Since the governmental purchase of grains in autumn has become reduction of aid under the WTO system, it was reduced and abolished. And therefore, the food administration system was revised in a market-friendly way in 2005, and in preparation for emergency situation, the public stock holding system was introduced to guarantee stable supply of food.
The income stabilizing function, stock holding for security purposes and supply and demand control previously provided by the governmental purchase of autumn grains are replaced by the direct payment for income compensation, public stock holding system and private distribution
* Revised the Act on Preservation Fund of Rice Income and the Grain Management Act (March 2005)
In 2013, targets for public stock holding system were expanded from rice to rice, wheat and soybean
* Law Amendment: Grain Management Act (March 22, 2013), and Enforcement Decree of Grain Management Act (September 23, 2013)
Significance of the Public Stock Holding System
The public stock holding system reserves a certain amount of food in preparation for food crisis such as supply and demand imbalance due to insufficient grains, natural disasters and war, etc.
Grain Management Act
Subparagraph 3 of Article 2 (Definition)
Paragraph 1 of Article 10
The term "grain under government management" means grain the Government manages after having obtained by means of purchase from private sectors, importation from overseas, or other ways;
The Minister of Agriculture, Food and Rural Affairs shall stockpile and utilize government-purchased grain to stably secure food for the nation.
Apply the principle of purchasing and discharging at market price to meet the auxiliary conditions by the WTO
Purchase from farmers at nationwide local average rice price in harvesting season (October - December); to ensure fund liquidity at farms, make a certain portion of payment at the time of acquisition (interim payment) and make the final payment once rice price is confirmed
For circulation of inventory, supply to military accommodations throughout the year based on '2-year circulating reserve' and discharge at the market at market price through public sales in case of imbalance in supply and demand
Stock Scale: 17 - 18% (2 months) of annual consumption
In order to prevent rapid degradation of quality over storage time and to ensure circulation of inventory, replace a certain amount each year