(EDITORIAL from the Korea Herald on March 6)

Agriculture reform

During his recent state visit to New Zealand, President Lee Myung-bak signaled
the administration's plan to reform the agricultural industry. Witnessing the
successful outcome of New Zealand's agricultural reform, Lee said that a reform
of the agricultural sector was necessary in order to make rural farming areas
wealthy.

The key feature of New Zealand's agricultural reform was the end of various
government subsidies to farmers. In the 1970s and 1980s, New Zealand heavily
subsidized the agricultural industry with the goal of boosting agricultural
production, as the country found it increasingly difficult to get good prices on
the international market. Because the agricultural sector was an important part
of the economy, the government kept expanding its farm support programs.
This policy, however, actually exacerbated the situation by causing
overproduction and lowering prices. In 1984, the new Labor Party enacted a bold
agricultural reform as part of a larger economic restructuring.
As of 2005, governmental assistance to agriculture in New Zealand is
approximately 2.6 percent of the value of agricultural output. The remaining
assistance is primarily in the form of funding for agricultural research.
Today, New Zealand's agricultural reform is hailed as a success story, resulting
in an agricultural industry that is more efficient and more responsive to market
signals.
The Korean government has given out some 130 trillion in farm subsidies over the
past 16 years. However, the agricultural sector has not seen any improvement.
Critics point out that as a result of dependence on government subsidies, farmers
have lost independence and the agricultural industry remains uncompetitive.
There is no doubt that a reform of the agricultural sector is needed. However,
merely transplanting another country's reform policy to Korea will not work. The
conditions of the two countries are too different.
It is important to note that the demand for agricultural reform in New Zealand
came first from farming leaders. In 1982, that country's leading farmers'
organization proposed that farming subsidies exacerbated overall inflation.
In Korea, there are no such forward-looking farm leaders urging reform. Hence,
the government is saddled the difficult task of persuading the farmers of the
need for sweeping agricultural reform.
It should be noted that when the agricultural reform was implemented in 1984 -
including the elimination of almost all farming subsidies - it was part of a
larger package of economic restructuring.
The farmers in Korea are also mainly aging subsistence farmers with small
family-owned plots. Eliminating all subsidies at once will be detrimental to
their livelihood. On the other hand, New Zealand farmers are younger and the
society has good social safety network to assist farmers who encounter hardships
or are displaced.
While New Zealand's experience with agricultural reform provides important
lessons, the Lee administration should do more thorough studies to come up with a
plan that will work in Korea.
(END)