The government and the ruling party have decided to buy 450,000 tonnes of rice this year, including stock rice produced last year and new rice this year, in order to catch the drop in the price of rice. From the harvest season (October to December), this is the largest ever recorded and almost doubles this year’s excess production. The budget for the purchase of rice alone is approximately 1 trillion won, and some criticize whether the government has introduced an excessive policy to prevent the mandatory quarantine of the rice market (government purchase) from being promoted by the major opposition Democratic Party.
The government and the ruling party, People’s Power, held the ‘4th High Level Party Council Meeting’ on the 25th and announced that they had decided on ‘rice price stabilization measures’. The rice market quarantine is a system where the Agricultural Co-operatives buy rice that has been produced in excess of domestic demand, and the government compensates the money the Agricultural Co-operatives spend to buy and storage of rice through taxes. As of the 15th, the price of rice, which fell 24.9% from a year ago (54,228 won) fell to 4725 per 20 kg, the most since 1977 when related statistics began to be collected, and the government plans to rebound the price of rice through government purchases.
The 450,000 tonnes the government decided to buy is 200,000 tonnes more than this year’s excess production (250,000 tonnes) estimated by the Ministry of Rural Development. The government has decided to buy more than 100,000 tons of rice produced last year, which is left on the market in this year’s excess production. This is the first time since 2009 that stock rice has been included in the market quarantine quantity, which is normally limited to the rice produced. In a briefing held on the same day, Vice Minister of Agriculture, Food and Rural Affairs Kim In-jung said, “In order to turn the price of rice that has fallen too much into an uptrend, we have decided that it is necessary to isolate the an excessive amount. from the market during the harvest period.”
The government’s explanation is that it is a ‘high landing policy’ for farmers struggling with falling rice prices amid rising fertilizer prices following the Russian-Ukrainian war, but critical views are strong. Previously, the government decided to increase the amount of publicly stockpiled rice from 350,000 tons per year to 450,000 tons this year under the pretext of strengthening food security.
The public stockpile is separate from the market quarantine, as the government buys a certain amount each year and stores it in case of emergencies such as supply and demand instability due to grain shortages and natural disasters. If public stockpiling is included, the government will buy 900,000 tonnes of rice within this year, or 23.3% of this year’s forecasted production.
According to the Ministry of Agriculture, Food and Rural Affairs, the average cost of buying rice from the government is 200 billion won per 100,000 tons. Although it has a food security function, given that the government buys excess production that exceeds private demand while stockpiling public stock, a budget of 1.8 trillion won is invested to buy the excess rice.
Some point out that the government’s measures are the result of too much awareness of the Democratic Party, which is trying to amend the Grain Control Act so that the government has to buy all surplus rice every year. The Democratic Party has chosen to review the Grain Control Act as a key task to be dealt with in the regular parliamentary session in October and has predicted that it will be implemented.
The stabilization of rice prices is an ‘agenda’ that the ruling party, which can only be aware of the feelings of rural people, must present. The government is more concerned that the size of the budget input may be large at the moment, but if the market quarantine, originally left to the discretion of the government, becomes mandatory, it will give a false signal to the market and deepens the structure of the rice supply glut. Regarding the amendment to the Grain Management Act, Vice Minister Kim said, “Obviously, the oversupply will intensify and the financial burden will increase,” adding, “It could hinder investment for the future of agriculture.
Correspondent Hwang Jung-hwan [email protected]