Song Ok-joo's bill would enlist nonprofits as buyers in Korea's falling farmland market

Farmland in Korea is still changing hands, only at lower prices. Last year's 149,230 parcels compare with roughly 296,000 implied for 2021 ^[1]. This year's 89,768 parcels through July ^[4] annualise to about 153,900, some 3% above last year's count ^[2]. That is a straight-line figure and ignores seasonality. Over the same seven months the average price fell another 6.4%, leaving it 38.5% below 2021 ^[3].

The constraint is on the buying side. "Owners looking to dispose of land they have retired from or inherited cannot find buyers, while young farmers cannot readily commit because farming income is not enough to cover purchase costs and loan interest," a political official said, according to Sedaily ^[5]. At this year's average price, the national average holding of 0.87 hectares ^[7] is worth about 436 million won ^[4]. Nearly three-quarters of farm households, 73.9%, sell less than 10 million won of crops and livestock a year ^[8].

The July survey turned a slow market into a political problem. The push for new buyers follows rural discontent over the survey ^[17], and the flagged parcels equal about 19 years of last year's national turnover ^[5]. Sedaily's simple calculation puts the cost of buying the whole flagged area at more than 150 trillion won ^[10], though the Farmland Bank is not obliged to buy all of it ^[18]. This year's 1.617 trillion won purchase budget ^[10] would buy about 3,230 hectares at the January-to-July average price, around 1.1% of the flagged area ^[6]. Sedaily also reports a view within the ruling party that government money alone would struggle to unblock the stalled trades ^[19].

Song's design separates owning the land from farming it ^[12]. "We need to create a structure in which land held by absentee landowners and older farmers can be disposed of smoothly, and farmers can use it stably without buying it directly," Song said ^[15]. "There is a need to institutionalize public-interest ownership and leasing arrangements," she added ^[21]. Land would go first to young farmers and people returning to farming ^[13]. The corporation pays the purchase price and the tenant pays rent. Each corporation would need annual approval for its acquisition, leasing and financing plans, and it could lose its designation for uses outside the public interest ^[14]. Sedaily did not report how much the corporations could borrow or what share of their interest the state would pay.

If the in-depth investigation clears most of the flagged land ^[11], the overhang shrinks, and a market that traded 149,230 parcels last year ^[3] can take the rest at lower prices. Should the bill pass, the designated corporations become extra buyers alongside the Farmland Bank, each borrowing to buy land it will let to young farmers ^[12][13]. The third route runs through Nonghyup ^[16].

I think the bill adds a counterparty for retiring and inheriting sellers and leaves the price to the market. Its end users are the young farmers the official described as unable to cover purchase costs ^[5], so the rent a corporation can charge, and with it what the corporation can afford to pay for land, depends on those same farm incomes. The view that the market is still clearing fails if full-year transactions come in below last year's 149,230 while prices keep falling ^[3]. The case on the bill fails if designated corporations turn out to pay above the market average for what they buy.