South Korean rice growers seek economies of scale

South Korea will double the average size of full-time rice farms to raise competitiveness of domestic farmers who may face imports of cheaper rice if world trade talks succeed, the agriculture ministry said on Monday.
The move came after the World Trade Organisation's 147 member states struck a crucial deal on Sunday to re-launch global trade talks and slash billions of dollars in farm subsidies.
"It is unavoidable that the local rice market will open wider as a result of current WTO and rice talks, and the competition between domestic and imported rice is expected to deepen in price and quality," a statement from the agriculture ministry said.
"To maintain our rice industry under further market liberalisation, we consider it urgent to shift to a system of rice farms of larger scale and better management skills."
The ministry will invest 4 trillion won ($3.43 billion) in the next six years to raise the average rice field per household of the total 70,000 full-time rice farms to more than 6 hectares (14.83 acres) by the year 2010.
As of 2003, 86,000 full-time rice farms cultivated average 3 hectares of rice, the ministry data said.
The policy aims to have the larger farms cultivate half of the total 850,000 hectares of land under rice by 2010, the statement said.
South Korea has been in bilateral talks with nine rice exporters, including the United States, China, Thailand, Australia, Argentina, Egypt, Canada, India and Pakistan, to extend a current quota system beyond 2005.
If this year's negotiation fails to reach agreement, South Korea is obliged to switch to tariff systems from import quotas from next year, according to the WTO agreement.
South Korean rice is four to five times more expensive than foreign rice.
The South Korean government in May proposed cutting this year's rice purchasing price by four percent to raise the competitiveness of home-grown rice. If approved by parliament, it would be the first cut in the purchasing price of rice since direct state buying from farmers started in 1948.
The government failed to get approval last year for a two percent purchasing price cut due to opposition from farmers who staged violent street protests. The farm lobby, including rural politicians, argued the cut would raise production costs and widen the gap between city and countryside.