‘Four Laws for the Ruin of Agriculture` is Correc

Suppose Samsung Electronics produces too many semiconductor chips and prices fall as a result. The government then steps in and mandates the purchase of the excess chips, and if the purchase price fails to reach a so-called “fair price,” the government is required to pay the difference. Suppose Hyundai Motor produces too many cars, leaving vehicles unsold in the market. The government is then obligated to buy them, and if the price is deemed too low, to compensate for the gap. Or consider cases advertised as “warehouse clearance due to business closure” or “distress sales at tearful discounts.” Imagine the government being required to purchase those goods as well, and to guarantee the price up to a “fair” level if it falls short. Does any of this sound like a sensible policy? Everyone knows it is absurd, which is precisely why no politician proposes such policies.

Yet there are politicians who are proposing and attempting to implement policies just as nonsensical. The only difference is that they apply not to semiconductors or automobiles, but to agriculture. In substance, however, the policy is exactly the same. The government would be forced to purchase surplus rice, and if rice prices fall below the “average price,” the government would pay farmers the difference. This is the core content of the revised Grain Management Act, which opposition parties led by the Democratic Party unilaterally passed through the National Assembly’s Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee.

In addition to the revised Grain Management Act, three more agriculture-related bills were pushed through unilaterally by the opposition. The amendment to the Act on Distribution and Price Stabilization of Agricultural and Fishery Products includes provisions to compensate for the gap between market prices and reference prices for certain fruits and vegetables. The amendment to the Agricultural and Fishery Disaster Insurance Act excludes disaster-related losses from premium surcharges when calculating insurance rates. Meanwhile, the amendment to the Agricultural and Fishery Disaster Countermeasures Act mandates compensation for all or part of production costs incurred prior to a disaster. Taken together, these bills guarantee prices for agricultural output while exempting producers from the responsibilities and risks they should bear.

Minister of Agriculture, Food and Rural Affairs Song Mi-ryeong stated that she “expresses deep regret over the forced passage of the so-called ‘Four Laws that Ruin Agriculture,’ which undermine the constitutional principles of a free-market economy and the future of agriculture.” As the coined term “Four Laws that Ruin Agriculture” aptly suggests, the minister criticized each bill in detail by pointing out the negative consequences they would bring about. Her criticisms are hardly novel; they are conclusions that anyone with basic common sense could easily reach. For example, if the government is required to purchase surplus rice and compensate farmers whenever prices fall below the average level, farmers will have little incentive to move away from rice cultivation. As a result, rice will continue to be overproduced, and the government’s fiscal burden from purchasing the surplus will continue to grow. Likewise, exempting producers from all responsibility inevitably leads to moral hazard. The real problem seems to be that in what is commonly called “Yeouido,” even such elementary logic is rendered powerless by political considerations.

The four agriculture-related bills that passed the relevant parliamentary committee are, as Minister Song aptly put it, indeed “Four Laws that Ruin Agriculture.” They are anti-freedom, anti-market bills that ultimately harm farmers and undermine agriculture itself. This is why her determination to prevent their passage in the National Assembly deserves support. And if they nevertheless pass the plenary session, the president should exercise the veto to ensure that these “agriculture-ruining” bills are never implemented.

Hyuk-Chul Kwon
Director, Free Market Research Institute

Korean version: https://www.cfe.org/20241127_27109