Korea Policy to Decrease Rice Plantings and Dispose of Excess Stocks

Feb 22, 2017
Striking a balance
Supply & Demand
SEOUL, KOREA – Due to higher than normal yield for the past few years and the resulting oversupply and price pressure, the Korean government is attempting to reach a balance between rice supply and demand by 2018.  The plan entails seeking a gradual reduction in harvested area and promoting expanded rice consumption.

The Ministry of Agriculture, Food and Rural Affairs (MAFRA) recently released its plan to reduce arable land used for rice cultivation to 711,000 hectares by 2018, a 4.7 percent reduction from the earlier established target of 746,000 hectares.

The government also plans to introduce the Production Adjustment Program which will encourage rice farmers to plant other crops in their rice land (up to 18,000 hectares nationally in 2017).  A recent survey by the Korea Rural Economic Institute (KREI) indicated that rice farmers intend to plant 762,000 hectares in 2017, a decrease of 2.1 percent from the previous year.

Exacerbating the issue, as in many Asian countries, per capita consumption of table rice here continues to decline as diets are diversified and westernized.  Per capita table rice consumption has declined by about 2.75 pounds per year in the last five years and projected consumption this year stands at 132 pounds per person.

In a further step to reduce the oversupply situation, the government will expand rice availability for use in animal feed to 470,000 MT (milled basis) in 2017.  This compares to just 91,000 MT in 2016 and practically none in years prior to 2016.  To assure usage for feed, the rice is sold at a price that is comparable to 88 percent of the value of corn imported in 2016.

“Korea agreed to import a minimum of 408,700 MT of rice per year at a duty level of 5 percent when it joined the World Trade Organization,” said USA Rice Vice President International Hugh Maginnis.  “Prior to tariffication in January 2015, a number of countries, including the United States, had a country specific quota.  Currently, Korea is still bound to import that quantity on a global basis without regard to origin.  

“It is extremely important that the U.S. remains engaged with the Korean government on this,” said Maginnis.  “USA Rice will continue to promote U.S. rice to assure that we maintain a significant share of this market, given that Korea is currently the seventh largest export destination for U.S. rice.”  

Under the 2016 MFN TRQ, the U.S. contracted to export 165,900 MT of rice to Korea (40,000 MT for table use) setting a market share record of 40.6 percent.