 100	18 773	19 986
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	556	571	556	542
Based on variable input use	29	207	267	193	298	309
with input constraints	4	34	44	44	46	41
Based on fixed capital formation	57	246	162	198	144	144
with input constraints	0	18	41	37	41	44
Based on on-farm services	4	17	128	180	114	89
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	29	490	495	540	481	464
Based on Receipts / Income	29	292	80	78	78	83
Based on Area planted / Animal numbers	0	198	415	462	403	381
with input constraints	0	160	12	37	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	1 598	733	1 999	2 063
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	1 598	733	1 999	2 063
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	50	0	0	150
Percentage PSE (%)	62.26	52.65	47.15	44.75	47.91	48.67
Producer NPC (coeff.)	2.50	1.97	1.71	1.66	1.73	1.75
Producer NAC (coeff.)	2.65	2.11	1.89	1.81	1.92	1.95
General Services Support Estimate (GSSE)	1 066	2 676	3 606	4 001	3 245	3 571
Agricultural knowledge and innovation system	67	243	875	869	852	904
Inspection and control	26	126	341	316	349	356
Development and maintenance of infrastructure	467	1 811	1 969	2 314	1 704	1 889
Marketing and promotion	0	26	39	37	38	42
Cost of public stockholding	505	471	383	465	302	381
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	8.92	15.63	14.26	16.69	12.94	13.32
Consumer Support Estimate (CSE)	-10 147	-15 369	-24 277	-24 275	-24 085	-24 471
Transfers to producers from consumers	-10 015	-12 809	-17 623	-16 971	-17 252	-18 647
Other transfers from consumers	-205	-2 653	-6 689	-7 339	-6 863	-5 866
Transfers to consumers from taxpayers	73	93	36	35	30	41
Excess feed cost	0	0	0	0	0	0
Percentage CSE (%)	-58.95	-46.06	-41.06	-40.42	-41.17	-41.63
Consumer NPC (coeff.)	2.45	1.86	1.70	1.68	1.70	1.71
Consumer NAC (coeff.)	2.44	1.85	1.70	1.68	1.70	1.71
Total Support Estimate (TSE)	11 821	17 230	25 295	23 981	25 085	26 817
Transfers from consumers	10 220	15 462	24 312	24 310	24 115	24 512
Transfers from taxpayers	1 805	4 421	7 671	7 010	7 833	8 171
Budget revenues	-205	-2 653	-6 689	-7 339	-6 863	-5 866
Percentage TSE (% of GDP)	7.64	2.93	1.49	1.45	1.53	1.50
Total Budgetary Support Estimate (TBSE)	1 258	3 731	6 341	5 881	6 312	6 831
Percentage TBSE (% of GDP)	0.81	0.64	0.37	0.36	0.39	0.38
GDP deflator (1986-88=100)	100	209	296	292	296	301
Exchange rate (national currency per USD)	812.03	1 224.03	1 163.29	1 165.29	1 180.13	1 144.46

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 (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Description of policy developments

Overview of policy trends

Korea’s agricultural sector experienced a number of structural changes in a short period, concurrent with its rapid industrialisation and associated economic growth. From the 1950s to the 1970s, the government concentrated primarily on increasing crop productivity and achieving self-sufficiency in staple foods, particularly rice.

Through the late 1980s and the 1990s, the main policy objectives were to restructure the sector and improve its competitiveness, in line with the opening of agricultural markets. With the progressive liberalisation of agriculture and food markets, agricultural policies in Korea adopted more diverse objectives, ranging from enhancing productivity to improving long-term agricultural sustainability. The accelerated growth and industrialisation around cities led to income disparity between farm and urban households.

From the year 2000, emphasis shifted to a broader set of objectives, including the revitalisation of the rural economy, the expansion of export markets, improvements in the environmental performance of agriculture and the promoting the food industry.

Korea’s progressive engagement in multilateral and bilateral trade agreements induced progressive structural adjustments in the agricultural sector. During the late 1990s and 2000s, non-tariff measures on agricultural products were gradually converted to tariffs and tariff rate quotas (TRQs), with the exception of rice as agreed in the Uruguay Round Agreement on Agriculture. In January 2015, non-tariff measures on rice were also replaced by a TRQ (OECD, 2018[1]).

