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Investment Priorities in the Korean Agricultural Sector

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Investment Priorities in the Korean Agricultural Sector 2. - TLE4ANI ISUITITLE A3 PRI.OARy 1. KUeJECTAgriculture CLASSI- AE0-0000-G704 FIAT 6 ,NSirCONDARV FICATIONAgr ic uliturali economic s--Kore a Rep. TITLE AND SUBTITLE Investment priorities in the Korean agricultural sector 3. AUTHOR(S) (101) Korean Agr. Sector Study Team 4. DOCUMENT DATE17 5.sNUMBER OF PAGES. !6. ARCc NUMBER34 7. REFERENCE ORGANIZATION NAME AND ADDRESS Mich. State S. SUPPLEMENTARY NOTES (Sponsoring Organizations Publtihote, Availabilty) 9. ABSTRACT 10. CONTROL NUMBER 11. PRICE OF DOCUMENT PN-AAB-767 12. DESCRIPTORS 13. PROJECT NUMBER Investments Korea Rep. 14. CON;TRACT NUMBER Requirements CD-2975 Res. IS. TYPE OF DOCUMENT AID 590-1 44.741 INVESTMENT PRIORITIES IN THE KOREAN AGRICULTUR L SECTOR John N. Ferris William J. Haley Glenn L. Johnson Young Sik Kim Lawrence W.Libby George E.Rossmiller In Joon Seol Han Hyeck Suh Sylvan H. Wittwer Agricultural Economics Department of Research Institute Agricultural Economics Ministry of Agriculture Michigan State and Forestry University Seoul, Korea East Lansing, Michigan 1972, Preface This study is one of the outputs satisfying a contract (AID/EA-184-Korea) between USAID and Michigan State Uni­ versity. As required by this contract, a review of an early draft of the Korean agricultural sector study, Korean Agricultural Sector Analysis and Recommended Development Strategies, 1971-1985, in April and May, 1972, revealed several broad areas for potential development investment in the Korean Agricultural Sector which could be provided by the Korean government and/or foreign and international agencies such as USAID and IBRD. This review assigned priority rankings and summarized the KASS findings which led to identification of each investment possibility. With the time and resource con­ straints and the priorities identified in the KASS study in mind, the ROK government, AID, and MSU agreed in late May upon three broad areas of concentration for study -­ agricultural research, agricultural input, and product marketing, and land and water resource development. This study was charged by the contract to "Identify those elements or subsections which require further in­ vestment to optimize the development of the agricultural sector, giving the priority sequence and time frame in which these investments jhould be made, the magnitude of this investment schedule, the most feasible sources of investment funds and the rationale for selecting invest­ ment areas, given selected price, program, and policy alternatives." It was further charged to "outline policy program, institutional and other pertinent requisites for the successful employment of the additional capital in­ vestment indicated." The KASS team of investigators was comprised of Koreans and Americans, most of whom had participated in the earlier KASS efforts. The study was accomplished during a three month period between June 1 and August 31, 1972, with the team composed in task forces focused on each of the three major areas of investigation. ii The land and water resource development task force was composed of William J. Haley, MSU; and Young Sik Kim, AERI. They were ably assisted by Margo Rich, a senior agricultural economics student from Cornell University who joined the team during her summer vacation stay in Korea. The agricultural input and product marketing task force included John N. Ferris, MSU; Lawrence W. Libby, MSU; Han Hyeck Suh, AERI; In Joon Scol, AERI; and George E. Rossmiller, MSU and KASS Field Project Leader. Their analysis benefited particurlarly from interaction with Thomas J. Manetsch, MSU and Sang Gee Kim, AERI, KASS team members. The agricultural research task force was comprised of Sylvan H. Wittwer, Agricultural Experiment Station Director, MSU; and Glenn L. Johnson, MSU and KASS Project Director. They were greatly assisted by the helpful sug­ bastions and groundwork laid by James Cobble, Everett Christopher, and George Estes, USAID contractors at-Suwon, and by interaction i,7ith Dr. Hyun Koo Pyo, Dean, College of Agriculture, Seoul National University; Dr. In Hwan Kim, Director, Office of Rural Development; and personnel from Rockefeller Foundation. General data collection and computational support was provided by Soon Koo Shim, AERI. James Williams, MSU; and Boo Kwan Lee, AERI provided computer programming support. Kyeong Soo Kim, MSU; Doris Gullian, USAID/RDD; and Jeong Suk Cho, MAF, provided computational and secretarial ser­ vices. Secretarial and administrative services were pro-" vided by Kay Cooper, MSU, who also typed her way through numerous drafts and the final manuscript. Numerous individuals from public and private agencies in Korea contributed generously of their time and energies in providing data, information, qnd analysis for use by the study team. Francis Jones, Chief; and Robert Morrow and Marc Winter, staff, Rural Development Division, USAID/ Korea provided valuable support and helpful criticism and suggestions throughoit the study. The study wes jointly financed by the Government of the Republic of Korea through the Ministry of Agriculture and Forestry and the United States Agency for International Development through the Rural Development Division, USAID/ Korea. iii TABLE OF CONTENTS Page MAJOR CONCLUSIONS AND RECOMMENDATIONS AND PRIORITIES .......... Part I GENERAL PERSPECTIVE AND ISSUES ..... 