The Democratic Party of Korea is moving to extend the authority to buy farmland and lease it back to nonprofit corporations funded by local governments and to consumer cooperatives. The step is intended to increase the number of institutions able to absorb farmland that is expected to flood the market following a government-wide survey. Ruling party lawmakers have also reached a degree of consensus that the buyer pool needs to be widened, given that the state Farmland Bank alone cannot handle the coming wave of sales, according to sources.
Rep. Song Ok-ju of the Democratic Party of Korea, a member of the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, plans to introduce an amendment to the Farmland Act to that effect in the near future, political sources said on the 29th. The bill would allow the agriculture minister or provincial governors to designate bodies such as local government cultural foundations, scholarship funds and various promotion centers as "farmland holding rationalization corporations," permitting them to buy, hold and lease farmland. It also includes a provision allowing the central and local governments to subsidize part of the interest when a designated corporation borrows money to purchase farmland.
The push for the revision reflects mounting discontent in rural areas over the government survey, as well as a judgment that existing measures alone cannot reverse falling prices and shrinking transactions. According to the Korea Rural Community Corporation, the average actual transaction price for farmland nationwide fell 34.3% to 53,518 won per square meter last year from 81,434 won in 2021. From January to July this year, it slipped further to 50,085 won. Transaction volume last year came to 149,230 parcels, down 49.6% from 2021. Only 89,768 parcels changed hands in the first seven months of this year.
"Owners who have retired or inherited land cannot find buyers, while young farmers hesitate to buy because farming income cannot cover the purchase cost and loan interest," one political source said.
The aging of rural communities and the small scale of farm operations are also cited as factors that will further widen the supply-demand imbalance. According to Statistics Korea on the same day, people aged 65 and over accounted for 51.0% of the population in farming, forestry and fishing households last year, up 9.0 percentage points from five years earlier. Cultivated area per farm household stood at 0.87 hectares, the smallest in the 65 years since 1960. Farm households with annual sales of agricultural and livestock products below 10 million won accounted for 73.9% of the total. Demand to put land on the market is rising as older farmers retire or pass on their holdings, while the capacity to buy is constrained by small scale and low profitability, a structure that could become entrenched.
Within the ruling party, there is also a view that government finances alone cannot unblock such stalled transactions. A basic survey released by the Ministry of Agriculture, Food and Rural Affairs in July identified 2.84 million parcels, or about 300,000 hectares, as suspected of violating farmland rules. Applying the average transaction price for January through July this year to that entire area puts the purchase cost at more than 150 trillion won by simple calculation. That is roughly 93 times the Farmland Bank's purchase budget of 1.617 trillion won for this year. The Farmland Bank is not obliged to buy all of it, but the figures mean substantial funds would be needed even to acquire a portion of the suspected parcels. The government says it has so far only narrowed down sites for on-site checks based on administrative records and that the actual scale of violations can be determined only after in-depth investigation.
As a result, discussion in political circles is focusing on having other organizations share the sales demand that the Farmland Bank cannot absorb. The core of the Farmland Act amendment Song plans to introduce is a designation system for "farmland holding rationalization corporations." Under the system, the agriculture minister or a provincial governor would designate qualifying nonprofit corporations and allow them to engage in purchasing, holding and leasing farmland. Eligible bodies include corporations funded by local governments and consumer cooperatives that mainly handle agricultural produce distribution.
If the amendment passes, these corporations would serve as intermediaries between owners looking to sell farmland and people entering farming. Land they acquire would be supplied first to young farmers and those returning to rural areas. The central and local governments would be able to subsidize part of the interest on purchase loans. In return, the corporations would have to obtain annual approval for their plans on farmland acquisition and leasing, support for young farmers and financial management, and undergo performance evaluations. Using farmland for purposes outside the public interest could result in sanctions including revocation of their designation.
"We need to create a structure in which land held by absentee landlords and older farmers can be disposed of smoothly, and farmers can use it stably without having to buy it themselves," Song said. "Public-interest ownership and leasing arrangements need to be institutionalized."
The National Agricultural Cooperative Federation, or Nonghyup, is also being mentioned as an alternative. A report titled "Improving the Farmland System and Nonghyup's Response," published by the federation this month, found that state purchase and stockpiling alone have limits in ensuring stable preservation and management. The report proposed that Nonghyup either own land directly for public-interest purposes only or invest in a separate corporation, in a structure covering everything from purchase to management and leasing. It also cited a role for Nonghyup in using its familiarity with local conditions to identify land offered by older and retiring farmers and supply it to young and tenant farmers.
A bill that would allow Nonghyup to own farmland on a limited basis has already been submitted to the National Assembly. The Farmland Act amendment introduced in January by Song and 10 other lawmakers would let Nonghyup acquire farmland only for certain purposes, such as joint farming and eco-friendly agriculture. It also includes a mechanism requiring acquired land to be disposed of to the Farmland Bank or similar bodies within a year if it is not used for the designated purpose for three months or more.
For now, the government is focusing on easing fears that the survey could lead to across-the-board forced sales. On the 21st, the government and the ruling party unveiled follow-up measures that distinguish between clear cases of speculation and customary violations in rural areas. Even where idle land or lease violations are confirmed, owners will first be given a period to correct the problems voluntarily, and those unable to do so on their own will be allowed to entrust leasing and management to the Farmland Bank, with the obligation to dispose of the land deferred. The government is also reviewing special legislation to support the measures and an expansion of the budget for farmland purchases.
