Structural Changes in Agriculture, Farm Household Economy and Policy Implications

Abstract

○ In 2013, the agricultural authorities announced that the average farm income reached 34.52 million won, 11.3 percent up from the previous year. This figure was considered a signal of the rebound of income that had long been stagnant, and formed expectations of the industry.- Given that the 2013 Farm Household Economy Survey is the statistics of the first year of the new samples that are renewed every five years, the increase in farm income can be deemed a rebound that reflects structural changes in agriculture.○ Since the 2000s, the social structure has changed with the increase in the numbers of both small and large farms, the aging of farmers and the increase in the number of single households. At the same time, the agricultural structure has also shifted in various ways, including the switch from rice farming to livestock breeding or fruit/vegetable/special crop cultivating. In this regard, it is necessary to interpret farm households’ economic status in2013 in the long-term perspective.○ A comparative analysis of changes in the agricultural structure and farm household economy within the past ten years, based on data from the Agricultural Census (2000, 2010) and the Results of Farm Household Economy Survey (2003, 2013) shows several findings and policy implications as follows.- The farming scale of professional farmers has expanded thanks to the scale expansion policy, but the income of the large farmers group with over 7 hectares of farmland has been sluggish, implying the need for boosting rice farming and reinforcing risk management policies.- An increasing proportion of Class 2 part-time farmers have redeemed the decreased proportion of professional farmers, which has significantly contributed to the income growth.- Since the number of low-income farmers has been on the rise due to the trend of aging in the agricultural industry and the increased risk factors in farming management, it is necessary to reinforce social welfare policies.- When excluding those who are classified as low-income farmers due to a temporary failure of farming management, the number of farmers in their 40s and 50s in absolute poverty has dropped, which implies that the employment policies for rural areas have worked.- However, the number of farmers in their 40s and 50s in absolute poverty due to a temporary failure of farming management has increased compared to a decade ago, which indicates that the risk management and supportive policies for the revival of farming management are needed.- The necessary scale of farming management and the required proportion of non-farm income are increasing in raising farm income to the level above that of urban working households. In this context, it is crucial to strengthen the policy of developing non-farm income sources along with the scale expansion policy.