Table 19.2. 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 supports and government procurement programme for crops Subsidies for inputs (including fertiliser, seeds)
1980-1990	Exposure of domestic producers to open market Structural adjustment programmes	Tariff and non-tariff measures replaced by tariffs and tariff rate quotas (except for rice) Government procurement programme for crops Direct payment programmes (early retirement payments from 1997) Agricultural insurance scheme (from 1997)
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

Despite a 20% decline in overall support to farmers as a share of gross farm receipts over the past thirty years, Korea’s PSE remains much higher than the OECD average. Market price support is a dominant component of total support to agriculture. The share of the MPS in total support showed only a moderate decrease during the last three decades (Figure 19.4). The share of support for general services slightly increased over the same period.

 

Notes: A/An/R/I:Area planted/Animal numbers/Receipts/Income.

Payments not requiring production include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. Other payments include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments.

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Main policy instruments

The Framework Act on Agriculture, Rural Community and Food Industry enacted in 2007 sets Korea’s agricultural policy framework. It requires the government to establish a national policy plan every five years. The most recent plan, for 2018-22, includes four main policy objectives: (1) strengthening farmers’ income safety net; (2) promoting innovation for sustainable agriculture; (3) enhancing food safety in the supply chain; and (4) improving rural welfare.

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 during a temporary shortage due to mismatching supply and demand. Under the scheme, the government purchases rice from farmers at market price during harvest season and releases the stocks at market prices when necessary. The government has a similar purchasing programme for soybeans.

The New Direct Payment System, introduced in May 2020, combines and replaces the previous agricultural direct payments for landscape conservation, environment-friendly agriculture, livestock products and paddy field farming (in the form of selective direct payments). The income compensation scheme for rice, which had been the main payment scheme in Korea, was also integrated into the new direct payment system. The overarching aims of the new direct payment system are to stabilise the incomes of small to medium-sized farms and to increase farm compliance with regulatory obligations in order to enhance public goods from agriculture and rural communities. In total, farmers have to 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 farming management rights to encourage retired farmers to sell or lease their farmlands while maintaining their incomes, and to increase opportunities for young farmers.

An agricultural disaster insurance scheme, which covers 67 crops and 16 livestock products, protects farmers against losses in crop yield and livestock and is supported through subsidised insurance premiums. The government also implemented a pilot project for subsidised agricultural revenue insurance for 7 crops: grape (coverage began in 2015), onion (2015), soybean (2015), garlic (2016), potato (2017) sweat potato (2017), and cabbage (2018). Subsidised work safety insurance is also available and covers injuries, illnesses and accidents, or deaths of farm workers that occur during on farm work and contribute to stabilise farm income. The agricultural disaster insurance, revenue insurance and work safety insurance are all provided by private companies and a government subsidy covers 50% of the insurance premiums.

The rapid economic growth in Korea, mostly in urban centres, has caused several challenges in rural areas. In particular, it has exacerbated the urban-rural gap in terms of residential conditions and community services, led to abandoned and potentially hazardous facilities near rural communities – such as empty houses, livestock barns and factories – and it has led to decreasing rural populations. To address these challenges, Korea has created the Spatial Plan for Rural Communities, which is under continuing development and mainly includes improved land use systems, restructured rural areas, and revitalisation of the function of rural villages. The Ministry of Agriculture, Food and Rural Affairs (MAFRA) plans to systematically develop and manage rural areas, address the issue of the hazardous facilities, improve residential space and landscape, and expand projects to provide necessary social services. Along with this effort, the government is supporting people migrating to rural areas to further revitalise these regions. In particular, it provides those wishing to move to rural areas with information tailored to their needs, training and education programmes for hands-on experience and job-seeking as well as a programme exploring culture and tourism sites and offering opportunities to interact with local residents.

The government has increased investment in information and communication technologies (ICT) via its Smart Agriculture Project. The programme emphasises the use of digital technologies at the farm level, including the use of big data, artificial intelligence technology and real-time monitoring of crop growth information. The government expects digital technology to improve predictability and mitigate production volatility, increase agricultural productivity, reduce production costs, address issues relating to labour shortages and help farms adapt to climate change. A key component of the project has been the establishment of Smart Farm Innovative Valleys. The Valleys’ main functions include training on smart farms for young farmers, the leasing of smart farms, research and development of smart farm technology and the demonstration of smart farm equipment.

