Source: Ukragroconsult (Ukraine)
The South Korean government, which previously encouraged farmers to replace rice with soybeans, is now considering reversing its decision and reducing the scale of soybean cultivation, even though farmers have already made significant investments in soybean farming.
The Policy Trap: How Government Intervention Created a Soybean Surplus and Shortage
South Korea’s soybean stocks reached 88,000 tons at the beginning of this year, almost double last year’s level, as imports fell by 40,000 tons. These changes are taking place against a backdrop of a domestic soybean surplus, with production outpacing the development of new markets. Since the government has purchased most of the soybeans grown on former rice fields to build up reserves, it cannot sell them at lower prices without destabilizing the market. At the same time, the reduction in soybean import quotas, intended to stimulate domestic consumption, has led to a shortage of imported and cheaper beans. Critics argue that by focusing exclusively on curbing rice overproduction, the government is mismanaging the supply and demand of soybeans, according to The Chosun Daily authors Kang Woo-ryang, Kim Yoon-joo, and Kim Mi-gon.
According to an August 18 report from the Korea Rural Economic Institute, the soybean planting area on former rice fields expanded by 46.7% this year to 32,920 hectares, up from 22,438 hectares in 2024. The sharp increase followed the government’s 2023 decision to classify soybeans as a “strategic crop,” offering farmers 2 million won ($1,440) per hectare if they grow soybeans instead of rice.
Pledged Purchases Backfire: Soybean Reserves Swell Beyond Capacity
The authorities also created mechanisms to stabilize prices. The government pledged to purchase up to 60,000 tons of soybeans annually for reserves and bought up the entire soybean crop from rice fields from farmers who decided to sell it. Officials argued that without such guarantees, the fall in prices caused by increased production would undermine farm profits, removing the incentive to switch from rice. In July, the wholesale price of soybeans reached 231,280 won ($166) per 40-kilogram bag, up 4.1% from 222,200 won a year earlier.
However, stocks have almost reached storage capacity limits. By early 2025, total reserves stood at 88,000 tons, nearly 80% more than the 49,000 tons a year earlier. Although the government has released small volumes, stocks still exceed 80,000 tons.
Farmers Decry Policy Shift as Government Pushes PR to Spur Demand
The government’s decision to reduce soybean planting has been met with negative reactions from farmers. Yoon Kwan-ho, secretary-general of the Korea Central Association of Field Cooperatives, said that many farmers have invested hundreds of millions of won in combine harvesters, tractors, and other equipment designed to grow soybeans on former rice fields. “Now, by calling on farmers to reduce their crops, we are shifting all responsibility for overproduction onto them, while the government is trying to wash its hands of the matter,” he said.
At the same time, the authorities are making every effort to stimulate demand for domestic soybeans. The Korea Agro-Fisheries & Food Corporation this month commissioned a 9.6 billion won PR campaign to promote local soybeans. Starting in September, the campaign will highlight health benefits on television programs and engage influencers on YouTube and TikTok to promote consumption.
The government has also decided to end the guarantee of full purchase of soybeans from rice fields starting in the second half of this year. However, analysts note that it will be difficult to find new large markets for Korean soybeans within one to two years, which will inevitably affect production adjustments.
The policy of reducing imports has also been criticized. Earlier this year, the government reduced annual imports from 280,000 tons to 30,000-40,000 tons. However, most tofu producers are small businesses unable to cover the higher cost of domestic beans. The Korean Soybean Products Manufacturers Association said Korean soybeans cost more than 5,000 won ($3.6) per kilogram, which is about three times the cost of imported soybeans, which cost 1,400 won ($1). Even with subsidies, prices are expected to remain at around 3,000 won ($2.20) per kilogram. Representatives of the Korean Soybean Products Manufacturers Association said that supplies of imported soybeans could run out as early as October.