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This image is unrelated to the article. [Getty Images Bank]

A call has emerged to shift the government's support policy for agricultural corporations away from subsidies and toward a performance-based system. The proposal urges concentrating rewards on competitive corporations while expanding succession and export support to build self-sufficiency.

The Korea Rural Economic Institute (KREI) said Sunday that policy should move away from simply expanding subsidies and instead build a support framework that promotes market competition, in order to ensure the sustainable growth of agricultural corporations. The recommendation appeared in a recently published report titled "Capital Investment Conditions of Agricultural Corporations and Policy Challenges."

The report said investment promotion for agricultural corporations should be approached from the perspective of long-term sustainability rather than short-term investment expansion. It said the government should provide support without distorting market principles, while creating a structure that allows agricultural corporations to grow independently without depending on government assistance.

The report also proposed changing the method of support. Rather than providing subsidies uniformly, it recommended shifting to a system that offers additional incentives to corporations that have demonstrated growth potential and management performance. Expanding rewards for corporations that have grown through competition could lead to increased investment and higher productivity, the report said.

As specific policy tasks, the report proposed identifying high-performing agricultural management entities and building a differentiated support system for them, as well as supporting the accumulation of operating funds to foster a culture of self-managed business risk. It also said eligibility for subsidy programs should be tightened and a cap on subsidy rates set to encourage more prudent use of government resources.

The report further called for strengthening education to improve the fundraising and financial management capabilities of agricultural corporation heads. The aim is to sharpen investment decision-making skills and increase use of financial institutions, broadening the investment base through private capital.

The report also stressed the need to move beyond startup-focused policy and expand support for business succession. It proposed that succession be recognized on par with startup activity and included among the beneficiaries of various startup support programs, so that generational transitions within agricultural corporations can proceed smoothly.

In addition, the report said support for market development should be strengthened to expand exports. It argued that the growth base of agricultural corporations must be broadened by helping them enter overseas markets rather than remaining confined to the domestic market.

"It is more important to create a structure in which a smaller number of competitive agricultural corporations grow sustainably, rather than having a large number of small, marginal ones proliferate," the researchers said. "Support policy should also be restructured to reduce government dependence and enhance self-sufficiency."


adastra@heraldcorp.com