Retaining the Quota System in the South Korean Rice Market

Abstract

On 30 December 2004, the Korean government reached an agreement to postpone tariffs on the rice market until 2014 in exchange for a gradual increase in the minimum market access quota (the access to the Korean market by others based on a percentage of Korea's total consumption of rice). However, economic reasoning shows that if the Korean government had decided to introduce the tariff system instead, the social welfare from the rice market would have increased considerably over the next ten years, even after taking into account the loss in the external value of rice farming. Thus, the 2004 choice of the quota in the rice market by the Korean government was a political decision. This article measures the social welfare in the rice market under the two alternative systems – tariff and quota – for the period 2005–15. It then explores the explanation for the 2004 decision by investigating three key variables: the characteristics of farmers' groups, their interaction with government executives and the legislature, and the trend in public opinion on rice market issues. In light of the organisational weakness of Korean agricultural interest groups, the focus is on farmers' tactics for achieving their goal, i.e. retaining the quota instead of introducing the tariff.