Research Reports
Evaluation and Improvement of Set-Aside Program for Rice
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AuthorKim, Myunghwan
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Publication Date2005.11.01
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Original
Set-aside program for rice in Kores was a pilot project for three years from 2003 to 2005 to reduce of rice production and to enhance the position at the rice negotiation to extend the exemption period of tariffication in 2004. The program aimed to reduce 130 thousand tons at a cost of 81 billion won (i.e., 623 thousand won per ton). Although this program could be considered cheaper than a special disposition like foreign aid which cost 1,806 thousand won per ton, it should be evaluated how much acreage at less-favored areas could be decreased in trend without the program.
The most farmers participated in the project were old and small-scaled peasants at the sub-mountain area, who were ready to retire their land in a few years. Most participated land had about 4% lower yield than national average, and their rent were cheaper than the set-aside payment. However, if the project should be stopped in 2006, 41 percent of farmers answered to restart on growing rice.
The forecasting results using the KREI-ASMO 2002 model which consists of data prior to the set-aside program showed that 47～68 percent of the set-aside acreage would be the pure effect.
The rice supply and demand forecast showed the stock in 2011 would increase up to 1,700 thousand tons without any control programs. Seven control programs were set to reduce the stock level. The cost of each program which keeps ending stocks at the level of 1,000 thousand tons every year was estimated. The rank of efficiency was 1) deficiency payment for switching rice acreage to soybean, 2) set aside for plain land, 3) deficiency payment for rapeseed, 4) land bank system for plain land, 5) set-aside for marginal land, 6) special disposition, and 7) land bank system for marginal land.
It is desirable to stop the set-aside program and review in 2007 because not only the government in 2005 have less stocks than the target amount of Public Stockholding for Food Security, but also there is a potitical issue of food aid to North Korea. If it is necessary to restart the set-aside program, it should introduce some restrictions to prohibit same fields' consecutive participation to improve the effectiveness of the program, and the payment of the program should be decreased to reduce the conflict with the payment for early retirement program.
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