Income Changes by Type of Farm Household and Implications

Abstract

 In 2016, farm household income slightly dropped from the previous year, but is still higher than the past. – Farm household income, which used to be on the rise every year from 2011, is now KRW 37.197 M, a 0.05% decrease from the previous year. – Farm household income in 2016 is 10.8% and 4.6% higher than the average of the past five years and that of the past three years, respectively.

 The recent continued growth in farm household income is attributed to the steady increase in nonfarm income and transfer income, not agricultural income. – From 2008 to 2016, the annual average growth rate of agricultural income was only 0.5%, while those of nonfarm income and transfer income were 3.8% and 6.5%, respectively, resulting in the decreasing proportion of agricultural income in the total farm household income. – As of 2016, agricultural income, nonfarm income, and transfer income account for 27.1%, 41%, and 23.6%, respectively, in the total farm household income.

 As farm household income has recently increased, the pace of growth in the gap between urban and farm households has slowed down. The financial stability of farm households has also been enhanced. – The ratio of farm household income to urban working household income decreased to less than 60% from 2011 to 2012, but went up to around 63% from 2013 (63.5% as of 2016). – Farm household debt used to continuously grow every year, but has decreased since 2008 to the stable level with a dramatic increase in asset value and stably managed debt level.

 Among all farm households categorized based on the standard farm size, farms with owners aged 65-70 and 0.5-1 ha of the standard farm size at the same time take up the largest proportion (5.27%). – The percentage of farms with owners aged under 65 was on the steady decline from 2008 to 2016. – Farms with owners aged 65 or over and with land of less than 0.5 ha have recorded 8.35% of annual growth rate, the highest level, implying that the percentage of elderly farmers is rapidly growing.

 According to the estimation of Gini’s coefficient, the inequality in farm household income is still high, while the instability of farm household income has been alleviated. – According to the analysis of primary factors for inequality of farm household income, the contribution of high inequality in nonfarm income is the largest. – The instability of farm household income is relatively high in the first income bracket with the lowest income (small farms with aged owners) and large full-time farms. – Such a high instability is attributed to limited income sources for small farms with aged owners and the volatility of price of agricultural and livestock products for large full-time farms. Proper measures should be designed for each cause.