'Preventing Rice Price Decline'... Government to Reduce Paddy Cultivation Area by 37,000 ha

Ministry of Agriculture, Food and Rural Affairs Promotes 'Proper Rice Production Measures'
Last Year, Rice Price Dropped to 40,393 KRW per 20kg
Encouraging General Paddy Farmers to Switch to Summer Forage Crops

The government has decided to reduce the rice cultivation area by 37,000 hectares this year to stabilize rice supply and demand. Through the 'Strategic Crop Direct Payment System,' which provides up to 4.3 million KRW per hectare for growing winter food crops or forage instead of rice, it plans to encourage crop switching to crops such as paddy soybeans, powdered rice, and summer forage.

The Ministry of Agriculture, Food and Rural Affairs (MAFRA) announced the '2023 Appropriate Rice Production Measures' containing these details on the 9th. MAFRA plans to fully cooperate with local governments, the Rural Development Administration, the National Agricultural Cooperative Federation, and rice producer organizations to adjust rice cultivation areas for stabilizing the supply and demand of 2023 rice and rice prices.

Since January, MAFRA has been promoting the formation of a rice appropriate production task force, implementing the strategic crop direct payment system, and holding explanatory meetings for farmers. After collecting opinions from farmers and local governments and undergoing a revision process, the ministry finalized this plan.

While rice consumption has been decreasing annually, the production of 2021 rice increased by 375,000 tons (10.7%) compared to the previous year, causing rice prices to fall from 50,889 KRW per 20 kg at the beginning of last year to 40,393 KRW by the end of September. As a result, the government implemented a large-scale market isolation of 450,000 tons, which helped rice prices recover to 46,994 KRW in early October.

A MAFRA official explained, "The market isolation of 450,000 tons of rice is estimated to have cost about 1 trillion KRW," adding, "Furthermore, farmers and rice processing complexes (RPCs) faced many difficulties during the isolation process."

Accordingly, MAFRA plans to proactively reduce rice cultivation areas by introducing the strategic crop direct payment system and strengthening support for non-rice paddy crops to alleviate structural oversupply and induce appropriate production.

MAFRA has set the appropriate rice cultivation area for this year at 690,000 hectares, aiming to reduce 37,000 hectares compared to last year's 727,000 hectares. Using the newly introduced strategic crop direct payment system, 16,000 hectares will be reduced; 10,000 hectares through local government budgets and rice cultivation area reduction agreements; 2,000 hectares by cultivating other crops on newly secured farmland in the Farmland Bank; and 9,000 hectares through farmland conversion and other means, achieving the reduction target.

According to research by specialized institutions, if the target is achieved, rice prices at harvest time are expected to rise by about 5% compared to the current trend of rice production, and isolation costs are expected to be reduced by approximately 440 billion KRW, MAFRA explained. Additionally, by switching rice to other crops such as soybeans, summer forage, and processed powdered rice, the food self-sufficiency rate is expected to increase from 23.7% in 2021 to 38.8% in 2024.

First, the strategic crop direct payment system, which will invest 1,121 KRW this year, expands and reorganizes the existing paddy field utilization direct payment to provide direct payments for important crops to improve food self-sufficiency and stabilize rice supply and demand. Considering the income difference with rice, 1 million KRW per hectare is paid for cultivating soybeans or powdered rice in paddy fields, and 4.3 million KRW per hectare for summer forage. If soybeans or powdered rice are cultivated together with winter wheat or forage, 2.5 million KRW per hectare is paid. Applications from farmers have been accepted at eup, myeon, and dong administrative welfare centers since the 15th of last month, and applications are open until the 31st.

MAFRA is also promoting securing sales channels and establishing production bases. To resolve sales issues for paddy soybeans and powdered rice farmers, the government will strengthen public stockpiling. Up to 60,000 tons of soybeans will be purchased, and for paddy soybeans, the government plans to buy all quantities desired by farmers. The government raised the purchase price for 2023 soybeans to 4,800 KRW per kilogram (premium grade) and plans to strengthen inspections on the origin of imported soybeans. For powdered rice, the government plans to focus on nurturing 38 specialized production complexes this year and will purchase all powdered rice produced in these complexes to supply food companies stably, supporting the initial industrial base establishment.

Furthermore, MAFRA plans to expand support projects for nurturing specialized production complexes and facilities and equipment to support new farmers switching to non-rice paddy crops such as paddy soybeans and powdered rice, and to support production base establishment such as drainage improvement.

For summer forage, silage manufacturing costs and seed costs will be supported for participating farmers in forage complexes and livestock-crop rotation complexes. A dedicated technical support team will operate from April to September for new farmers, and machinery and equipment support projects necessary for forage production will be preferentially provided. To secure sales channels, cooperation systems will be established with Korean beef farmers, livestock and fisheries cooperatives, and total mixed ration (TMR) factories, and a new project will provide incentives to farmers purchasing more than 150 tons of summer forage. MAFRA plans to encourage farmer participation by supporting self-mixed feed ratios and TMR mixing design using summer forage (in cooperation with the National Institute of Animal Science).

MAFRA also aims to expand high-quality rice production. While reducing rice cultivation areas, it plans to move away from yield-focused cultivation practices and reduce the cultivation of high-yield varieties to expand high-quality rice production. Under the basic direction of switching high-yield varieties, which burden rice supply and demand stabilization, to high-quality varieties that have good taste and stable cultivation, public stockpiling purchases of high-yield varieties will be restricted from 2024, and government-supplied seeds will be discontinued from 2025. Future new variety development goals will shift focus from yield to taste, concentrating on developing varieties and materials demanded by industries such as powdered rice.

Kim In-jung, Vice Minister of MAFRA, said, "Since adjusting rice cultivation areas to a certain extent is inevitable to resolve the structural oversupply in the rice market and stabilize rice prices at harvest, we will respond with full efforts together with farmers, local governments, the National Agricultural Cooperative Federation, and the Rural Development Administration," adding, "We ask for active interest and participation from rice farmers."

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