Rice: Korean trade policy is harming consumers

The economic development of the Republic of Korea is a modern success story of how an agrarian society can transform itself into a technological and industrial powerhouse in one generation. Korea is the 12th largest economy in the world and companies such as Samsung are leading the world in technological innovation, especially in consumer electronics.

One interesting relic of Korea's agrarian past is the excessive taxes and quota system on imported rice. Methods of Korean rice farmers have changed little, despite worldwide advances in genetics and farming mechanisation. Across rural Korea, farmers still do most rice farming with primitive tools and by hand. The rice industry has lagged behind the rest of the country in innovation and modernization.

In a free market, inefficiencies are weeded out through competition. The Pittsburgh steel industry suffered as a result of cheaper imported steel from countries (especially Korea and Russia) with more efficient manufacturing processes. The outdated methods of the huge steel plants were too expensive to compete with leaner and more modern manufacturing facilities in Korea and in other areas of the US. The result, while bad for steelworkers, led to lower steel prices which led to lower costs on finished goods. Competition led to increased efficiencies which ultimately boosted both the US economy and Korea's.

The rice industry in Korea has been a "sacred cow." Protectionist trade practices had saved domestic farmers from the influx of cheaper, imported rice. This led to dramatically higher prices for rice at the consumer level. Korean households were, in effect, subsidizing outdated and non-sustainable farming practices.

Much like Korean steel put old-guard US firms in the red, (forcing modernization) it's time that Korean rice farmers be subject to competition. Ultimately, it will benefit the economy of Korea as it will lower food costs for consumers and force modernization of an inefficient and environmentally unsound industry.