The government has selected garlic and onions as the first crops covered by its agricultural price stabilization program. Under the program, when average prices for these crops fall below a reference price, the government makes up the difference to guarantee roughly 80% of normal-year wholesale prices. The move follows the entry into force on the 27th of last month of an amendment to the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, legislation that drew controversy alongside the Grain Management Act. The reference price reflects the full cost of farm operations plus all or part of the value of the farmer's own labor. The government plans to expand the list of covered crops in stages, making sophisticated supply-and-demand management essential to contain fiscal costs and prevent overproduction.
The price stabilization program is a product of the agricultural price law that the Democratic Party of Korea pushed through beginning under the Yoon Suk-yeol administration. Song Mi-ryung, who was already Minister of Agriculture, Food and Rural Affairs at the time, criticized the measure along with the Grain Management Act as legislation that would "ruin the future of farming," then recast it as a "law of hope" after the change in government. But a change in government does not make the side effects disappear. In 2024, the Korea Rural Economic Institute projected that if the law took effect, overproduction could raise output of five major crops including napa cabbage by as much as 41.2% and push prices down by as much as 67%. Using normal-year prices as the reference, it estimated annual fiscal costs at 1.19 trillion won. Adding the cost of mandatory rice purchases under the Grain Management Act, the combined fiscal burden of the two programs could exceed 2 trillion won a year. Price guarantees risk setting off a vicious cycle of rising output, falling prices and expanding government spending.
Policymakers cannot ignore the reality that volatile crop prices erode farm incomes and hasten the decline of rural communities. Yet relying solely on taxpayer money to cover price declines would break the mechanism that adjusts production, ultimately raising costs for farmers and consumers alike. That has prompted calls to design the stabilization program so that it draws farmers into preemptive supply management rather than encouraging them to expand output, and to tailor it to the characteristics of individual crops. More fundamentally, policy resources should be concentrated on strengthening competitiveness — raising the value added of agricultural production and spreading smart farming that incorporates artificial intelligence — rather than on cash support. If the agricultural price law, together with the Grain Management Act, ends up fueling overproduction and draining public finances, it will be hard to escape the criticism the minister herself once leveled: that it is a law that ruins farming.
