1. The Prospects of Korean Agriculture post DDA - The Impact of Agricultural Market Opening on Korean Agriculture - The Prospects of Korean Agriculture post DDA - The Impact of Agricultural Market Opening on Korean Agriculture - 28 October 2003 Jin Kyo Suh Korea Rural Economic Institute

2. I. Contents 1. Major Features of Korean Agriculture What’s the problem of Korean Agriculture? 2. Agricultural Negotiation in the WTO How did it proceed after Doha ? What happened at Cancun Ministerial meeting? 3. The Impact of DDA Farm Meeting on Korean Ag. Sector What will happen in Korean rice sector? 4. Conclusion 1. Major Features of Korean Agriculture What’s the problem of Korean Agriculture? 2. Agricultural Negotiation in the WTO How did it proceed after Doha ? What happened at Cancun Ministerial meeting? 3. The Impact of DDA Farm Meeting on Korean Ag. Sector What will happen in Korean rice sector? 4. Conclusion - 1 -

3. □ Rice is the single most important product in Korean agriculture. (1) in terms of the value of agricultural production(1) (2) in terms of rural employments(2) (3) in terms of farm incomes(3) (4) in terms of caloric intake(4) (5) in terms of multi-functionality(5) □ Rice is the single most important product in Korean agriculture. (1) in terms of the value of agricultural production(1) (2) in terms of rural employments(2) (3) in terms of farm incomes(3) (4) in terms of caloric intake(4) (5) in terms of multi-functionality(5) - 2 - II. Main Characteristics of Korean Agriculture (1)

4. □ Small-scaled family farming with highly aging labor forces. (1) average farming size (2) structure of farm labor forces(2) □ Small-scaled family farming with highly aging labor forces. (1) average farming size (2) structure of farm labor forces(2) - 3 - II. Main Characteristics of Korean Agriculture (1)

5. 1.After Doha Ministerial Conference - US, Cairns. Greater reduction/elimination in Agr. Subsidies. Substantial tariff cuts using Swiss formula - EU, MF6: Gradual market opening. Consideration of NTC in each countries. - Developing Countries. S&D (Special and Differential Treatments) 1.After Doha Ministerial Conference - US, Cairns. Greater reduction/elimination in Agr. Subsidies. Substantial tariff cuts using Swiss formula - EU, MF6: Gradual market opening. Consideration of NTC in each countries. - Developing Countries. S&D (Special and Differential Treatments) - 4 - III. Agricultural Negotiation in WTO

6. 2. Before Cancun - Failures of Agreements on Harbinson’s Drafts. - The EU-US Joint Paper - Castillo’s Draft for Modalities 3. Cancun Ministerial Conference - The four Singapore Issues - The Appearance of G-21 - Yeo’s Draft for Modalities 2. Before Cancun - Failures of Agreements on Harbinson’s Drafts. - The EU-US Joint Paper - Castillo’s Draft for Modalities 3. Cancun Ministerial Conference - The four Singapore Issues - The Appearance of G-21 - Yeo’s Draft for Modalities - 5 - III. Agricultural Negotiation in WTO

7. - 6 - Developed Countries Developing Countries % of Tariff Lines Tariff Reduction % Tariff Lines Tariff Reduction 5 Years 10 Years (+2 Years) Group 1 10~20% Average 36% Minimum 15% 25~30% Average 24% Minimum 10% Group 2 50~40% Swiss formula with a coeff. of 25 45~50% Swiss formula with a coeff. of 25 Group 3 40%Duty-free30% Bound at 5~10% 1. Tentative Assumptions for Tariff Reductions IV. Impacts of DDA on Korean Agriculture

8. - 7 - 2. Scenarios of Agricultural Market Opening in Korea ScenarioContents Scenario 1 1-1 Rice: SP Others: Subject to Market Opening Market Opening Conditions for Conditions for Developing Countries Developing Countries 1-2 Rice: 200% of Max. Tariff Scenario 2 2-1 Rice: NTC product Others: Subject to Market Opening Market Opening Conditions for Conditions for Developed Countries Developed Countries 2-2 Rice: 150% of Max. Tariff IV. Impacts of DDA on Korean Agriculture

