Since the grain purchase system is the target for the reduction of Aggregate Measurement of Support (AMS) of WTO, the Korean government reduced/abolished the procurement. In 2005, the government reformed the grain policy system to a market-friendly system and introduced public stock-holding system to secure food in case of an emergency.
Direct payment system for preserving incomes, public stock-holding system and the private distribution will play the role of the previous government rice purchase system for income stabilization, stockpiling for food security and supply and demand control.
In 2013, targets for public stock holding system were expanded from rice to rice, wheat and soybean
* Law Amendment: Grain Management Act (March 22, 2013), and Enforcement Decree of Grain Management Act (September 23, 2013)
Significance of the Public Stock Holding System
The public stock holding system reserves a certain amount of food in preparation for food crisis such as supply and demand imbalance due to insufficient grains, natural disasters and war, etc.
Subparagraph 1 of Article 10 (Stockpiling and Utilization of Government-Purchased Grain)
The term "government-purchased grain" means rice and grain prescribed by Presidential Decree which are reserved by the Government after purchasing from private sectors at the market price in order to prepare for unstable supply and demand due to the shortage of grain and for an emergency, such as natural disasters
The Minister of Agriculture, Food and Rural Affairs shall stockpile and utilize government-purchased grain and grain prescribed by Presidential Decree to stably secure food for the nation.
The principle of purchase and release at market price is applied to meet the requirements of the WTO
Purchase from farmers at nationwide average price of local rice in harvesting season (October - December); to ensure fund liquidity at farms, make a certain portion of payment at the time of acquisition (interim payment) and make the final payment once rice price is confirmed
For the circulation of inventory, supply to military and public accommodations throughout the year based on '2-year circulating reserve', and release to the market at market price through public sales in case of imbalance in supply and demand
17 to 18% (2 months) of annual consumption
Appropriate stock of government grain (including imported rice and rice for APTERR) is about 17~18% of annual rice consumption (about 800,000 tons)
Stock Method: Circulating reserve in principle
In order to prevent the rapid degradation of quality over storage time and to ensure the circulation of inventory, replace a certain amount each year