All agricultural activities involve risk or possibility of monetary loss in the form of a loss of capital or of yields. Some losses from natural factors are crucial for farmers. Through the insurance system some kind of risks can be eliminated or tran...
All agricultural activities involve risk or possibility of monetary loss in the form of a loss of capital or of yields. Some losses from natural factors are crucial for farmers. Through the insurance system some kind of risks can be eliminated or transferred. However, without the insurance system, there is no way of avoiding losses for farmers except bearing all of the burden for themselves just
like in Korea.
To help the damaged farmers, Korean government has tried continuously under the aiding farmers program against natural disasters. The aid programs are consisted of providing subsides and loans for the damaged farmers with better conditions than usual cases. Besides these, even basic necessities such as rice are supported and reduction of loan interest, postponement of loan payment, and exemption of tuition fee for farmer's children were added to those supports.
To make the subsidies and supports realistic, Korean government has upgraded the standard of aiding programs every year. In recent years, government's payments against natural disaster amount about 4% of agricultural sector's budget. Nevertheless Korean farmers have not been happy all the time because the aid programs have always been limited far below the compensation level farmers expected.
Farm insurance program which introduced in 2001 seems to be a starting point of lessening dissatisfactions of farmers and disagreements between damaged farmers and government on the level of aids.