If Rice Cultivation Area Does Not Decrease by 80,000 ha... Income per Farm Drops by 240,000 Won

KREI Announces 'Agricultural Outlook 2025'
Rice Cultivation Area May Drop by Up to 11.5% Year-on-Year
Decline in Farming Population Unavoidable... Expected to Barely Remain Above 2 Million

The government’s newly introduced 'Rice Cultivation Area Adjustment System' aimed at resolving the rice oversupply issue is projected to result in a decrease in agricultural income by more than 240,000 KRW per farm if the target reduction of 80,000 hectares is not achieved this year. The oversupply of rice causes price drops, which ultimately lead to income reductions.

On the 16th, the Korea Rural Economic Institute (KREI) held the 'Agricultural Outlook 2025' at Lotte Hotel World in Jamsil, Seoul, where it announced the forecast results for key agricultural indicators.

Kim Yong-ryeol, head of the Agricultural Observation Center at the Korea Rural Economic Institute, is explaining the trends and outlook of major agricultural indicators at the Government Sejong Complex on the 15th.

The Ministry of Agriculture, Food and Rural Affairs is promoting the Rice Cultivation Area Adjustment System with a goal of reducing 80,000 hectares this year. To implement the adjustment system, reduction areas were allocated by city and province in December last year based on the 2024 rice production volume, and individual farms will be notified of the rice cultivation area they need to reduce within this month. Environmentally friendly rice and rice flour are excluded from the adjustment system, and trading of reduction areas between farms is permitted. To encourage participation, farms that comply with the reduction will be given priority allocation of public stockpiled rice at purchase prices 7-10% higher than the market price.

Kim Yong-ryeol, Director of the Agricultural Outlook Center at KREI, stated, "Since the government is promoting the rice cultivation area adjustment system, the forecast assumes an 80,000-hectare reduction through this system. Under this assumption, the trend of increasing agricultural production value and farm income is expected to continue this year." The total agricultural production value in 2025 is forecasted to slightly increase to 60.1 trillion KRW compared to the previous year. Farm income is also expected to rise by 2.6% to 54.35 million KRW per household. Farm income consists of income earned by farms over one year, including agricultural, non-agricultural, transfer, and non-recurring income. Agricultural income refers to income earned through agricultural activities.

However, if the target reduction of 80,000 hectares in rice cultivation area is not achieved this year, the growth rate of farm income will slow to 1.5%. Although transfer income, including agricultural direct payments, will increase by 3% to 18.03 million KRW per household, agricultural income will decrease by 1.9%, from 12.8 million KRW last year to 12.56 million KRW this year.

Lee Hyung-yong, head of the Grain Outlook Team at KREI, explained, "Since agricultural products are essential daily food items, demand does not decrease as prices rise. If the rice cultivation area is reduced by 80,000 hectares, rice production will decrease by about 400,000 tons, and as rice prices rise, the effect on increasing farm income will be greater."

This year, the rice cultivation area is expected to decrease by up to 11.5% compared to the previous year, according to the institute. Lee said, "The intended rice cultivation area for the 2026 grain year is expected to decrease by up to 11.5% due to the rice cultivation area adjustment system (80,000 hectares) and the expansion of the strategic crop direct payment system. If the reduction in cultivation area is not achieved, it is forecasted to decrease by 2.3% (16,000 hectares)." Last year, the rice cultivation area was 698,000 hectares. An 11.5% reduction, or 80,000 hectares, would result in 618,000 hectares, and a 2.3% reduction would result in 682,000 hectares.

The decline in the farming population engaged in agriculture is expected to be unavoidable. Last year, the farming population was 2.045 million, down 2.1% from the previous year. This decline rate (2.1%) is expected to continue this year, with the farming population projected to be 2.002 million in 2025. Due to the intensifying aging trend, the proportion of farming population aged 65 and over is expected to increase from 52.7% in 2024 to 52.9%.

Meanwhile, at the outlook conference, KREI will present topics including ▲Agricultural policy directions and the future of Korean agriculture ▲Agricultural policy issues in 2025 ▲Supply and demand outlook and current issues by industry.

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