9. - 8 - IV. Impacts of DDA on Korean Agriculture 3. Simulation Results of Agricultural Market Opening in Korea YearTotal Ag. Income (Billion Won) Major Index of Rice Industry PlantedArea(1,000ha)Farm-gatePrice (1,000Won/8 0kg) Per capita Consumption(Kg) Total Rice Income (Billon Won) 200214,436 1,053 1,053153.787.07,227 200515,245 986 986147.679.46,939 2010S-1114,536 840 840141.269.05,629 S-1213,317 786 786117.870.54,232 S-2113,460 828 828127.469.75,014 S-2210,848 724 724 77.3 77.371.32,076

10. - 9 - V. Concluding Remarks □ Simulation results show that (1) rice industry will shrink because of a decrease in the demand for a rice. - Vegetables: almost stabilize except high-valued added Veget. - Fruits: similar to Vegetables - Livestock: slow growth (2) both the level and the speed of agr. market opening could have crucial effects on the future Korean agriculture; particularly, the establishment of maximum tariffs could cause to a dramatic reduction of rice industry. ⇒ Needs a proper level and the smoothing speed of agricultural market opening for both the survival of rice industry and the maintaining the NTC of agriculture in Korea □ Simulation results show that (1) rice industry will shrink because of a decrease in the demand for a rice. - Vegetables: almost stabilize except high-valued added Veget. - Fruits: similar to Vegetables - Livestock: slow growth (2) both the level and the speed of agr. market opening could have crucial effects on the future Korean agriculture; particularly, the establishment of maximum tariffs could cause to a dramatic reduction of rice industry. ⇒ Needs a proper level and the smoothing speed of agricultural market opening for both the survival of rice industry and the maintaining the NTC of agriculture in Korea

11. Thank you for your attention! 감사합니다 ! Thank you for your attention! 감사합니다 !

12. - i - During the last two decades, the share of rice in total value of agricultural production has been persistently maintained at the level of more than 30 percents. During the last two decades, the share of rice in total value of agricultural production has been persistently maintained at the level of more than 30 percents. Unit: % Table 1Table 1. The Share of Rice in the Value of Agricultural Production Table 1Table 1. The Share of Rice in the Value of Agricultural Production

13. Table 2Table 2. The Share of Rice Farming Household in Total Farm H. Table 2Table 2. The Share of Rice Farming Household in Total Farm H. Unit: 1,000 households The 77 percents of total farm households produces a rice in 2002; three of four Korean farmers produce a rice ! The 77 percents of total farm households produces a rice in 2002; three of four Korean farmers produce a rice ! 1,280 985 - ii -

14. Billion Korean Won Table 3Table 3. The Share of Rice in Total Agricultural Income Table 3Table 3. The Share of Rice in Total Agricultural Income Share of Non-farm Income (%) 41.9% 50 % Nearly 50 percent of total agricultural income comes from a rice The share of non-farm income in farm income at the level of farm households is below 40 percents Nearly 50 percent of total agricultural income comes from a rice The share of non-farm income in farm income at the level of farm households is below 40 percents - iii -

15. Table 4Table 4. Calories capita per a day Table 4Table 4. Calories capita per a day Unit: kcal Rice still accounts for more than 30 percents of daily per capita calorie in take in Korea Rice still accounts for more than 30 percents of daily per capita calorie in take in Korea19801990199520002001 Daily per capita calories intake (A) 2,4852,8532,9593,0102,994 from rice (B) from rice (B)1,2341,1751,054997945 B/A (%) B/A (%)49.741.235.633.131.6 - iv -

16. Figure 1Figure 1. Multi-Functionality of Agriculture Figure 1Figure 1. Multi-Functionality of Agriculture The aesthetic contribution of the rice landscape is also of great value in Korea. Fields are terraced on to steep mountainsides. The aesthetic contribution of the rice landscape is also of great value in Korea. Fields are terraced on to steep mountainsides. - v -

17. 1980199020002002 Arable Land per Arable Land per Farm Household (ha) Farm Household (ha)1.021.191.371.45 The Number of The Number of Employment in Agr. Sector (A) Employment in Agr. Sector (A)4,6543,2372,2432,069 - More than 60 Years old (B) - More than 60 Years old (B)3097669881,013 B/A (%) 6.623.744.049.0 Table 5Table 5. Small-scaled farming & Highly aging farm labor forces Table 5Table 5. Small-scaled farming & Highly aging farm labor forces Fundamental constraints: small-scaled farming: 1.45ha / F.H. (2002) Highly aging farm labor forces: - almost 50 percents of farm employments is more than 60 yrs old. Fundamental constraints: small-scaled farming: 1.45ha / F.H. (2002) Highly aging farm labor forces: - almost 50 percents of farm employments is more than 60 yrs old. - vi -