Since the grain purchase system is the target for the reduction of Aggregate Measurement of Support (AMS) of WTO, the Korean government reduced/abolished the procurement. In 2005, the government reformed the grain policy system to a market-friendly system and introduced public stock-holding system to secure food in case of an emergency.
Direct Payment System for preserving incomes, Public Stock-holding System and private distribution supplied the role of the previous government rice purchase system for income stabilization, stockpiling for security and supply and demand control.
* 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 "government-purchased grain" means rice and grain prescribed by Presidential Decree which are reserved by the Government after purchasing from private sectors at the market price in order to prepare for unstable supply and demand due to the shortage of grain and for an emergency, such as natural disasters
The Minister of Agriculture, Food and Rural Affairs shall stockpile and utilize government-purchased grain to stably secure food for the nation.
The principle of purchase and release at market price is applied to meet the Apply the principle of purchasing and discharging at market price to meet the auxiliary conditions by the WTO
Purchase from farmers at nationwide average price of local rice 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 the circulation of inventory, supply to military accommodations throughout the year based on '2-year circulating reserve', and release to the market at market price through public sales in case of imbalance in supply and demand
Stock Scale: 17 to 18% (2 months) of annual consumption
In order to prevent the rapid degradation of quality over storage time and to ensure the circulation of inventory, replace a certain amount each year