Rising Issue in National Audit: 'Rice Mandatory Purchase Act'... Nonggyeongyeon Forecasts "1.4 Trillion KRW Fiscal Investment by 2030"

Rice displayed at a large supermarket in Seoul. 2022.10.3 [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Son Seon-hee] The "mandatory rice market isolation," which requires the government to purchase all leftover rice that does not sell in the market, emerged as a key issue in the Ministry of Agriculture, Food and Rural Affairs (MAFRA) audit on the 4th. While the opposition party holding the majority of seats (the Democratic Party of Korea) is proceeding with the unilateral passage of the "Grain Management Act Amendment" centered on mandatory rice market isolation, the ruling party and government defended the measure, estimating that the annual taxpayer burden would amount to about 1 trillion won if the system is introduced.

According to the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee (AFROFC), the MAFRA audit held at 10 a.m. at the National Assembly focused intensively on government measures in response to the plummeting rice prices. The Ministry of Agriculture, Food and Rural Affairs reported that if market isolation is mandated as stipulated in the Grain Management Act amendment, the supply-demand adjustment function could weaken, leading to an increase in the scale of overproduction and fiscal expenditure. While rice supply should be reduced according to demand, if the government unconditionally purchases leftover rice ignoring market supply-demand logic, the rice cultivation area will not decrease in line with demand, which will rather increase the scale of oversupply over time.

According to a report titled "Impact Analysis of Mandatory Rice Market Isolation" published earlier by the Korea Rural Economic Institute (KREI), the rice overproduction is projected to reach approximately 641,000 tons by 2030. This is about 2.6 times the overproduction of this year (248,000 tons). The fiscal cost estimated for the government to purchase this amount is expected to reach 1.4 trillion won.

Meanwhile, the "Grain Management Act Amendment" led by the Democratic Party is currently under the agenda adjustment committee (AAC) after failing to reach bipartisan agreement in the standing committee. However, recently, the Democratic Party unilaterally elected the AAC chairman, increasing the likelihood of unilateral passage.

This content was produced with the assistance of AI translation services.