1..../1 Chapter I General Perspective and Issues . 3 \ rt II LAND AND WATER RESOURCE DEVELOPMENT .... 15 Chapter 2 Introduc-tion .................. 17 Chapter 3 Irrigation ............... • ..•25 Chapter .4 Drainage ..................... 45 Chapter 5 Upland Development ............. 69 'Part III -AGRICULTURAL INPUT AND PRODUCT MARKETING 93 Chapter 6 Policy Enviroument of Marketing Investments .................... 95 Chapter 7 Farm to First-Receiver ....... 105 .. Chapter 8 Agricultural Credit Requirements 133 Chapter 9 Market Information System ...... 149 uthapter 10 Storage and Movement of Farm Commodities with Emphasis on Storage Requirements ........... 169 /iapter 11 Demands on Transportation Faci­ lities and Benefits from Road Improvement .................... 209 Part III APPENDICES ...------- ------------ 237 Table. of Coqxtents, ,cont., Page Appendx ,I ,.Procedures for Estimating and Projecting Monthly Sales, Con­ dumption and Storage-Transporta­ tion Requirements by Province ... 239 Appendix II Distances Products Travel ....... 245 Appendix III Costs of Feeder Road Construction 253 Part IV AGRICULTURAL RESEARCH ................... 265 Chapter 12 An Investment in Support of Agricultural Research ........ 267 Part 7V APPENDICES ................. 291 Appendix I Agricultural Research in Korea .. 293 Appendix II Agricultural Research and Develop- ment Budgets ........... .,... ... 303 Appendix III Alumni of COA/SNU Presently Resid­ ing in Foreign Countries Furnished by Dean Hyun Koo Pyo, COA/SNU ... 307 Appendix IV Some Tentative Personnel Sugges- tions for Phase I Planning Team 313 References ...... ....... 400460* 315, oo oo eo e o # eo uo o oo oo ~ e ~OVe LIST OF TABLES Page Chapter 1 GENERAL PERSPECTIVE AND ISSUES Table 1-1 Ratios of Increased Flows of Products and Inputs in the Product and Input ' Marketing Systems, 1971-1985 .......... 8 Chapter 2 INTRODUCTION Table 2-1 Expenditures on Water Development, 1946p 1971 18 Chapter 3 IRRIGATION Table 3-1 Plan for Irrigation Projects as a Part of TFYP, 1972-1976 ...... '28 Table 3-2 Irrigation Projects Under Construction,. 1972 ......... 28 Table 3-3 Installation Cost Per Hectare of Benefit Area ....... .29 Table 3-4 ADC Water Reservoir Projects Under :"struction ............... .. .Con­ . 31 Table 3-5 ADC Water Pumping Projects Under Con­ struction ....................... 32 Table 3-6 ADC Infiltration Gallery Projects Under Construction .......................... 33 'Table 3-7 UNDP-ROKG Comparative Costs of Paddy Rearrangement ......................... ....34 Table 3-8 Summary Statistics on Pumping and Reservoir Projects ................... 37 Table 3-9 Test of Pumping and Reservoir BC Means ... ..... 39 vi, LIST OF TABLES CONTD. Page Table 3-10 Method:of Determining Distribu- tion of Feasibility Studies ......... 41 Chapter 4 DRAINAGE Table 4-I Soil Classification of Low Productive. Paddy ............ 47 in a 13 Gun Table 4-2 SamplePaddy Needing. .. .Drainage . .t o * *50. Table 4-3 Sample in Relation to Four River Basins ................................ 52 Table 4-4 Yield Effects of Drainage on Wet and Saline Paddy in Korea ................. 53 Table 4-5 YieldEffects.of Drainage on Wet and Normal Paddy on Foreign Soil ....... , 53 Table 4-6 Distribution of Paddy in Four River Basins ................ eet...*.@ . 55 Costs of Drainage ,Table 4-7 TheInstallation Per Hectare ............ 58 Table 4-& Daily and Hectare Costs of Using al Winch in Establishing Mole Drainage Systems . .... .. .. _60 Table 4-9 Present Values Per Hectare of the Costs of the Methods of Subsurface Drainage Over 30 Years ........ ,..... 60 Table 4-10., The Rate of Return Which Equates; the Cost of Tile Pipe Versus the Mole and Open Ditch Method .................... 61 Table 4-11 Benefit-Cost Ratios of Drainage With Double Cropping Pattern 63 vii LIST OF TABLES CONTD. Page Table 4-12 Benefit-Cost Ratios of Drainage With Single Cropping Patterns ........... 63 Table 4-13 Benefit-Cost Ratios of Drainage Under Conservative Cost and Benefit Assmiptions Single Cropping ....... 65 Chapter 5 UPLAND DEVELOPMENT Table 5-1 Regression Results ................ 74 Table 5-2 Potential New Land By Province .... 78 Table 5-3 Present Value of Twenty Year Net Cash Flow for
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