[Why&Next] Mandatory Rice Purchase: Boon or Bane for Food Security?

Government and Ruling Party Warn of 'Oversupply and Price Drop' Vicious Cycle Due to Rice Cultivation Concentration
Opposition Calls for "Minimum Measures" to Stabilize Rice Farmers' Income and Food Security
Yoon's 'First Veto Bill' Amendment to Grain Management Act Expected to Be Submitted to National Assembly Plenary Session by Month-End

The amendment to the Grain Management Act, which is President Yoon Suk-yeol's 'veto (reconsideration request) No. 1 bill,' is scheduled to be resubmitted to the National Assembly plenary session at the end of this month. The Democratic Party of Korea, which submitted the amendment to the plenary session solely by the opposition party, and both the People Power Party and the government, which oppose it, all cite 'food security and stabilization of farm income' as grounds for their support or opposition. Ultimately, it is highly likely that the opposition party will pass the amendment in the plenary session alone, and President Yoon will once again exercise his veto.

According to the National Assembly and the government on the 7th, the National Assembly's Agriculture, Forestry, Livestock, Food, and Maritime Affairs Committee resolved on the 18th of last month to directly refer the amendment to the Grain Management Act to the plenary session solely by the opposition party. Previously, in December last year, the Agriculture, Forestry, and Fisheries Committee's subcommittee on bills processed the amendment solely by the opposition party. Subsequently, the agenda adjustment committee passed it solely by the opposition party in January this year, followed by the full Agriculture, Forestry, and Fisheries Committee's sole opposition party approval and referral to the Legislation and Judiciary Committee.

On the 18th of last month, during the full meeting of the Agriculture, Forestry, Livestock, Food, and Maritime Affairs Committee held at the National Assembly, proposals including the direct referral of the 'Grain Management Act Amendment Bill' and the 'Agricultural Products Price Stabilization Act Amendment Bill' to the plenary session of the National Assembly were passed solely by the opposition party. Photo by Kim Hyun-min kimhyun81@

The Democratic Party holds the position that since rice accounts for 47% of the total cultivated area and 33% of agricultural income, establishing a safety net for rice farming households through mandatory rice purchases is necessary to stabilize the economy of rice farming households and improve food self-sufficiency rates.

The core of the controversy is whether the amendment constitutes a 'forced purchase of rice.' The current law stipulates that when rice prices fluctuate sharply or are expected to fluctuate, the government 'may purchase amounts exceeding or below production exceeding demand.' However, the amendment mandates the government to 'must purchase' rice.

As the amendment mandates the government to purchase surplus rice, the government and the ruling party strongly oppose the Grain Management Act, evaluating it as a 'mandatory rice purchase system.' The Democratic Party counters with the position that it is 'not a mandatory purchase system.' Lee Ho-jung, a Democratic Party expert advisor, explained, "The previous amendment, which President Yoon vetoed, required the government to purchase rice if the price fell by more than 5% or production exceeded demand by more than 3%, but this amendment expands the government's discretion by allowing the Grain Management Supply and Demand Committee, chaired by the Vice Minister of Agriculture, Food and Rural Affairs, to set those standards. It means the government can set the criteria for a crisis situation where rice prices fall excessively and mandatory purchase is necessary, so it is not a forced purchase."

The government rebutted that even if the supply and demand committee is involved, the government cannot practically lead the setting of purchase criteria. A Ministry of Agriculture, Food and Rural Affairs official said, "Even though the vice minister is the chairperson, experts, farmers, and other stakeholders participate as members, so the government cannot arbitrarily decide the criteria. Since the amendment changed 'may purchase' to 'must purchase,' it is unlikely to deviate significantly from the previously presented criteria of production exceeding demand by 3% and price falling by more than 5%."

The opinions on the effects of the Grain Management Act amendment are sharply divided between supporters and opponents. The opposition party argues that stable income for farmers must be guaranteed to ensure stable production of rice, the staple food. However, the ruling party and the government worry that mandatory rice purchases will ultimately cause overproduction of rice, leading to price declines and, consequently, reduced farm income.

They particularly point out that concentrated support for rice farmers will accelerate the tendency to focus on rice farming. According to the Rural Development Administration's '2022 Mechanization Rate Survey of Agricultural Work,' the mechanization rate for paddy rice is an average of 99.3%, but for field crops, it is only 63.3%. Soybeans average 71.1%, potatoes and sweet potatoes are 72.4% and 70.2%, respectively. The government believes that mandatory rice purchases will reduce incentives to cultivate other crops that require relatively more labor input, thereby exacerbating the structural oversupply of rice. This will eventually lead to a decline in the self-sufficiency rates of other crops. In fact, for the 2022 rice crop, the food self-sufficiency rate was 104.8%, but barley was 27.2%, wheat 1.3%, and corn 4.3%. The shortfall depends on imports, and mandatory rice purchases will inevitably lower the self-sufficiency rates of crops other than rice.

Song Mi-ryeong, Minister of Agriculture, Food and Rural Affairs, said, "If the amendment to the Grain Management Act, which forces the government to purchase surplus rice, is passed and implemented, structural oversupply of rice will worsen, inevitably leading to a vicious cycle of rice price declines. Therefore, it is difficult to agree with the amendment. Before the National Assembly plenary session at the end of this month, the government plans to officially convey opinions from various sectors, including farmers, to the National Assembly regarding the amendment."