'Yanggok Act' Rejected After Clash... Alternatives for Rice Price Stabilization

As the Grain Management Act, which was put to a re-vote, was rejected at the National Assembly plenary session on the 13th, the responsibility for devising measures to stabilize rice prices has shifted to the government. Both the ruling and opposition parties, which had been engaged in sharp conflicts over the pros and cons of amending the Grain Act, have agreed on the necessity of measures to stabilize rice prices.

Rice prices at production sites are on a downward trend. According to the Ministry of Agriculture, Food and Rural Affairs and the Korea Rural Economic Institute as of the 10th, the rice price at production sites was 44,545 KRW per 20kg as of the 25th of last month, down 8.1% from 48,467 KRW the previous year.

The Grain Act promoted by the Democratic Party aimed to amend the Grain Act to maintain rice prices at production sites. The main point of the Grain Management Act amendment is that if the surplus rice production exceeds 3-5% or prices fall by 5-8%, the government would be obligated to purchase the excess rice to stabilize rice prices. The People Power Party has raised doubts, arguing that it would only involve massive fiscal expenditure without effectively stabilizing rice prices.

There are predictions that the Democratic Party will reintroduce the amended Grain Act, but if the Presidential Office exercises its veto power again despite the political burden, the issue is likely to return to square one. For a bill vetoed by the president to be re-approved, it must meet the conditions of 'a majority of the total members present and two-thirds or more of the members present'?which is difficult if the ruling party, the People Power Party (with 115 seats), votes against it. The recent re-vote on the Grain Act also failed to pass this hurdle and was rejected.

On the 23rd of last month, officials checked the temperature, humidity, and other conditions of rice in a public rice reserve storage warehouse located in Cheongju-si, Chungbuk. [Image source=Yonhap News]

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With the rejection of the Grain Act on this day, the Ministry of Agriculture, Food and Rural Affairs, the responsible ministry, has taken on the responsibility for alternatives to stabilize rice prices. On the 4th, President Yoon Suk-yeol exercised his veto power on the Grain Management Act amendment and instructed the Ministry of Agriculture to devise countermeasures to stabilize rice prices.

The Ministry of Agriculture has announced that instead of the Grain Act, it will induce a balance in rice supply and demand to maintain rice prices at production sites at a certain level and provide direct subsidies to farmers.

The core content of the rice price stabilization measures proposed by the Ministry of Agriculture includes appropriate production of rice, reduction of rice cultivation area, and inducement of crop switching. Kim In-jung, Vice Minister of the Ministry of Agriculture, Food and Rural Affairs, appeared on MBC Radio's 'Kim Jong-bae's Focus' on the 14th and pointed out that the fundamental problem behind the decline in rice prices at production sites is "supply-demand imbalance, especially oversupply."

Vice Minister Kim explained, "Starting this year, we introduced a strategic crop direct payment system that compensates for income differences when planting soybeans, forage crops, or powdered rice instead of rice," adding, "We calculated the support unit price including a slight incentive on top of the income difference with rice." He continued, "I believe the unit price provides sufficient compensation for highly productive farms, but some farmers on the ground are requesting higher unit prices."

The key issue is the price changes of strategic crops. There is concern that if the cultivation area of other crops such as soybeans planted instead of rice increases and market prices fall, similar problems could recur. Vice Minister Kim said, "Considering the increase in production, we will also purchase soybeans," and added, "We calculate the appropriate rice production volume annually and plan for other crops accordingly, so we will simultaneously implement price stabilization and supply-demand stabilization measures for those crops."

The Ministry of Agriculture expects rice prices at production sites during this year's harvest season to be maintained at around 200,000 KRW per 80kg.

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