FFTC Agricultural Policy Platform (FFTC-AP)

ABSTRACT

Korea has pursued overseas agricultural resource development since 2009 as a national food security instrument, on the premise that resources secured abroad can be brought into the domestic market when required. This study reviews the current status of that program and the legal and institutional framework governing repatriation, drawing on government administrative data, customs statistics, statutory texts and the government's own program documents. Since the program began, 225 firms have entered 35 countries; the 57 firms active in 2024 had secured 2.60 million tons of agricultural resources, yet only 377 thousand tons, or 14.5%, were brought into Korea. The analysis attributes this gap to three constraints. The first is a market failure: repatriation performance depends on ownership of export terminals and rail links rather than cultivated area, so two firms operating in North America account for 93% of repatriated volume. The second is an institutional failure: for feed grains, the dedicated import channel has been rendered redundant by a standing zero-rate quota tariff, while for food soybeans the same channel generates substantial tariff rents that attracted trading firms without genuine farming operations. The third is a discontinuity between what is secured abroad and the domestic channels through which those commodities move, most visibly in the case of palm oil. The two governing statutes, one regulating the securing of resources abroad and the other regulating imports and price stabilization at home, operate without effective linkage. The paper concludes that measures aimed at restoring the neutrality of the dedicated channel, linking repatriated volumes to public stockholding, financing overseas logistics assets and specifying compensation rules for emergency repatriation orders are more likely to be effective, and more defensible under trade rules, than preferential quota set-asides.

Keywords: food security, overseas agricultural investment, tariff rate quota, grain logistics, Korea

INTRODUCTION

Korea is among the most import-dependent countries in the Organisation for Economic Co-operation and Development (OECD) with respect to food. According to the Ministry of Agriculture, Food and Rural Affairs, the food self-sufficiency rate stood at 47.9% in the 2024 grain year and the grain self-sufficiency rate including feed grains at 21.6%, both provisional (Ministry of Agriculture, Food and Rural Affairs, 2025b). Rice remains close to self-sufficient at 96.0%, but wheat, maize and soybeans, which together account for the bulk of caloric and feed demand, are supplied almost entirely from abroad. This structure means the stability of Korea's food supply depends less on domestic production capacity than on the reliability of international procurement.

This structure's vulnerability became evident in two episodes. The grain price surge of 2007 and 2008 prompted a wave of export restrictions among major producing countries, and the disruption following the Russian invasion of Ukraine in 2022 demonstrated that logistics corridors, not only harvests, may become the binding constraint. Both episodes shared a common feature: commercial contracts alone did not guarantee delivery when exporting states invoked sovereign measures.

The international response to the first episode was a substantial increase in cross-border acquisition of farmland, a phenomenon documented and debated extensively in the development literature (Cotula et al., 2009; Deininger and Byerlee, 2011; HLPE, 2011). That literature has focused mainly on consequences for host countries, including land tenure security, displacement, and governance. Comparatively little attention has been paid to the question that matters most to the investing country: whether resources secured abroad actually reach the home market when needed.

Korea's program is instructive precisely on this point. The Overseas Agriculture and Forest Resources Development and Cooperation Act, enacted to provide a statutory basis for the program, is explicit that domestic repatriation is a policy objective rather than an incidental outcome. The Act requires the quinquennial comprehensive plan to address repatriation, provides administrative and financial support for repatriation in normal times, and empowers the Minister to order repatriation in an emergency. In other words, the program was designed as a food security instrument, not as an overseas investment promotion scheme.

Yet the record shows a persistent divergence between securing and repatriating. This study therefore examines the current status of Korea's overseas agricultural resource development with particular attention to the institutional arrangements governing repatriation and identifies where the design of those arrangements fails to deliver the intended outcome. The paper is structured as follows. The next section describes the data and methods. The section that follows presents the findings, covering the evolution and present status of the program, the legal and support framework, the structure of import channels, the constraints observed in practice, and comparative observations on Japan and China. The final section draws policy implications and notes the study's limitations.

