December 8, 2005

South Korea rice row underscores subsidy strains

By Jack Kim and Kang Shinhye

ANSONG, South Korea (Reuters) - Among the protesters determined to make their voices heard at the World Trade Organization talks in Hong Kong next week, there will be more than 1,000 Korean rice farmers.

Thousands of farmers and farm activists have staged a string of violent protests in South Korea in recent weeks over plans to edge open the country's long protected rice markets to imports.

Two farmers have committed suicide by drinking agricultural chemicals: Both left notes saying the future is hopeless unless markets are closed to protect the people who work the land.

"Farming shouldn't and can't be the sacrificial offering to this government's trade policy," said Kang Ki-kab, a vocal farm advocate and member of the minority Democratic Labor Party at a farm rally in central Seoul last month.

The dilemma for the government is similar to that long faced by Japan over its rice market and by the European Union, which has come under huge pressure from developing countries ahead of the Hong Kong meeting to lower import tariffs on farm goods.

South Korea is largely closed to foreign imports of rice, which has been its people's staple for centuries. But what is good for farmers is not so good for consumers, who pay seven times as much for rice as they would do in other countries.

Now, the government has taken measures to open its markets a little, and this has sparked fierce protest among farmers.

"The government has been taken hostage by rice farming for the past 10 years," said Cho Il-hyun, a ruling Uri Party lawmaker willing to take on the powerful agricultural lobby.


The dispute between South Korea's government and its rice farmers shines a light on the domestic strains underlying a global subsidies dispute that has clouded the Hong Kong talks to reform world trade.

Deep divisions on farm subsidies and market opening in farm and industrial goods and services trade forced the WTO to drop plans to seek a draft accord at the December 13-18 conference.

In South Korea, as elsewhere, the subsidies debate is as much about politics as it is about economics.

The rural vote in South Korea is powerful because it is a swing bloc that can tip the balance of power in a country that is nearly evenly split between the conservative Grand National Party and the ruling, progressive Uri Party.

Last month, parliament approved a deal struck with rice-exporting countries that would open the local market slightly wider for a trickle of foreign imports, and for the first direct sales of foreign rice to consumers.

Under the so-called minimum market access provision, South Korea will import 225,500 tons of rice in 2005, equivalent to 4.4 percent of its consumption. It will raise the quota incrementally to 408,000 tons, or 8 percent, by 2014.

"This sets the stage for even greater minimum market access, which will eventually migrate to other commodities," said Kang.

The plan also promises Korean farmers huge sums of money to soften the blow ahead of eventual full liberalization


Critics however fear that taxpayers will pay the price of the reforms, which include direct income subsidies of 119 trillion won for farmers over the next 10 years.

"At this rate, nothing will change even if we spend 1.19 zillion won, not just 119 trillion won," Cho said in an interview in his parliamentary office in the capital Seoul.

However, the pledge has also failed to impress the farmers.

"That might sound like a huge amount of money to you, but that's just a little bit more than what's being spent now," said Yoo Kye-hyung, a 51-year-old rice farmer in Ansong county about 37 miles south of Seoul.

"It's been the same, farm aid or not. I still can't make ends meet," he said, to a chorus of grunts and nods of agreement from other farmers in a region that produces the country's third best-selling brand of rice, "Ansong Perfect Rice."

"We're standing on a mountain of debt," said Koh Young-sun, 42, who left Seoul with her husband 10 years ago and settled in Ansong to farm. "All this government has done is make it more and more expensive to farm."


Cho says it is difficult for South Korean politicians to tell farmers that it is time to move to leaner farming.

South Korea still has 3.5 million people living off the land out of a population of 48.4 million.

But land has become a precious commodity in the modern and densely populated country, which relies on firms like industrial giants Samsung and Hyundai to power its economy instead of farmers in places such as Ansong.

Younger generations are also increasingly less inclined to stay on the farm because there are better-paid jobs in the country's industrial and service sectors.

With fewer young farmers, the day may come when the agricultural lobby's strength diminishes but the transition will take years, said Seo Jin-kyo, senior fellow at the Korea Rural Economic Institute.

"Unlike other businesses, the labor structure in the farm industry does not change for a long time since farming is a life-time job, with no layoffs and no retirement," Seo said

"This is why I see there would be no dramatic change in the country's farm industry in the next 10 years."