MAFRA is striving to educate and train farm successors and young farmers to cope with the aging population and labour shortages in rural areas. Would-be farmers enrolled in agricultural schools are encouraged to start their own agricultural business and make inroads into the agro-food industry, nurturing specialised professionals for each product, selecting farm successors and supporting them with consulting, training on technology and management. It also offers other support in several areas including housing, and farmland leasing to reduce the risk for promising young farmers when establishing their business.

Tariffs and TRQs continue to be the main trade policy measures applied to agriculture in Korea. 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, corresponding to about 10.7% of annual rice consumption) is maintained at a 5% tariff rate (the out-of-quota tariff is 513%).

Korea is engaged in 18 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 in existing FTAs. Import tariffs on beef from the United States, Australia and Canada are being progressively phased out over 15-year periods from the entry into force of the respective agreements (March 2012 for the United States, December 2014 for Australia, and January 2015 for Canada). Tariffs on pork from the European Union, the United States and Chile are being phased out over 10 years, and on pig meat from Canada over 13 years. Tariffs on chicken meat from the United States and the European Union are being abolished over a period of 10 to 13 years after the respective FTAs came into effect (2019 for the United States and 2011 for the European Union).

Climate change mitigation policies in agriculture

GHG emissions from the agricultural sector were 22.2 MtCO₂eq in 2018. Agriculture’s share of national emissions declined from 7.4% in 1990 to 2.9% in 2018 despite stable GHG emissions from the sector since 1990. The stability however, is due to the combination of a decline in GHG emission from crop cultivation (CH₄ and N₂O), from decreased farming area, with an increase in GHG emissions from livestock (CH₄) from an increasing number of animals.

New sector-specific targets were announced at COP26 in 2021, bolstering the ambition of Korea across all sectors. The Republic of Korea’s Enhanced Update of its First Nationally Determined Contribution, submitted to the UNFCCC in December 2021, and the 2050 Carbon Neutrality Strategy require GHG emissions in agriculture and fisheries to decline 27.1% relative to 2018 levels by 2030 and 37.7% by 2050. Korea joined the Global Methane Pledge announced at COP26 and set a target of reducing methane emission 30% relative to 2018 levels nationally and 20.6% in the agricultural sector by 2030.

The 2050 Agri-Food Carbon Neutrality Strategy, announced in December 2021 contains a detailed implementation plan for the 2050 Carbon Neutral Strategy. The strategy includes GHG emission reduction plans for food production, distribution, consumption and energy conversion, and detailed intermediate reduction goals. The strategy strengthens and expands efforts for climate change mitigation and adaptation in the agri-food sector.

In the crop sector, the strategy aims to reduce GHG emissions by 0.54 MtCO₂eq from rice cultivation through water management and by 2.269 MtCO₂eq from agricultural land by 2050 through reducing excessive use of fertiliser. More specifically, MAFRA plans to reduce GHG emissions through the dissemination and increased usage of alternate wetting and drying (AWD) for rice cultivation and publication of a manual for optimal application of fertilisers. The strategy aims to reduce emissions by expanding the use of organic fertilisers and reducing the use of mineral fertilisers. The strategy targets increased carbon sequestration from soils through no-till farming, the use of biochar and establishment of grasslands. MAFRA is currently considering policy options and incentives to meet these targets.

In the livestock sector, the strategy targets GHG emissions reductions by 2050 of 1.075 MtCO₂eq from enteric fermentation, 2.355 MtCO₂eq from livestock manure and 1.773 MtCO₂eq through enhanced production. This includes developing and disseminating quality forage and low-emission feed, and utilising and recycling livestock manure, for example as organic fertilisers (see above).

Finally, the strategy plans to reduce GHG emissions from distribution and consumption by reducing the carbon footprint of food and food miles by establishing a local food distribution system, expanding online transactions, and reduced food waste through education on dietary patterns.

In January 2022, the Rural Development Administration (RDA) announced the Agricultural Technology Development and Application Plan to Achieve Carbon Neutrality by 2050. The plan aims to develop and improve GHG emissions statistics and calculation methods, and expand the development of low-carbon technologies for the agricultural sector, such as AWD and recycling of livestock manure. Moreover, the plan also aims to increase the use of renewable energy and energy-efficient technologies, and enhance carbon sequestration capacity of farmland soils. The first stage is to disseminate low-carbon agricultural technologies, raise awareness and promote peer-learning through enhanced co-operation between central and local governments and the private sector. These efforts will be supported by the Smart Farm Innovation Valleys, which will demonstrate and disseminate the benefits of precision farming using intelligent machinery and optimum input models, to be developed by the government for each commodity.

