Professor Seo Se-wook from Incheon National University stated, "However, rice prices cannot plummet all at once," adding, "The remaining task is to reduce direct payments to rice-producing farmers while allowing rice prices to land softly."
Japan is a country that has taken the initiative to resolve the issue of rice overproduction ahead of South Korea. In 1970, Japan's government reported that its rice stock reached 60% (7.2 million tons) of total demand, leading to a plea for help.
Professor Kim Han-ho from Seoul National University emphasized the need to refer to Japan's case, stating, "Since 1971, Japan has implemented rice production adjustments, and now, 50 years later, it has somewhat stabilized."
Japan produced about 12 million tons of rice in 1970, but by 2023, it significantly reduced production to around 6.6 million tons. According to Japan's Ministry of Agriculture, Forestry and Fisheries, the stock of rice produced in Japan in 2022 was about 12% of its consumption. In the same period, South Korea's rice stock was 34.7% of its consumption.
In the early stages of production adjustment, Japan allocated production quantity targets to each farm according to rice demand. In other words, it enforced a uniform reduction in production.
At that time, the area designated for production adjustment by the government reached half of the rice cultivation area, leading to a surge in complaints from rice-producing farmers. Although production was reduced, the actual results did not meet the government's expectations.
In response, Japan shifted its rice policy direction starting in 2004. The core of the change was a transition from 'government-led' to 'private-led' initiatives. In 2018, the government stopped setting production quantity targets, allowing local governments and producers to negotiate and determine production levels.
Subsidies for rice cultivation were also abolished. Japan eliminated the variable direct payment (partial payment when target prices are not met) in 2014, followed by the abolition of fixed direct payments (subsidies per cultivation area) in 2018. Instead, they strengthened subsidies for cultivating other crops like soybeans.
Professor Seo explained, "As the financial burden increased, the government withdrew, and since 2018, rice has been produced under the leadership of producers." With the cessation of subsidies, the cultivation area has continuously decreased. As rice prices, which had been maintained by national finances, fell, there was no longer a reason to continue rice farming.
In fact, looking at the relative profitability of Japanese rice, it has continuously decreased from 43,102 yen per 10 ares in 1970 to 34,500 yen in 2020, and further down to 29,000 yen in 2023.
South Korea has also attempted rice reform measures. The government has implemented rice production adjustments three times in the past. The first was in 2003 with the rice production adjustment system, where the government successfully reduced 82,500 hectares, achieving a 90.2% success rate. The second and third adjustments were in 2011 and 2018, respectively, achieving only 52-56% of the reduction targets.
Experts pointed out that the biggest flaw in domestic policy is the 'still high' profitability of rice. According to Statistics Korea, the net profit from rice cultivation nearly doubled from 240,000 won per 10 ares in 2007 to 440,000 won in 2020. In 2021, it even rose to 500,000 won.
The net profit margin for rice farming is around 30%, which is relatively high compared to other crops. For example, the net profit margin for soybean cultivation last year was only 11.3%. A government official mentioned, "The state buys rice for public stockpiling and isolation, and even if it ultimately doesn't sell, the agricultural cooperatives buy it regardless of quality, so prices do not fall."
Professor Kim Jong-in from Incheon National University advised, "We need to expand the role of private RPCs (Rice Processing Complexes) rather than relying on the agricultural cooperative-centered rice distribution system to activate the price adjustment function in the rice industry market."
Inconsistent policies are also a problem. A professor who requested anonymity pointed out, "When rice prices rise briefly, they end up fizzling out again, which is a decisive failure factor," adding, "The decrease in rice consumption is an unstoppable trend, and short-term measures give the wrong signals to producers."
Meanwhile, diversifying rice processed products is also one of the necessary measures alongside rice production reduction. This is because it is not possible to reduce rice production all at once. Encouraging a shift to rice suitable for processed products and activating processed products like frozen kimbap made from rice are potential solutions.
Professor Kim Jong-in stated, "Processed rice not only requires an appropriate raw material cost level but also has different processing characteristics compared to rice for staple food, so it is necessary to expand dedicated varieties based on the development of suitable varieties from the cultivation stage," explaining that "In Japan, they are currently working collaboratively with food processing companies, the final consumers, from the development stage of processed rice varieties to customize the products."
[Reporter Lee Ji-an]
