Government to Eliminate Grain Purchase System

There is an outlook that the purchase system of autumnal harvest grain by the government, started right after the establishment of the republic in 1948, is to be abrogated.

Should the system be abrogated, farmhouse income will decrease since farmers must sell rice at the market price.

On February 11, according to the Ministry of Agriculture and Forestry, the government and the Uri Party agreed to settle a revised bill for grain management, which includes the abrogation of the system of autumnal harvest grain by the government upon the motion by the National Assembly at this month’s extraordinary session. Since the Grand National Party (GNP) also holds the same view that the abrogation of the system is inevitable, the passing of the bill is likely.

If the system of autumnal harvest grain purchases is abrogated upon the motion by the National Assembly, the government can decide at its discretion whether or not it will purchase rice from farmers. Thus, the purchase system of autumnal harvest grain by the government will lose its effect.

The Ministry of Agriculture and Forestry said, “It is currently hard to keep the system, because the autumnal harvest grain fund is classified as one of the main subsidies, as a subject of reduction.” He also said that it plans to introduce a system of public reservation instead.

The system of public reservation is a system of purchasing grain at the market price for reserve capacity in case of an emergency. It means that the purchasing price is to become lower than it is in the current purchase system of autumnal harvest grain.

According to the new system, the method of selling rice will change as well.

With the current purchase system of autumnal harvest grain, farmers are able to receive prepayment (60 percent of the provisional contract) in May or June at the price the government set at the beginning of the year. They receive the rest of the payment after the harvest.

However, if the new system is introduced, the farmers will not receive any prepayment because they must sell their rice at the market price after the harvest.

An official of the Ministry of Agriculture and Forestry said, “The new system of public reservation is buying rice only according to the needs of the government. It is hard to expect the effect of supporting farmhouses from the system.”

In the meantime, the GNP is preparing an alternative plan for the abrogation of the purchase system of autumnal harvest grain.

A GNP lawmaker, Kim Jae-won, a member of the Committee for Agriculture and Forestry in the National Assembly, said that he is considering an alternative of setting up an aimed price and securing the difference between that price and the market price for five years.

An enforcement chairman of the National Farmers’ Organization, Jung Gi-hwan, argued that the structure of the purchase system of autumnal harvest grain must remain as it is. He also argued that the time of adaptation of the public reservation system must be delayed until after May when the negotiations of World Trade Organization (WTO) are to be completed.

legman@donga.com