Decoupled Payments and Agricultural Policy Reform in Korea

Abolishing a nearly 50-year-old policy for rice price support, Korea adopted a new direct payment program in 2005. Making the transition to decoupled income payments has been governed by the need for operative and effective income safety nets and the WTO disciplines on domestic support. The program aims to deal with over-supply of rice while guarding against the threat of income insecurity. Integrated into a target price mechanism, the fixed and variable payments compensate part of farm income loss arising from adverse market conditions. Besides, the government launched a public stockholding measure to ensure food security. A review of previous studies highlights the fixed payment has no or at most minimal effects on production while the variable payment carries a fairly large effect on production. The share of direct payments in agricultural budget accounts for only 8 percent in 2004 and thus the Korean government envisions greater use of decoupled income support.decoupled payments, direct payments, policy reform, rice, Korea, Agricultural and Food Policy,

Agricultural Policy Adjustments in East Asia: The Korean Rice Economy

The processes of agricultural policy decision-making in the East Asian economies of Japan, Taiwan, and Korea are characterized by the complex interactions of competing special interest groups in their respective political arenas. An analytical model is designed to investigate how adjustments in rice price policies are endogenously related to the political economic forces associated with macroeconomic changes. The model is tested against the case of Korean rice price policy, which has not been satisfactorily explained in earlier modeling efforts. A political preference function is used to estimate the relative political weights of producers, consumers, and government over a 25-year period (1961-1985) during which major macroeconomic changes occurred. A simultaneous 12-equation model is then constructed to explore the effects of the macroeconomic changes on the rice pricing decisions through the estimated political weights. Highly significant econometric results are obtained to explain the pattern of increasing political influence of producers relative to that of consumers and government. Simulation experiments show how the patterns in the rice economy are linked to macroeconomic change. The results obtained, thus far, open the way for methodological improvements to further our functional understanding of agricultural policy adjustments in Korea and other East Asian economies.endogenous rice policy, political macroeconomy, political preference function, political weights, econometric simulation, East Asia, Korea, Agricultural and Food Policy, Crop Production/Industries,

Implications of the U.S.-Korea Free Trade Agreement for Agriculture and other Sectors of the Economy

This paper examines the effects of the U.S.-Korea free trade agreement (KORUS FTA) on various sectors of the economy in the two countries using a general equilibrium model. Additional analysis focuses on the agricultural sector. Our analysis indicates that the increase in U.S.-Korea bilateral trade volume in recent years has been through intra-industry trade of high-technology products. Under the KORUS FTA, the bilateral trade volume would increase for virtually all the sectors, and GDP and social welfare would improve for both countries. However, producers of textile products in the United States and producers of agricultural and food products in South Korea would suffer from the FTA. This agreement could benefit U.S. agriculture, but the benefits could be greater in the long run as duties on beef and other meat products are eliminated.Korea, Free trade agreement, Trade creation, Trade diversion, International Relations/Trade,

Impact of the Sino-Korea Free Trade Agreement on China’s Agricultural Industry

Free Trade Agreement (FTA) between China and South Korea was an inevitable consequence of intimate cultural and geographical background between two countries. On the surface, China is prevailing over the current agreement. However the agreement contained tariff concessions on staple items from South Korea. This implies Chinese agricultural market was also has been affected in some ways. Previous researches were mostly focusing on the feasibility of free trade agreement between China and South Korea. Little empirical research has been done on the actual results of the agreement regarding tariff concession. This article discusses the current status of agricultural trade and future of Sino-Korea agricultural trade. Major agricultural products of both countries are analyzed through general equilibrium analysis, then changes of production, consumption and import and export rate is predicted. Finally, implications to China have been suggested. Keywords: Sino-Korea FTA, Agricultural products, General equilibrium analysi

Group Behavior and Development: A Comparison of Farmers' Organisations in South Korea and Taiwan

This study presents a comparative analysis of farmers' organisations in Korea and Taiwan during 1950-80 in order to help us understand the role of group behavior in affecting development outcomes. It highlights the linkages between group behavior, parastatal organisational structures and economic performance. The paper examines the historical and political economy contexts that led to the creation of both countries' farmers' organisations and highlights the institutional characteristics that impacted their operational effectiveness. The study discusses elements in internal and external policies that affected group motivation and traces the implications of such differences in group behavior for bottom line performance. Though there existed many similarities in both organisational structure and operations, it is argued that differential intra-group behavioral dynamics led to differences in agricultural performance. Although, with the declining importance of agriculture, the relative importance of such organisations has declined in recent years, the study is relevant for developing countries at every stage of development.Farmers' Organizations, Korea, Taiwan, Group Behavior

Demand for meat products in Malaysia

One distinct change in Malaysians’ food consumption behavior has been the preference towards meat products. The entire agri-food industry is impacted by changes in food consumption behaviors. This study attempts to provide a better understanding of meat consumption behaviors, by estimating income and price elasticities in Malaysia. Expenditure and price elasticities are estimated by Linear Approximate Almost Ideal Demand System (LA/AIDS) model in the first stage, followed by estimation of Engel function in the second stage in order to obtain the estimates of income elasticities for the meat products using Household Expenditure Survey 2004/05 data. The estimated positive and inelastic income elasticities indicate that all meat products are normal and necessity goods, except other meats. The estimates of the own-price elasticities of demand for all the meat products are greater than unity. This study shows that there would be increasing demand for major meat products among Malaysians in the future.Meat, Linear Approximate Almost Ideal Demand System model, Demand elasticity