회생지원프로그램 개발을 통한 농업경영회생 지원방안 연구

Abstract

The purpose of the study is to establish farm workout program that supports the farmers under a credit crisis to recover and keep farming activity. Farm household debts have steadily increased and thus threatened severly the stability of farm household economy. The government have been introduced various measures to solve the debt problem since the end of 1980s. Additionally, the national assembly revised the Special Act of Lessening Farm and Fishery Household Debts in 2004. Main contents of those measures were to reschedule the repayment of policy loan, lowered the interest rate, and supplied a special mid-term loans for farms suffering from the high burden of debts and liquidity problems. However, those were not sufficient to solve the farm financial stress. Especially, the financial situation for the age of 40s and 50s' full time farmers, who are core farm labor to lead Korean agriculture, has not been improved. There already exist two workout programs for the public since 2000, one is administrated by "the credit counseling & recovery service" whose member is more than 4000 financial institutes the other is run by the court of Korea. However, they are not sufficient to solve the financial problems confronted by farmers. They are not able to count the special circumstance in agriculture such that the farm land is a capital as well as a essential production resource asset. Also they do not cover the debt from policy loan, which is a main source of debt for farmers. Hence, the workout program for farmers should be introduced to help them to recover from financial stress and keep farming. New workout program will serve farm households as an alternative of debt measures. Many experts have been criticizing the existing debt measures with the reasons of policy failures such as distorting income distribution, causing moral hazard, being failed to achieve the goal of reconstructing fragile farms. We designed a workout program, which is constantly working and requiring land liquidation for restructuring farms. As a new supporting system for the farms under a financial crisis, the program must be designed based on the principles such as cost minimization, apportionment of a loss, inducement of self-reliance efforts and conjunction with overall restructuring policy in agriculture. There are several factors to consider in order to run a workout program successfully. First, it is necessary to organize executing committee, which screens insolvent farms and work together. It will sign a memorandum of understanding with farmers for the fulfillment of managemental rationalization, plans their overall financial restructuring schemes and monitor performance to payback and continuous farming. Second, a so called "Farm land bank" will do a role of purchasing farm land of debtors and subrogating their debts to creditors. It will ultimately run the program and farmers will pay back their loans in a more affordable interest rates. To operate the workout program effectively, call option for the disposed farm land should be included in the program. Call option is the right of farmers to repurchase the land sold in the beginning, which we expect to disentangles a complication between land bank and previous land owners. With this scheme the utilization of agricultural fixed assets and resource allocation can be facilitated. In conclusion, the program is for the farmers with high financial stress, who cannot pay off the debt in short run but can afford to do it in the long run, while continuing farming practices. Either those who their financial stress is not high enough or are ready to exit farming because of their age or some other reasons are not eligible for the program. We expect that the program will help the core farmers to recover from the financial stress and become competitive business entities who can lead Korean agriculture to compete in the world market. Researchers: Eui-Sik Hwang, Hogun Chong, Youngwon Cho E-mail address: eshwang@krei.re.kr