The purposes of this study are to design a direct payment program for farm households and to suggest a proper direction through the analysis of the Korean agricultural industry. In order to achieve these purposes, domestic and foreign case studies on the Direct Payment measures in the agricultural sectors were reviewed.
In contrast to a price supporting policy in which the government purchases agricultural goods, the direct payment program is generally an income supporting policy in which the government directly grants subsidies to farmers. Advanced countries such as member states of European Union, and Japan tend to raise the direct subsidy for farmers instead of price supporting policy which would cause problems including overproduction.
The government has provided a subsidy to small-income rice producers since 2005 after the government had opened the rice market wider in line with international trade agreements. Land owners should receive the subsidy only if they actually produce rice, otherwise the money should be given to tenant farmers who actually cultivate rice. According to the Board of Audit and Inspection, however 170,000 out of the 998,000 people who received the subsidies in 2006 were not real farmers.
Results of this study suggest the Direct Payment measures for farm households. In order to carry it out, it is necessary to set up a system composed of key elements, such as goals, supporting groups, supporting conditions and methods. If the government set the system, the rice subsidy scandal would be solved.