The Korean government introduced the Korea Emissions Trading Scheme (KETS) in January 2015, which allocates emissions to companies or workplaces that exceed a defined GHG emissions threshold and imposes reduction obligations. Under this scheme, MAFRA operates voluntary reduction and offset projects external to KETS to reduce GHG emissions in the agricultural sector.

Farmers are not obliged to reduce GHG emissions under KETS, but they can sell offset credits in the emission trading market if the amount of GHG reduction through offset projects is certified. It enables farmers to obtain additional income through GHG reduction activities. MAFRA encourages their participation by subsidising the cost of verification. However, smallholders with difficulty participating in the emission trading market due to administrative costs are provided other incentives equal to the certified reduction amount. In addition, MAFRA is reviewing incentives for farmers to reduce GHG emissions to achieve the 2050 reduction target.

Several policies are in place to reduce GHG emissions indirectly. The new direct payment system enhances environmental cross-compliant requirements and increased green coverage through expanded urban farming. Information programmes on diets could also contribute to reduced emissions in the sector.

Domestic policy developments in 2021-22

The New Direct Payment System was introduced in May 2020 to combine previous agricultural direct payment systems. In 2021, the Korean Government enhanced its monitoring system to prevent illegal receipts and increase administrative efficiency. Furthermore, the government expanded the scope of legal obligations for farmers to cover environment protection and food safety, beyond the management of existing farm areas and pesticide usage.

MAFRA is establishing four Smart Farm Innovation Valleys as part of the Smart Agriculture Project. Two Smart Farm Innovation Valleys in Gimje, Jeollabuk Province, and Sangju, Gyeongsangbuk Province, started their operation in November and December 2021, respectively. The Gimje Valley will utilise nearby research and development infrastructures such as RDA and the private Seed Valley to facilitate research in smart farming as well as demonstration and certification of smart farming techniques. The Sangju Valley, which is the largest of the four valleys, includes housing and other facilities for students studying at the complex and other young people, as well as smart farms for lease by farmers. MAFRA also plans to prepare data standards for key produce with a view to expanding smart agriculture based on big data and artificial intelligence. MAFRA also plans to invest in infrastructure for data usage such as cloud-based big data platforms.

In May 2021, the Act on Fostering of and Support for Next Generation Farmers or Fishers and Young Farmers or Fishers was passed. This act provides an institutional foundation to foster farmers in a systematic manner, help successors and young farmers settle in rural villages, and support sustainable rural development. The government also plans to support successors and young farmers by implementing a variety of other projects, including a framework plan to foster farm successors; a survey to assess the status of young farmers and farm successors; supporting education and employment; and an integrated information system to support programmes, technologies and lifestyles.

In December 2020, MAFRA developed the Fifth Basic Plan to Support Female Farmers (2021‑25). The plan aims to increase the participation of women in farming, promote the rights of female farmers and improve their quality of life. To achieve these aims, the government plans to implement policies to raise awareness on gender equality in agriculture and rural areas; expand regional development projects to increase the participation of female farmers in the social economy (e.g. economic activities that put more emphasis on social objectives such as caring for family members or organising local events); and build capacity for starting and managing a business. Moreover, increased investment in welfare, culture and health services are expected to enhance the wellbeing of female farmers. In parallel, the government is developing various educational programmes, strengthening welfare services for foreign women and increasing their stability of accommodation.

The Fifth Five-Year Plan to Foster Environment-friendly Agriculture (2021-25), announced in October 2021, contains detailed plans supporting the government’s efforts to expand environmentally friendly agriculture. They include reinforced measures to improve the environmental performance of agriculture, strengthened conservation activities at local levels, the expansion of the foundation for production of eco-friendly agriculture, and the diversification of sales network of eco-friendly agro-food.

In 2021, the calculation method for insurance premiums for the agriculture disaster insurance scheme was changed for apples and pears to more precisely reflect the level of risk faced by individual farms. The new calculation subdivides the regional units that were previously used to calculate the insurance premiums. Improvements have also been made in response to feedback from farmers, and there have been efforts to prevent moral hazard of farmers (e.g. when individuals take fewer risk-reducing measures after purchasing insurance). These measures include strengthened farm-level monitoring as well as developing a manual for risk-management and an indicator of insurance soundness.

