"Up to 35 Million Won Per Person"… FTA Domestic Support Measures Offer 'Direct Assistance' [FTA Transforming Agriculture] ①

South Korea Builds the World's Largest Economic Playing Field
Farmers Suffering Price Losses from FTAs
Receive Up to 35 Million Won per Individual, 50 Million Won per Corporation

As of the third quarter of this year, South Korea is conducting trade with 59 countries by utilizing 22 effective Free Trade Agreements (FTAs). This achievement comes approximately 21 years and 5 months after the Korea-Chile FTA, South Korea's first FTA, went into effect in April 2004. The government now plans to expand and strengthen its FTA network, which currently covers about 85% of global GDP, to reach 90%, the highest in the world.

With the expansion of the FTA network, South Korea's export markets have broadened, and export volume has surged from 253.8 billion dollars in 2004 to 683.6 billion dollars in 2024, a 2.7-fold increase. Last year, exports to FTA partner countries reached 544.8 billion dollars, accounting for 80% of total exports. FTAs have played a significant role in boosting South Korea's exports.

President Donald Trump signed a proclamation imposing a 25% tariff without exceptions on steel and aluminum products imported into the United States, and also announced that tariffs on automobiles and semiconductors are under consideration. On February 13, 2025, export vehicles were waiting to be loaded at Pyeongtaek Port in Gyeonggi Province. Photo by Kang Jinhyung

According to the Korea Customs Service on December 9, the FTA utilization rate for the third quarter of this year was 86.8%. The FTA utilization rate indicates how actively companies are using existing FTAs. It refers to the proportion of export and import transactions eligible for FTA benefits that actually received tariff reductions. A higher utilization rate means that more transactions have benefited from FTA tariff advantages.

While South Korea has built an extensive network through 22 FTAs, vulnerable sectors such as agriculture and fisheries have suffered damages. In response, the government is providing support to minimize the impact on farmers and fishers and to turn these challenges into opportunities.

A representative measure is the domestic FTA compensation program, which has allocated a total of 39 trillion won. Among these, the direct loss compensation program is designed to stabilize the management and livelihoods of farmers by supporting direct import-related damages caused by FTA implementation. For products that have suffered price drops due to a sharp increase in imports following FTAs, the program compensates a portion of the price decline. The maximum compensation is up to 35 million won per individual farmer and up to 50 million won per agricultural corporation. So far, 2.4457 trillion won has been provided. Since the Korea-Chile FTA, which started with Campbell grapes, the program has also compensated for damages to beef and pork producers following the Korea-US FTA in 2012. This year, compensation is being provided to farmers producing mung beans, who have been affected by the Korea-Peru FTA.

While direct compensation addresses immediate, tangible losses, programs to enhance competitiveness by product and fundamentally improve the structure of the sector are designed to help agriculture remain competitive in the FTA environment. A total of 21.9918 trillion won and 15.1127 trillion won have been allocated to these initiatives, respectively.

The competitiveness enhancement program mainly supports livestock, fruit, and horticultural products. To strengthen the livestock sector, it provides funding for modernizing slaughter and processing facilities for cattle and pigs, as well as for building storage facilities and equipment for eggs. For example, the BUKYUNG Swine Cooperative’s integrated livestock market, which received 3.6 billion won in government loans in 2023, invested the entire amount in renovating slaughter and processing facilities. As a result, the volume of beef processed (primary processing) increased from 3,597 head in 2019 to 6,751 head in 2023, an 87.7% rise, while sales volume grew from 1,385 tons to 2,668 tons, a 92.6% increase over the same period. The Porkville Livestock Market of the Daejeon-Chungnam Swine Cooperative, which received 4.5 billion won in operating funds (loans) in 2022, used the funds to support member farms, renovate slaughter and processing facilities, and purchase domestic livestock and raw meat, resulting in increased slaughter volume and operating rates. In 2023, the number of cattle slaughtered was 72,000, up 24.0% from 2022, and the operating rate rose from 60.7% to 75.3%, a 14.6 percentage point increase. Pig slaughter volume also increased by 7.1%, and the operating rate rose by 6.2 percentage points.

Support funds from the compensation program are also being used to strengthen the competitiveness of fruit producers. A farm in Seogwipo, Jeju, cultivating early-season tangerines and Redhyang oranges on about 5,000 pyeong (16,529 square meters), received support through the fruit quality improvement and modernization project between 2021 and 2022. A total of 222.77 million won (including a subsidy of 116.93 million won) was invested to install windbreak nets, rainproof greenhouses, air circulation fans, and ventilation fans. As a result, sales increased from 33.33 million won before the project to 53.33 million won after. In particular, operating costs dropped significantly from 27.6 million won to 14.5 million won. With higher sales and lower costs, farm income increased accordingly.

The FTA compensation program also supports the development of agricultural talent, strengthens the capabilities of agricultural management entities, promotes eco-friendly agriculture, and helps expand exports of agricultural products. For example, the Mungyeong Omija Valley Agricultural Cooperative increased its exports from just 15 tons in 2017 to 48.9 tons in 2018, the first year of the project, by participating in the global K-Food Fair with support from the export infrastructure enhancement project.

An official from the Ministry of Agriculture, Food and Rural Affairs stated, "Since the signing of the Korea-Chile FTA, the government has established and implemented domestic compensation measures to respond to the opening of the agricultural market resulting from FTAs, with the aim of compensating farmers for losses, enhancing the competitiveness of agriculture, and fundamentally improving the sector. We will continue to do our utmost to ensure that FTAs serve as opportunities, not crises, for agriculture by establishing and implementing further compensation measures in the future."

Production Support: Ministry of Agriculture, Food and Rural Affairs · Korea Rural Economic Institute