METHODOLOGY

This study is descriptive and institutional in character. Four categories of material were used. Administrative data on participating firms, secured volumes and repatriated volumes for the period 2009 to 2024 were obtained from the Ministry of Agriculture, Food and Rural Affairs. These data are compiled from the annual reports that participating firms are required to submit under the Act, and are disaggregated by firm, region and commodity. Import statistics by tariff line and by import route were drawn from the Korea Customs Service.

Statutory and regulatory texts were examined directly, including the Overseas Agriculture and Forest Resources Development and Cooperation Act, the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, the Customs Act provisions governing quota tariffs, and the ministerial notification on recommending and managing import quantities for market access.

Program and performance information was drawn from the government's own program documents: the Fourth Comprehensive Plan for Overseas Agricultural Resource Development (Ministry of Agriculture, Food and Rural Affairs, 2023), the annual public notice setting the budget and disbursement standards for the overseas expansion support program (Ministry of Agriculture, Food and Rural Affairs, 2025a), and the guidance on tariff rate quota administration issued by the Korea Agro-Fisheries and Food Trade Corporation (2024).

Finally, the arrangements of Japan and China were reviewed for comparison, using primary legal texts and the assessment contained in the OECD agricultural policy monitoring series (OECD, 2025).

The analysis is limited to publicly reported and administratively compiled aggregates. No econometric estimation of the determinants of repatriation was attempted, since firm-level cost and price data are treated as confidential business information and were not available. The findings should therefore be read as a structural diagnosis rather than as a causal estimate.

FINDINGS AND DISCUSSIONS

Evolution and current status of overseas agricultural resource development

Since the program began in 2009, 225 firms have entered 35 countries, of which 57 remained active in 2024. Korea's overseas agricultural resource development has passed through two distinguishable phases. The first, running from the inception of the program to about 2020, was oriented toward production. After the 2008 food price crisis, policy attention shifted to securing farmland abroad and cultivating it directly. Secured volume rose from 107 thousand tons in 2010 to 1.63 million tons in 2020, more than a fifteen-fold increase. Repatriated volume, however, averaged less than 40 thousand tons a year over the decade, although it rose toward the end of the period, and the repatriation rate remained below 10% throughout.

The second phase, from 2021 onwards, has focused on distribution. Large trading firms entered the sector by acquiring logistics assets abroad rather than farmland, notably a grain terminal in Ukraine and an interest in an export terminal in the United States, the latter accounting for most of the subsequent increase. Repatriated volume rose sharply as a result. By 2024, secured volume had reached 2.60 million tons and repatriated volume 377 thousand tons, a repatriation rate of 14.5%. In absolute terms, this represents a threefold increase over 2020, but it remains well short of the level implied by the food security rationale of the program. Table 1 summarizes the contrast between the two phases.

Table 1. Two phases of Korea's overseas agricultural resource development

Source: Compiled from Ministry of Agriculture, Food and Rural Affairs administrative data

Table 2 disaggregates secured and repatriated volume by commodity group. The disaggregation reveals that the aggregate repatriation rate conceals two very different situations. Grains, the commodities most directly relevant to food security, recorded a repatriation rate of about 30% in 2024. Maize performed best at 50.5%, reflecting the availability of bulk shipping through North American terminals. Soybeans, by contrast, recorded only 1.3%. This is not primarily a failure of effort. Soybeans produced in the Russian Far East can be sold in the adjacent Chinese market at lower logistics cost than if they were shipped to Korea, so domestic repatriation is the economically inferior option for the firm concerned.

Non-grain commodities present a starker picture. Secured volume of 1.34 million tons, principally oil palm and cassava, yielded repatriation of only 1,437 tons. The explanation lies less in a lack of physical capacity than in the orientation of the operations involved. Secured output is directed largely at sale in third countries, and the firms holding it are not integrated into the domestic edible-oil supply chain, in which imported palm products are channeled through established refiners and, in growing measure, into biodiesel, which accounts for about 20% of the vegetable oil market (United States Department of Agriculture, 2024). The result is a discontinuity between what is secured abroad and what the domestic market draws upon.

