Since the Introduction of the Public Stockpiling System in 2005... 23 Trillion Won of Tax Money Invested in Rice Market Isolation

[Asia Economy Sejong=Reporter Kim Hyewon] It has been revealed that the government’s budget spent on rice market isolation since the introduction of the public stockpiling system in 2005 has approached a total of 23 trillion won. This is taxpayers’ money used by the government to purchase public stockpiled rice annually to maintain an appropriate rice inventory and to buy up surplus rice whenever prices fall due to oversupply. Meanwhile, the imbalance in rice supply and demand has become entrenched, and controversies over fiscal waste are growing. The opposition parties are pushing for amendments to the Grain Management Act, which mandates market isolation, raising concerns that this will further distort the market.

On the 13th, the Ministry of Agriculture, Food and Rural Affairs and our agency examined the overall costs including market isolation and storage fees from 2005, the first year of the public stockpiling system, to this year, and found that the required budget scale reached approximately 23 trillion won. Excluding this year’s estimated public stockpiling and market isolation purchase costs (about 2 trillion won), the budget executed up to last year exceeded 20 trillion won. The total budget spent on public stockpiling was 12.8316 trillion won (6.542 million tons), and a separate market isolation (9 times, 2.533 million tons) cost 4.4935 trillion won.

The cost of storing the purchased rice at stockpiling bases was also estimated at about 3.5 trillion won. This year, based on the harvest season, the government plans to invest around 1 trillion won each for the largest-ever public stockpiling and market isolation of 900,000 tons. Since rice prices have dropped by more than 20% this year, the government is urgently purchasing quantities exceeding 23% of the expected rice production, which is significantly higher than the average range (8.3% to 18.1%).

Amid a trend of rice oversupply continuing for over 20 years, per capita rice consumption is rapidly decreasing, and a vicious cycle is repeating where the government injects massive budgets to defend prices. In this situation, the ruling Democratic Party is proceeding with the sole passage of an amendment to the Grain Management Act that obligates the government to purchase excess rice annually. The Ministry of Agriculture, Food and Rural Affairs, the relevant department, and the ruling party are opposing this move.

Professor Han Seokho of the Department of Agricultural Economics at Chungnam National University pointed out, "The government has maintained an agricultural policy stance that guarantees farmers’ income through public interest direct payments while minimizing market intervention in specific items and seeking supply-demand balance through the market. However, the opposition’s proposed amendment to mandate market isolation under the Grain Management Act goes against market logic."

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