The Ministry of Agriculture and Forestry (MAF) plans to reduce the area of rice paddies by about 12 percent by 2005 as part of measures to restructure the rice market, which is due to be opened in 2004.

Rice fields will be cut from 1,083,000 hectares last year to 953,000 hectares by 2005, the ministry said yesterday.

It will also extend subsidized loans at an interest rate of 3 percent to farmers who purchase rice paddies. Farmers growing crops other than rice will be also given subsidized loans. Law revisions are planned to encourage the establishment of floriculture complexes or orchards in the rice paddies.

According to the package mapped out yesterday, farmers can receive direct subsidies of 400,000-500,000 won per hectare even if they grow fruits trees or ornamental plants in the their paddies. At present, farmers who have grown rice for at least three consecutive years are eligible for the program.

The measures were unveiled as farming market opening nears and foreign countries are preparing for a change in the industrial map.

In October, Taiwan notified the WTO that it would fling its rice market open and Japan declared its rice market opening in 1999. Currently, only the Philippines and South Korea are holding out on the market opening. During the Uruguay Round negotiation in 1994, South Korea succeeded in delaying the market opening, promising it would make efforts to restructure the farming industry to open the rice market from 2004. On that condition, the country was allowed to close the farming market to outsiders.

South Korea has harvested 37 million som (One som is equivalent to 80 kilogram) in addition to importing one million som this year, exceeding the total annual consumption of 34 million som. The rice stockpile of 10.4 million som has approached the nation's capacity of 11 million som.

Each year, the government procures rice at 150,000 won per som and sells the sum two or three years later. Though the procurement is said to be necessary in strategic terms, industry insiders said the amount is excessive.

It is a priority for the government to reduce the size of rice paddies and at the same time to hone the competitiveness of the sector by boosting the quality of rice, according to analysts.

Good quality Chinese rice priced around 30,000 won per som is expected to flood the domestic market when the market opens.

With the market opening just two years away, farmers need to wake up to the seriousness of the issue, they said.

Agriculture-Forestry Minister Kim Dong-tae has urged the WTO to refrain from abrupt rice market opening during his visit to the WTO in Geneva between Dec. 2 and 3. "The sudden opening or reduction in direct subsidy is not acceptable for rice-importing nations," Kim said. The farming sector accounted for 4 percent of gross domestic product (GDP) last year, down from 4.3 percent in 2000.