The Democratic Party of Korea is moving to expand the authority to buy farmland and lease it back to nonprofit corporations funded by local governments and to consumer cooperatives. With the government's sweeping inspection of farmland use gaining pace and raising the prospect of more land coming up for sale, the aim is to diversify the public-interest bodies that can absorb it. Ruling party lawmakers have reached a degree of consensus that the Farmland Bank alone cannot handle future selling demand and that the pool of buyers needs to be widened, according to people familiar with the discussions.
Rep. Song Ok-ju of the Democratic Party of Korea, a member of the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, plans to introduce an amendment to the Farmland Act along these lines shortly, political sources said on the 29th. The core of the bill would allow the minister of agriculture, food and rural affairs or metropolitan mayors and provincial governors to designate qualifying local government-funded nonprofit corporations and consumer cooperatives engaged mainly in agricultural distribution as "farmland holding rationalization corporations."
Designated entities would be granted the authority to purchase, hold and lease farmland. The bill also includes a legal basis for the central and local governments to subsidize interest costs so that such entities can borrow purchase funds more cheaply.
Behind the legislative push are a prolonged decline in prices and a slump in transactions. The average recorded sale price of farmland nationwide fell 34.3% to 53,518 won per square meter last year from 81,434 won in 2021, according to the Korea Rural Community Corporation. It slipped further to 50,085 won in the January-July period this year. The number of parcels traded last year came to 149,230, down 49.6% from four years earlier. From January through July this year, 89,768 parcels changed hands.
"Owners looking to dispose of land they have retired from farming or inherited are struggling to find buyers, while young farmers cannot easily commit to a purchase because farming income is not enough to cover the cost and the loan interest," one political source said.
The aging of rural communities and the small scale of farm operations could deepen the supply-demand imbalance. The share of people aged 65 or older in farming, forestry and fishing households stood at 51.0% last year, up 9.0 percentage points from five years earlier, according to figures released the same day by the National Data Agency. Cultivated area per farm household was 0.87 hectares, the smallest in the 65 years since 1960. Households with annual sales of agricultural and livestock products below 10 million won accounted for 73.9% of the total.
Retirement and inheritance among older farmers could increase the volume of land for sale, while small operating scale and low profitability constrain new demand. That means falling prices alone will not revive transactions if there are not enough buyers with the capacity to purchase.
Some in the ruling party see limits to resolving such a blocked market with government funds alone. A preliminary survey released by the agriculture ministry in July found 2.84 million parcels, or roughly 300,000 hectares, suspected of violating farmland rules. Applying the average transaction price from January to July this year to that entire area yields a figure of more than 150 trillion won on a simple calculation — about 93 times the Farmland Bank's 1.617 trillion won budget this year for purchases intended for public leasing.
Not all 2.84 million parcels will be confirmed as actual violations or become subject to public purchase. Still, political figures judge that substantial funding could be required even if only a portion comes onto the market. The government says the actual scope of violations has yet to be determined, as it has completed a preliminary survey using administrative records and is now conducting in-depth verification.
For that reason, the discussion is focused on broadening the participation of public-interest organizations so that land put up for sale can be absorbed outside the Farmland Bank as well.
The amendment Song is preparing centers on introducing a designation system for "farmland holding rationalization corporations." Eligible bodies include nonprofit corporations funded by local governments, consumer cooperatives and social cooperatives. Such entities would manage or lease the land they buy and, where necessary, take on projects making use of idle plots.
Land they secure could be supplied first to young farmers, successor farmers and returnees to farming. In return, they would have to obtain annual approval for their acquisition and leasing plans, support for young farmers and financial operations, and undergo evaluations of their performance. Using land they hold for purposes other than the stated ones would be grounds for revoking the designation.
"We need to create a structure in which land held by absentee landowners and older farmers can be disposed of smoothly, and farmers can use it stably without having to buy it themselves," Song said. "Public-interest ownership and leasing arrangements need to be put on a statutory footing."
Expanding the role of the National Agricultural Cooperative Federation is also under discussion. A report titled "Improving the Farmland System and Nonghyup's Response," published this month by the Future Strategy Research Institute of the federation, concluded that state purchases and stockpiling alone have limits in ensuring stable preservation and management. The report proposed allowing local cooperatives to own land directly, or to invest in a separate corporation, strictly for certain public-interest purposes.
Under the latter approach, a new organization would handle everything from purchases to management, leasing and consolidation. Drawing on its familiarity with conditions on the ground, it could also link land offered by older and retiring farmers with demand from young and tenant farmers, the report said.
Related legislation is already before the National Assembly. An amendment to the Farmland Act introduced in January by Song and 10 other lawmakers would permit the agricultural cooperatives to acquire and hold farmland for limited purposes such as joint farming and environmentally friendly agriculture. It also includes a provision requiring disposal of land if it goes unused for the stated purpose for more than three months.
The government is focusing on easing concerns that the sweeping inspection could lead to across-the-board forced sales. The government and the ruling party on the 21st of this month announced follow-up measures that distinguish clear cases of speculation from customary violations in rural areas. Even where idle land or leasing problems are confirmed, owners would first be given time to correct the issues voluntarily; those unable to do so on their own could hand over leasing and management to the Farmland Bank, easing the pressure to sell. The government is also reviewing special legislation to underpin the approach and an expansion of related support.
