[Editorial] The Reintroduction of the Four Anti-Market Agricultural Bills Must Be Withdrawn Without Fail

-Excessive Agricultural Subsidies and Market Distortions Will Ruin the Present and Future Agricultural Economy-

On March 27, four anti-market agricultural bills, including the Grain Management Act, were reintroduced, led by member of the National Assembly Yoon Junbyeong. The reason given was that the government exercised its veto over bills that guarantee the livelihoods of agriculture, fisheries, and farmers and fishermen, while failing to present any alternatives.

These so-called “four agricultural laws” are anti-market legislation that directly defies the order of the free market economy, and they represent a deeply troubling attempt to lock Korea’s agriculture into a premodern structure. The bills, which were passed by the plenary session late last year and later scrapped by a veto, are now once again knocking on the door of the National Assembly with their essential substance virtually unchanged. This is an anachronistic choice that blocks the future of Korean agriculture, which should be advancing as an export industry through industrialization and stronger competitiveness.

First is the amendment to the Grain Management Act (Bill No. 9413). It includes mandatory government purchase of excess rice production (market isolation) and the introduction of a grain price stabilization system. This can only further accelerate distortions in the rice market and the structure of oversupply.

It distorts the price mechanism that should adjust according to supply and demand, creating incentives for overproduction for producers while forcing a tax burden onto consumers, that is, the public. Although investment is needed in diverse forms of future-oriented agriculture beyond rice, this bill repeats a vicious cycle in which only uncompetitive rice is supported while the government’s fiscal burden continues to grow.

Second is the amendment to the Act on Distribution and Price Stabilization of Agricultural and Fishery Products (Bill No. 9404). It includes the introduction of an agricultural product price stabilization system and mandatory implementation of price stabilization measures when excess production occurs. In effect, this would neutralize the function of the agricultural market through a price stabilization mechanism and subject it to forced government control.

Research shows that for major crops such as garlic, onions, radishes, napa cabbage, and red peppers, a 10% increase in output leads to a 14% to 56% drop in prices. If farmers produce items that are easy to cultivate or have high reference prices, a price decline could result in excessive fiscal spending by the government. There is no sound basis for the government to provide loss compensation merely because agricultural markets inherently experience sharp price fluctuations depending on output, and the issue is also serious from the standpoint of equity with other industries.

Third is the amendment to the Agricultural and Fishery Disaster Countermeasures Act (Bill No. 9411). This bill provides full or partial support for production costs incurred before a disaster occurs when a disaster strikes. Even now, sufficient opportunities for recovery from disasters are already being provided through emergency living expenses, facility restoration costs, and replanting support.

However, in almost no industry does the government compensate production costs when disasters occur, nor is there any need for the government to fully assume the disaster risks borne by private actors. Compensation for losses such as production costs is also a duplicative support measure because disaster insurance is already in operation, and concerns over fairness remain.

Fourth is the amendment to the Agricultural and Fishery Disaster Insurance Act (Bill No. 9412). It includes expanding the insured subject matter of disaster insurance in response to the climate crisis and prohibiting disaster insurers from applying premium surcharges for unforeseeable disasters. This bill not only imposes excessive compensation burdens on insurers for the various damages that climate change will cause in the future, but also significantly undermines the principle of autonomous operation in insurance.

Although these are being packaged as the four livelihood laws for agriculture, in reality they are nothing more than harmful anti-market laws that will repeat a vicious cycle of ruining both the present and future agricultural economy by leading to excessive agricultural subsidies, damage compensation, price controls, stronger dependence among agriculture and farmers, distortions in the agricultural and food market, and ultimately weakened agricultural competitiveness.

The National Assembly must immediately withdraw the reintroduction of these four agricultural laws, which once again go against the tide of the times. The moment the principles of market autonomy and responsibility, as well as competition and innovation, collapse, agriculture will lose its future. If Korean agriculture is to grow into an export industry and produce globally recognized food brands, now is precisely the time for a firm decision to return agriculture to the domain of the market. Building market competitiveness through smart agricultural innovation and food tech in response to climate change is the path the future agri-food industry must take.

March 31, 2025

Center for Free Enterprise (CFE)

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Original title: [논평] 반시장적 농업 4악법 재발의, 반드시 철회되어야

Author: Center for Free Enterprise (CFE)

Date: 2025-03-31

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=comment&pn=2&idx=27445