RESTRICTED Report No. AS - 13 3 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROS PECTS OF KOREA (in four volumes) VOLUME II AGRICULTURE FIS HERIES January 23, 1968 Asia Department CURRENCY EQUIVALENTS U.S. $1.00 = Won 270 Won 1, 000 = U.S. $3. 70 Won 1, 000, 000 U.S. $3, 703. 70 This Report is based on the findings of a Mission which visited Korea in September 1967. The Mission was composed of the following memberst Cornelis J.A. Jansen Chief Shu-Chin Yang General Economist Guenter H. Reif General Economist M. Shafi Niaz (FAO) Agriculture W. F. Doucet (FAO) Fisheries Jacques M. Gruot (BCECM) Transport.ation This Volume was prepared by M. SLafi Niaz (Annex on Agriculture) and W.I F, Doucet (Annex on Fisheries). TABLE OF CONTENTS Volume II Agriculture Page No. SUIIARY AID CONCLUSIONS . ....................... - iv I. RECENT TREES ................................. A. Growth of Output ...... 1 B. Impor-ts and Exports ....... 3 C. Prices ,.......... .. 6 D. Employment ........... 7 II. DEVELOPNENT EFFORTS ........ .*.*...***...... 9 A. Land and Water ............... ......... ...... 9 B. Other Agricultural Inputs ........... 12 C. Forestry . ........... 15 D. Livestock ............* 17 E. Processing ............ *...,*.... 18 F. Extension, Research and Training .. 19 G. Subsidies and Credit .... 20 H. Administration and Statistics 22 III. INVESTMAENT ALLOCATION TO AGRICULTURE ............. 23 A. The Over-All Picture 23 B. Assessment of Investment Prograrns ... .... 25 C. Possible Output Targets , 27 STATISTICAL ANNEX (Tables 1 - 10) SUITG= ANJD COMCUSIOINS 1. In recent years, agricultural output has flucbuated quite sizably around a steadily rising trend.. Unhile the fluct-uations are due mainly to weather conditions, theunderlyr ng upward trend indicates basic improvement in agricultural production. During 1957-66, agricultural output increased at an average annual rate of about 5 percent which is well ahead of the rate of population growth0 -uor 1967, due mainly to poor harvest of food- grains resulting from adverse climatic factors, it is lilely to drop by 2 or 3 percenit from the previous year when weather cond-itions w.Tere except- ionally favorable. 2. I,hile agriculture has performed comnendably in recent years, readily available evidences, admittedly incomplete and argely qualitative, suiggest that severe obstacles to fuather progress are emerging and more are on the horizon. Certain agricultural development programs already appear to slow domn Unless momentum is regained, the rising long-term trend may be adversely affected. Among the more basic tasks is land and water develop- ment. To increase land productivity, annual recurrent use of such agric- ultural inputs as lime, fertilizer, pesticides, improved seeds, etbc. should also be increased. To facilitate the application of2 these inputs, extension services, credits and distribution channels particularly need uo be improved. 3. Land development programs, including reclamation of uplands and tidal lands and land consolidation have recently progressed rather slowly. They are all behind plan targets and in most cases even below the levels achieved in l96h-65. It is necessary to adopt a more scientific approach rather than the earlier haphazard approach in certain programs, such as the land conservation programs. Som-e temporary slowdov-n would result from,l such a switch-over, but more substantial benefits will be realized in the long-term. Progress in repair and improvement of existing irrig- ation facilities and development of new irrigat on facilities seem also belowa expectation although sufficient funds have been made available0 Further efforts in land and water development needs to be stepped up. 4. The Government has been o0erating for some time a program to increase individual land holdings with Government financial assistance. The program has been rather effective, but for not clearly understandable reasons the Government decided to discontinue it from the current year. A program for consolidation of fragmented holdings is also giving encouraging results in terms of improved productivity but. appears to be suffering under reduced allocation of funds. Recently, the Government has been giving thought to removing the ceiling on individual land holdings imposed during the post-war land reform and permitting again absentee land-ownership. The purpose of this step would be to increase the flow of capital to agriculture. While this objective is-desirable, care shouLld be takcn to avoid endangering the positive social aind econcanic results of t 1e land ref nor - ii - 5. One of Korea's serious problems is soil erosion. Ln order to com- bat soil erosion effectively, it is necessary to take measures on a watershed or sub-watershed basis involving all the related fields and to carry out a con.rehensive program. They should be based on the various studies concerning the soil, land capability, land onmership and utilization patterns that have been made in the past. The studies made by the United Nations Development Program should be used in the development of an integ- rated plan for erosion control. Erosion control requires coordination of the work of a number of Government agencies. The Mission suggests the establishment of an office for land conservation with authority to tackle erosion problems on a comprehensive basis. 60 The consumption of lime, fertilizer and pesticides is groming much slower than had been planned. The difficulty with lime seems mostly due to transport bottlenecks. For fertilizer, relatively high prices and perhaps lack of sales motivation by the National Agricultural Cooperatives Federation may be a major cause. A study of all factors influencing fertilizer and pesticide consumption and distribution is recommended: prices, storage, marketing, credit. The Government operatJes a program for multiplication and distribution of improved seeds, covering the country reasonably well. 