Table 2. Secured and repatriated volume by commodity group, 2024

Source: Compiled from Ministry of Agriculture, Food and Rural Affairs administrative data

The regional pattern reinforces the same conclusion. Southeast Asia hosts 31 participating firms and accounts for 60% of secured volume, yet contributes less than 1% of repatriation because its output is dominated by oil palm. North America hosts only two firms but accounts for 36% of secured volume and 93% of repatriation. The northern region, comprising Russia and China, has long been the traditional destination for Korean agricultural investment and hosts 16 firms, but contributes about 6% of repatriation owing to underdeveloped logistics and export duties imposed in the Russian Far East, although the share of secured volume attributable to that region is not separately reported in the source data. These three regions are the principal destinations; the remaining firms among the 57 active in 2024 operate elsewhere.

The distribution of performance across firm sizes is the most striking finding of the descriptive analysis, because it runs counter to the distribution of public support. Table 3 reports secured and repatriated volume for each size category. Of the KRW 208.7 billion (approximately USD 150 million) in concessional loans extended between 2009 and 2024, 60% was allocated to 42 small and medium-sized firms among the cumulative recipients. Yet in 2024 the 46 small firms then active repatriated 5,121 tons, or 1.4% of the total, while six large firms accounted for 352,685 tons, or 93.5%.

Table 3. Secured and repatriated volume by firm size, 2024

* The three categories follow the classification used in Korean law. Large firms are those belonging to business groups subject to cross-shareholding restrictions under the Monopoly Regulation and Fair Trade Act. Medium-sized firms are those with total assets of KRW 500 billion or more but less than KRW 10 trillion, approximately USD 360 million to USD 7.2 billion, under the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises. Small firms are those below the lower threshold, under the Framework Act on Small and Medium Enterprises. The 57 firms active in 2024 together secured 2,599,848 tons and repatriated 377,387 tons. Shares are computed from the volumes shown and may not sum to 100 because of rounding.

Source: Ministry of Agriculture, Food and Rural Affairs

Concluding from Table 3 that support for smaller firms should be withdrawn would be a misreading. The relevant inference concerns the type of support rather than its recipient. Repatriation requires bulk handling, port access and the ability to meet the volume and price terms demanded by domestic feed and processing industries. These are capabilities associated with logistics assets, not with cultivated area. Support instruments directed at cultivation therefore do not translate into repatriation, regardless of the recipient's size.

The pattern in Table 3 corresponds closely to differences in commodity and destination. The large firms that account for most repatriation operate principally in feed grains shipped from North America, where terminal and rail capacity permits bulk movement at competitive cost. The small and medium-sized firms are concentrated in soybean cultivation in the Russian Far East and in oil palm in Southeast Asia, where no dedicated grain terminal is available and where the nearest commercial outlet lies in a neighboring market rather than in Korea. Firm size, commodity and destination are therefore not independent of one another: the firms with the least logistics capacity are also those producing the commodities for which the domestic channel is weakest.

The legal framework governing repatriation

Two statutes divide responsibility for the two halves of the problem. The Overseas Agriculture and Forest Resources Development and Cooperation Act governs the securing of resources abroad. The Act on Distribution and Price Stabilization of Agricultural and Fishery Products governs imports, stockholding and price stabilization at home. Each contains provisions relevant to repatriation, but the two operate without effective connection.

Within the first Act, two provisions matter. Article 24(2), introduced by amendment in 2023, permits the government to provide administrative and financial support for the smooth domestic repatriation of developed resources. Article 33 empowers the Minister to order a firm to bring all or part of its developed resources into Korea in an emergency, and provides for compensation of resulting losses as well as sanctions, including recovery of outstanding loan principal and interest, in the event of non-compliance.

Within the second Act, Article 13 authorizes the purchase and stockholding of agricultural products for price stabilization, including the use of futures contracts as a hedge, which furnishes a legal basis for treating repatriated volumes as public stock. Article 15 governs the allocation of tariff rate quota volumes and the issuance of import recommendations, and Article 16 provides that the import surcharge levied on those importing under recommendation, calculated within the margin between the domestic and the import price, accrues to the Agricultural Price Stabilization Fund. Table 4 summarizes how the two statutes divide responsibility.