As a pre-emptive response to Avian Influenza outbreaks outside Korea, in the second half of 2021, MAFRA strengthened measures including disinfection and restrictions for entering and exiting production sites to stop the introduction of contamination sources. It also strengthened diagnostic tests on wild birds and poultry farms for the rapid detection of infected animals, conducted biweekly assessments of risk factors as a pre-emptive measure, and enhanced testing and public awareness targeting areas with high numbers of egg laying facilities.

In 2021, to fight against African Swine Fever (ASF) (which first emerged in 2019), MAFRA designated areas with a high risk of ASF outbreaks as critical control areas while mandating farms to establish enhanced disease control facilities. It also monitored the spread of the disease on pig farms nationally, provided training and promoted disease control protocols, such as disinfection guidelines to reinforce the levels of biosecurity of farms.

The government published Korea’s National Food Plan in September 2021. The plan aims to contribute to the UN’s Sustainable Development Goals and ensure not only the stable production and supply of food but also comprehensively respond to a host of issues related to food such as the environment, health and safety. The first goal of this plan is to establish stable supply chains of food by improving the stockholding system and enhancing international co-operation to secure overseas supply chains. The second goal is to expand sustainable production and consumption. The government plans to promote environmentally friendly agriculture to reduce agriculture’s environmental impacts, reduce food waste and pursue an energy transition to reduce GHG emissions. The third goal is to ensure access to healthy and nutritious food, especially for vulnerable people. To achieve this third goal, the plan seeks to improve health and nutrition through strengthening public access to nutritional information, and to improve food safety by expanding the positive list system (PLS) – currently used to set standards for acceptable pesticide residues – to include standards for medicine residues in animal products. To effectively implement the National Food Plan and associated Local Food Plans, the government envisages adding new provisions to the Framework Act on Agriculture, Rural Community and Food Industry.

Domestic policy responses to the COVID-19 pandemic

In 2021, the Korean Government interventions to address the impacts of COVID focused on commodities that have been particularly negatively affected by the COVID-19 pandemic, for example through the cancellation of school meal programmes. Support to farms struggling with management costs and liquidity issues due to decreased sales was continued by MAFRA. Two voucher schemes for stable management were also provided to farms: the first scheme targets farms producing certain commodities that were particularly impacted by disease control measures leading to decreased sales; and the second scheme targets small farms vulnerable to the impact of the COVID-19 pandemic based on certain eligibility criteria.

The government has also worked towards managing imbalances in labour supply and demand to ensure efficient farming activities. To resolve temporary and sporadic labour demand issues, the government enabled the re-distribution of contingent workers to farms and covered a proportion of the costs incurred by farmers. Furthermore, it increased the number of job-matching centres for rural manpower which recruit workers for farms in need. The government eased visa regulations in collaboration with other ministries so that foreign visitors or migrant workers from other industries could work in the agricultural sector. There have also been efforts to encourage promising agro-food businesses with staffing constraints to hire young workers who have struggled to find jobs due to the pandemic.

In 2021, Korea introduced an electronic phytosanitary certification system in response to issues such as delays in customs clearance for agricultural products due to COVID-19, forgery and alteration.

Trade policy developments in 2021-22

On 1 January and 1 March 2021, the Korea-UK Free Trade Agreement (FTA) and the Korea-Panama Free Trade Agreement (FTA) came into force, respectively. Implementation of the Regional Comprehensive Economic Partnership (RCEP) in Korea started on 1 February 2022; RCEP includes 14 other participating countries, namely, the 10 ASEAN member states, as well as the People’s Republic of China, Japan, Australia and New Zealand. The Agreement includes strengthened co-operation on transparent and reasonable application of SPS measures and application of strict rule of origin to prevent roundabout import of fresh agricultural products within the region. Tariff reductions for some commodities, including rice, were excluded from the Agreement. After signing FTAs with Israel, Indonesia, Cambodia and the Philippines, domestic procedures are underway. Negotiations are ongoing for agreements with MERCOSUR, Chile, India and Uzbekistan, respectively.

