| dc.description.abstract | Previous reserve projects for spice vegetables have been carried out as Purchase and Reserve for producer’s income credit, but the Purchase and Reserve scheme was classified as price support policy since UR and joining WTO and gradually reduced in terms of application. After 2006, the Purchase and Reserve project is not applied. While more and more spice vegetables are imported, the area for cultivating them in Korea is decreasing and it is hard to effectively achieve stable demand and supply and price stabilization if extreme weather conditions are encountered.
Currently, the reserve project for spice vegetables is connected with TRQ (Tariff Rate Quotas) to implement the import and reserve project. However, there is no generalized operation system for reserve projects to result in non-systematic operation, e.g., controlling the scale of import and the scale of release to the market depending on changes in the Korean market prices. The amount of reserved major items of spice vegetables, e.g., chillies, garlics and onions, is 3.0% for chillies, 3.3% for garlics and 1.5% for onions in 2009 on the basis of consumption. Therefore, stabilizing the market prices would not be easy if unstable demand and supply in Korea occurs. Accordingly, it is necessary to investigate problems of the reserve project, to calculate the optimum scale of reserve and to devise a strategy of improving the reserve project so that the reserve project for spice vegetables can contribute to demand and supply and price stabilization.
Problems of the reserve project for spice vegetables include the following.
1. While the Government cannot positively participate in the purchase and reserve project due to changes in the international trade order, it is hard to achieve demand and supply and price stabilization because there is no autonomous role of producer’s associations, e.g., Nonghyup, etc. 2. Because private companies want to deal with TRQ and to increase the amount of TRQ, Government’s role for demand and supply and price stabilization is weakened. 3. Economic growth of newly emerging developing countries, weather changes and increasing demand for bio-fuel lay pressure on rising global agro-product prices to contribute to continuously increasing the expenses of reserve project. 4. The area for cultivating spice vegetables in Korea continues to decrease and it is hard to take fundamental measures for demand and supply and price stabilization. 5. For spice vegetables, DM (De Minimis) of the range acknowledged in the UR Agreement on Agriculture is not applied.
The scale of reserved spice vegetables were divided into and calculated for the reserve for producers’ income and consumer price stabilization and the reserve for market price stabilization when sudden changes, e.g., weather changes, occur. It is considered that it is desirable to calculate the reserve project scale for spice vegetables for producers’ income and consumer price stabilization to be the reserve project scale for achieving producers’ income and consumer price stabilization in terms of the total of TRQ amount and the amount imported by the private sector other than the amount of items (frozen, processed, and salted) imported by the private sector.
The scale of reserve project for the spice vegetables for achieving producers’ income and consumer price stabilization is estimated to be 11,000 tons of chillies (5.5 % as compared to the estimate consumed in Korea), 15,000 tons of garlic (4.5% as compared to the estimate consumed in Korea), and 39,000 tons of onion (2.6% as compared to the estimate consumed in Korea).
It is possible to selectively calculate the reserve scale of spice vegetables for market price stabilization if sudden conditions, e.g., weather changes, are encountered depending on the range in which the Government intends to lower the market prices.
With respect to chillies, as the normal year prices increase by 10%, 20%, 30%, 40% and 50%, the rate of supply decrease is shown -3.2%, -6.4%, -9.6%, -12.8% and -16.0%, respectively. It is then shown that the reserve project scale of 6,900 tons, 13,800 tons, 20,700 tons, 27,600 tons and 34,500 tons as compared to consumption is required. With respect to garlic, as the normal year prices increase by 10%, 20%, 30%, 40% and 50%, the rate of supply decrease is shown -2.3%, -4.6%, -6.9%, -9.2% and -11.5%, respectively. It is then shown that the reserve project scale of 9,500 tons, 19,000 tons, 28,600 tons, 38,100 tons, 47,600 tons as compared to consumption is required. It is predicted that the self supply rate of onions would be kept at more than 95% because of increasing cultivation areas and production thereof. Therefore, it is considered that 2.6% (approximately 40,000 tons) compared to the consumption in Korea would be enough although the target of reserve project is producers’ income and consumer price stabilization or market price stabilization against sudden weather changes.
Operation of the reserve project for spice vegetables can be improved if 1) Nonghyup enhances the capability for expanding contract cultivation of spice vegetables so that some amount from contract cultivation can be used for the reserve project, 2) the reserve project for spice vegetables should be systematically applied by considering both cases of market price drop and rising, and 3) a flexible operation system is established, considering the cost of reserving spice vegetables.
Researchers: Choi, Byoung-Ok and Park, Young-Chan
Research period: 2011. 3. - 2011. 6.
E-mail address: bochoi@krei.re.kr | - |