Table 4. Division of statutory responsibility for repatriation

Source: Compiled from statutory texts

The consequence is institutional discontinuity. Resources secured under the first Act do not automatically attract any preferential treatment under the import management instruments of the second. A firm that has borne the risk of production abroad competes on identical terms with a trading company that has simply purchased on the international market. The first Act, moreover, contains no procedural specialization for quarantine or customs clearance, so that even an emergency repatriation would proceed through ordinary import procedures.

Support programs

Public support operates through two channels. Concessional lending covers land acquisition and lease, facility construction and operating costs, at 2.0% interest, reduced to 1.5% for grain projects, with a five-year grace period and ten-year repayment. Eligibility is conditional, among other requirements, on the applicant's capacity to accept an emergency repatriation order under Article 33, which represents the one point at which support and food security obligations are explicitly linked. Grant support covers preliminary environmental surveys, consulting, farming support centers in principal destinations such as the Russian Far East, training and information provision. Table 5 sets out the budget and principal terms of each program.

Table 5. Overseas agri-food business support programs, 2025

Source: Ministry of Agriculture, Food and Rural Affairs (2025a)

Import channels and the neutralization of the dedicated track

Understanding why repatriation remains low requires attention to the structure of import channels. Four routes coexist. Ordinary imports bear the general tariff, which for food soybeans is 487%. Imports under the tariff rate quota established in Korea's schedule under the Agreement on Agriculture bear a low in-quota rate. Quota tariffs under Article 71 of the Customs Act are set annually by Presidential Decree for price stabilization purposes and have been applied at zero for feed grains. Finally, a dedicated track operates for overseas development volumes through an import-right auction. Table 6 compares the four routes.

Table 6. Import routes and allocation methods for major grains

Source: Compiled from Korea Customs Service data and statutory texts. Shares are of 2024 maize imports and routes not shown account for the remainder; n.a. = not separately reported

Two consequences follow, and they run in opposite directions. For feed grains, the standing application of a zero-rate quota tariff has made the dedicated track redundant. A firm using the tariff rate quota pays between 1.8 and 3.0% and must in addition post a performance bond and obtain a recommendation, whereas an importer using the quota tariff pays nothing and faces a simpler procedure. In 2024, 94.7% of maize was imported under the quota tariff and only 0.3% under the tariff rate quota. In practical terms, the dedicated track has become inoperative.

For food soybeans, the position is reversed. Reducing a general rate of 487% to 5% generates a substantial tariff rent, and access to that rent, rather than the underlying farming activity, became the object of competition. Because the auction awards the right to the highest bidder and because verification of genuine overseas farming was initially weak, trading firms without production operations sought entry, and recurring disputes over eligibility followed. In May 2024 the Ministry restricted participation to firms engaged in actual farming and made submission of a farming verification certificate mandatory. Table 7 reports repatriation through the auction between 2020 and 2024.

Table 7. Repatriation through the import-right auction, 2020–2024 (Unit: tons)

Source: Korea Overseas Agro-Resources-Development Association (2025)

Structural constraints observed in practice

Three constraints emerge from the foregoing. The first is a market failure arising from asymmetry in logistics capacity. Firms holding export terminals and rail connections achieve bulk shipment at competitive unit cost, while firms operating without dedicated terminals load through multipurpose berths using grab equipment, incurring loading delays of four to five days and correspondingly higher freight. Under domestic procurement practice, which relies heavily on lowest-price tendering, the latter group cannot compete, and local or third-country sales become the rational choice.

The second is an institutional failure of the kind described above, in which the same dedicated track provides too little inducement for one group of commodities and too much for another. It is worth emphasizing that these two conditions require opposite remedies, so that a single instrument applied across commodities cannot resolve both.

The third is discontinuity in the domestic value chain. Repatriation presupposes not only that the receiving market can absorb the commodity in the form in which it arrives, but that the firm holding it is connected to the domestic processing and distribution channels through which that commodity moves. Palm oil is the clearest instance, and the same logic applies wherever processing, storage or berth capacity, or access to it, is lacking. Securing capacity abroad without a corresponding position in the domestic chain does not produce repatriation.