Contextual information

Korea’s economy has been growing rapidly over the last two decades led by growth in international trade. Trade represented 30% of GDP in 2020, twice the average of the countries covered in this report. In contrast, the share of agriculture’s contribution to GDP fell from 4.3% to 2.0%, and its share of national employment declined from 10.6% to 5.4% during the period of 2000-2020. Although the proportion of agricultural commodities in total exports slightly increased, Korea still remains a large importer of agricultural products (Table 19.3).

Crop production accounted for 59% of the total value of agricultural production in 2020 down from 75% in 2000, due dietary changes and the diversification of production towards livestock and high value products (Table 19.3).

Table 19.3. Korea: Contextual indicators

	Korea		International comparison
	2000*	2020*	2000*	2020*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	872	2 243	2.2%	2.1%
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	1 637	0.1%	0.1%
			All countries1
Population density (inhabitants/km2)	473	523	53	63
GDP per capita (USD in PPPs)	18 539	43 319	9 281	20 929
Trade as % of GDP	29	30	12.3	14.0
Agriculture in the economy			All countries1
Agriculture in GDP (%)	4.3	2.0	2.9	4.9
Agriculture share in employment (%)	10.6	5.4	-	-
Agro-food exports (% of total exports)	0.9	1.4	6.2	8.5
Agro-food imports (% of total imports)	5.2	6.1	5.5	7.7
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	75	59	-	-
Livestock in total agricultural production (%)	25	41	-	-
Share of arable land in AA (%)	87	83	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

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

Following a contraction of GDP in Korea by 1% in 2020, as a result of the COVID-19 pandemic, GDP returned to growth in 2021, increasing by 4%. Both the level of unemployment and inflation have remained low, although the latter did increase from 0.5% in 2020 to 2.5% in 2021. As an export-oriented economy, Korea is vulnerable to weaknesses in foreign demand and to disruptions in global value chains. In response to COVID-19, a range of policy measures limited the damage to domestic economy, but further global recession would likely affect investment and employment (OECD, 2020[2])(Figure 19.5).

Korea is one of the largest net agro-food importers in the world. While over 85% of agro-food exports are products for final consumption, just under half of imports are destined for further processing by the Korean industry. Key imported agricultural commodities include maize, soybeans and wheat for animal feed (Figure 19.6).

 

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

 

 

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

Source: UN Comtrade Database.

At 1.6% per year, total factor productivity (TFP) growth in Korea was slightly higher than the global average over the period of 2010-19. TFP growth offset the declining use of primary factors, causing output to grow slowly over the last decade (Figure 19.7).

The average nitrogen and phosphorus surpluses are still well above OECD averages, partly due to intensive livestock production. The share of agriculture in water withdrawal remains high compared to the OECD average, due to the high proportion of rice paddy fields (50%) in agricultural land area, and water stress has been increasing and remains very high compared to other OECD countries (Table 19.4). The annual GHG emissions from the agricultural sector accounted for just under 3% of total emissions and were 22.2 MtCO₂eq in 2018, of which 6.3 MtCO₂eq came from rice cultivation, 5.5 MtCO₂eq from agricultural soils, 4.5 MtCO₂eq from enteric fermentation and 4.9 MtCO₂eq from manure management.

 

Note: Primary factors comprise labour, land and capital (livestock and machinery). Intermediate input comprises materials (feed and fertiliser).

Source: USDA Economic Research Service Agricultural Productivity database.

Table 19.4. Korea: Productivity and environmental indicators

	Korea		International comparison
	1991-2000	2010-2019	1991-2000	2010-2019
			World
TFP annual growth rate (%)	3.4%	1.6%	1.7%	1.4%
			OECD average
Environmental indicators	2000*	2020*	2000*	2020*
Nitrogen balance, kg/ha	230.6	227.8	32.1	30.0
Phosphorus balance, kg/ha	45.4	44.3	3.4	2.9
Agriculture share of total energy use (%)	2.9	0.9	1.7	2.0
Agriculture share of GHG emissions (%)	4.2	2.9	8.6	9.7
Share of irrigated land in AA (%)	41.0	41.0	-	-
Share of agriculture in water abstractions (%)	53.4	50.1	46.3	43.7
Water stress indicator	27.1	29.9	9.7	8.6

Note: * or closest available year.

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

References

[2] OECD (2020), OECD Economic Surveys: Korea 2020, OECD Publishing, Paris, https://doi.org/10.1787/2dde9480-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.