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5.10. The agriculture sector is regulated under the Framework Act on Agriculture, Rural Community and Food Industry, No. 17618 of 2020. The Act introduces basic policy directions: ensuring a stable supply of agricultural products and sustainable development of agriculture; (...).

5.11. The Act mandates the MAFRA to draw up an Agricultural and Rural Community and Food Industry Development Plan every five years. (...) The current five-year plan, for 2018-22, emphasizes enhancing food safety and strengthening the income safety net for farmers. It aims to reduce the income gap between agricultural and non-agricultural sectors, improve living conditions in rural areas, achieve balanced development between agricultural production and environmental conservation, and strengthen the competitiveness and growth of agriculture by enhancing agricultural productivity.

5.12. To achieve these policy objectives, Korea plans to strengthen its agricultural innovation capacity to produce environmentally friendly and safe foods. Key policies include introducing environmental compliance conditions to direct payments and a new agricultural environment preservation programme. The Government also aims to improve the environmental performance of livestock production by supporting the modernization of cattle sheds, and to revitalize the rural economy by promoting the return of people to rural areas to engage in agriculture.

5.27. Approval from competent authorities is required for the exportation of ginseng seeds and animals (Section 3.2.3.2). According to the authorities, this is to protect and conserve biological variety and diversity under the Act on the Protection of New Varieties of Plants and the Act on the Preservation, Management and Use of Agro-fishery Bioresources.

5.36. On the other hand, the share of direct payment to total PSE fell from about 13% in 2017 to about 9% in 2019 (Table 4.1). In 2020, the rice income compensation scheme was replaced by a new direct payment programme, which integrates payments for rice, upland crops, and less favoured areas. It aims to further decouple payments from production and reinforce cross compliance of farmers. Under the new programme, farmers must meet requirements in five categories: (i) environmental protection; (ii) ecology preservation; (...) Farmers conforming to these requirements may receive direct payments, while non-compliance will result in reduced payment.

5.40. In 2018, Green Box support amounted to KRW 7.7 trillion (up from KRW 7.4 trillion in 2015); 41% of this was spent on infrastructure services, (...) 7% on environmental programmes. They were followed by investment aids (6%), public stockholding for food security purposes (4.7%), (...) and payment for relief from natural disasters (2.6%). (...). [19]

[19] Korea also notified some modified domestic support measures that are exempt from reduction: an R&D project to develop technology to manage foreign organisms threatening biodiversity; and building infrastructure for the Smart Horticultural Complex.

5.43. The agriculture sector also benefits from preferential tax treatment (Section 3.3.1): (...) Oil fuels used for agricultural machines, including tractors and heaters, are exempted from all fuel taxes, including the transportation-energy-environment tax, the auto tax, individual consumption tax, and VAT.

5.44. The OECD suggested that income tax exemptions could impede resource reallocation to more profitable and competitive non-grain agricultural sectors and reduce farmers' incentives to record and manage their farming business activities through bookkeeping, while the fuel tax exemption may create incentives for excessive use of inputs and natural resources. [22]

[22] OECD (2018), Innovation, Agricultural Productivity and Sustainability in Korea, OECD Food and Agricultural Reviews.

5.45. Farmers also benefit from zero or low irrigation water fees; according to the authorities, this is because the irrigation facilities were built by farmers at their own expense. Irrigation water is either provided by the Korea Rural Community Corporation (KRC), a public company, or by local governments. The KRC provides irrigation water free of charge, and local governments' prices do not cover operation and maintenance fees. This arrangement reduces the farmers' motivation to conserve water, adopt water-saving technologies, and diversify away from paddy rice production. The authorities disagree, and state that the facilities were built in the 1970s by the Farmland Improvement Corporative, formed by farmers. The facilities were transferred to the KRC in 2000, and it covers the operation cost with its profits. The authorities also indicate that, as part of the efforts to achieve the Net Zero carbon emissions target by 2050, Korea announced that it is adopting various water saving technologies.

5.49. To promote environmentally friendly and safe goods, the Government launched the Promotion Plan for Environmentally Friendly Agriculture (2016-20), with a view to improving certification policy [25]; establishing an eco-friendly agri-food industry linking production, processing, distribution, and consumption; and reducing chemical inputs in crop production. Measures adopted include direct payment adjustments: farm households or farm corporations certified by the Environment-friendly Agricultural Product Certification System may receive direct payments. In 2020, 35,071 crop farms and 32 livestock farms received payments totalling KRW 23.9 billion (USD 21.6 million) under this Plan.

[25] The certification system is operated by private certification agencies. Under this system, organic processed food using 70% or more organic ingredients may be marked as "Organic 70%", but may not use the Korean Organic Food logo on its packaging.