Comparative observations

Japan has recently placed emergency food supply arrangements on a statutory footing. The Act on Countermeasures for Difficult Food Supply Situations, promulgated as Act No. 61 of 2024 (Japan, 2024), establishes a graduated framework under which the government may coordinate shipment and sale, promote imports and promote production according to the severity of the situation, with criteria for the respective stages subsequently established by cabinet decision (OECD, 2025). The significant feature for present purposes is that response measures, including the promotion of imports, are specified in advance rather than improvised.

China has approached the question through integration rather than emergency powers. Its plan for international agricultural cooperation aims to coordinate the use of domestic and international markets and resources, linking trade, investment, technical cooperation, and the construction of overseas agricultural cooperation demonstration zones within a single framework (Ministry of Agriculture and Rural Affairs of China, 2022).

Both cases suggest the same lesson for Korea. The instruments that secure resources abroad and the instruments that govern their entry and storage at home need to operate as one system. In the Korean case, they are presently governed by separate statutes with no operative link between them.

CONCLUSION AND POLICY IMPLICATIONS

Korea's overseas agricultural resource development has succeeded in its first objective but not yet in its second. Securing capacity has grown by a factor of twenty-four since 2010, but the share of that capacity reaching the domestic market remains at 14.5%. The diagnosis offered here is that this is not a matter of insufficient effort by participating firms, but of instrument design: the support instruments address cultivation while the binding constraints lie in logistics and in the structure of import channels.

Four implications follow. The first concerns the dedicated import track. Since the difficulty for feed grains is that the track offers no advantage over ordinary importation, the appropriate remedy is to remove the disadvantage rather than to create a new privilege. Aligning the applied rate within the dedicated quota with the quota tariff, easing performance bond requirements and consolidating recommendation and clearance procedures would restore the practical availability of the track. A unilateral reduction within bound rates raises no question under trade rules, and since feed grains are wholly imported, the measure would have no effect on domestic producers. By contrast, reserving a share of the quota tariff volume for a defined class of firms, although it would be more immediately effective, would engage the non-discrimination disciplines of Articles I and XIII of the General Agreement on Tariffs and Trade and the transparency requirements of the Agreement on Import Licensing Procedures, and would therefore warrant prior assessment.

The second concerns public stockholding. Purchasing repatriated volumes for public stocks addresses the constraint that tariff measures cannot reach, namely the absence of an assured domestic outlet. Purchase at prevailing market prices would fall within the terms of paragraph 3 of Annex 2 to the Agreement on Agriculture, and the measure would create demand rather than adjust price, which is the more direct response to the constraint identified in this study.

The third concerns logistics. Since repatriation performance follows terminal ownership, financing instruments for the acquisition of overseas grain terminals and elevators, clarification of the treatment of food-related overseas assets under investment tax credit provisions, and development cooperation projects that construct shared port access and storage facilities in destinations where Korean farming-type firms are concentrated, together address the constraint most directly. Where development cooperation is used, the public-good components should be separated from commercial facilities so that the arrangement remains consistent with development assistance norms, with commercial access secured through equity participation and long-term throughput agreements rather than as a condition of assistance.

The fourth concerns emergency arrangements. The power to order repatriation exists, and the Act provides a basis for compensating the resulting losses, but subordinate legislation has not elaborated the rules for calculating compensation. Specifying the compensable heads of loss, comprising the differential between the international price and the domestic delivered price, contractual penalties, incremental freight and exchange losses, and objectifying the reference price by reference to recognized international quotations and verified transaction documents, would make the power operable. Advance notification of eligible contracts and stocks would limit subsequent over-claiming. Consideration might also be given to contractual arrangements concluded in advance, under which the government acquires a priority claim on a defined share of secured volume in return for a periodic availability payment, although such an arrangement would require statutory authority, multi-year budget authorization and careful specification of its legal character.

Two limitations should be noted. First, the analysis relies on administratively compiled aggregates and does not incorporate firm-level cost structures, so it cannot quantify the relative weight of logistics cost, procurement practice, and tariff treatment in determining repatriation decisions. Second, the study does not assess the effect of repatriated volumes on domestic producers of competing commodities, which is a necessary complement to any expansion of the program. Both questions merit further research, the first through a firm-level survey and the second through partial equilibrium analysis of the affected commodity markets.

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