'urther improvement of quality control and seed distrib- ution appears desirable. 7. Recent emphasis on mechanization is re(icing the importance of draft cattle. ileanwhile, domestic demand for beef is increasing fast. However, there is little scope for developing a beef industry because of shortage of pasture areas; cultivable land is scarce and increase in foodgrain production is needed. The prospects for developing a dairy industry near or around big cities are more promising, and efforts in this direction are afoot. Local stock can be improved through the increased use of artificial insemination. The chances for raising pigs and establish- ing a broiler industry are brightening because of increased domestic demand and promising export prospects. 8. There appears to be no serious shortage of agricultural extension workers but what is needed is improvement of their quality through in-service training and increase of their mobility by providing better transport and other facilities. 9. The use of agricultural inputs is being encouraged also by subsidies on irrigated water, lime, pesticides, fertilizer, etc. However, it is difficult to judge their effectiveness by a short visit. Agricultural credit appears to remain at a lowf level. Again, it is difficult to judge whether this is due to shortage of funds, or deficits in the organizations which channel these funds. The HIission recommends a thorough study of the economic, financial and institutional aspects of agricultural credit and subsidies be undertaken as soon as possible with a view to finding ways for improvement. - iii - 10. Agricultural processing industry is at present stagnant, small and not wzell organized. Private initiative is not forthcoming in view of the difficulties of organizing and financing reliable supply sources and finding markets for the products. The Government is contemplating to establish a corporation w4hich would attempt a breakthrough in this important area. The new corporation wsould act in cooperation with private interests, foreign or domestic, w-henever it can be mustered, but would go ahead on its ou, if the private sector feels shy. The corporation is looking for financial and technical assistance from international agencies. This move is in the right direction. If well managed, the development of the process- ing industry will encourage increased production of cash crops, meat, poultry and fishery products, whnich would contribute to the increase of farm income. llo Prices of agricultural products increased less than thqe general price rise, except prices of meat, poultry, and fish - the main protein products. A deterioration in the farmerst "terms of trade" and a slower growth rate than the national average have apparently tidened teo disparity between urban and rural per capita incomes since 1964. Retail and dis- tribution problems in the countiryside appear part of the reason for the deterioration, The long-run improvement of the plight of the farmer lies mostly on how fast the rural population can be shifted to Eidustry and hoAT speedy agricultural productfvity can be improved. The percentage of agri cultural employment in the country's total enploym-ent has declined slightly iLn recent years. I4eanwhile, higher grcrtih rates in other sectors of the economy have reduced the share of agriculture, forestry and fisheries sectorsto GMP from 42 percent in 1964 to 38 percent in 1966. This trend tends to continue. 12. The planned investment allocation to agriculture in 1967 and 1968 appeam to be ample. But our analysis of development programs shows that implementation in 19067 will probably lag behind, For 1968, the investment magnitude may also not be realized unless Government programs are stepped up and conditlons for agricultural investment in the private sector are im.proved. 13Q The Government target for 1968 is to increase agricultural production (in terms of value-added) by 7.6 percent over the record 1966 level. This implies a production of 8 million tons of -foodgrains, of wThich 6.7 million tons would be rice, barley and wheat. Given normal weather conditions, it may not be easy to attain this target. Certainly it will be necessary to increase sharply the use of fertilizer and lime, and to speed up land and water development. Bat even if the Government's goal of rice production for 1968 is reached and a normal crop of suammer grains in 1969 is reaped, Korea wJill still have to import about 300-hO0 thousand tons of foodgrains during 1969. - iv - 14. To speed up agricultural development for achieving the plan targets, correct and prormpt policy decision and effective adninistratian machineriy are indispensable. For making such decisions reliable statistical information is essential. ?Regarding administration, the reorganization of the fisheries and forestry administration into independent government "offices" is an improvement and both are off to a good start. The planning unit in the Nilinistry of Agriculture, however, needs further strengthening with qualified agricultural planners and so does the agricultural planning cell in the Economic Planning Board. Regarding statistics, much1 more work for improvement is required. Since it involves very specific techniques, the Government may consider to obtain external ass-istance, particularly for the im1provement of the crop-cutting experiments for production estimation and for consumption statistics. I. RECENT TRENDS A. Growth of Output 1. Agricultural statistics were recently revised to overcome some of the shortcomings of the hitherto used administrative reporting system which appeared to lead to underestimation of agricultural production. By carrying out crop-cutting experiments according to random sampling techniques for 1965 and 1966, the statistical authority established margins of underestimation for various crops and made up-ward adjust- ments for the current and past years. Thus production statistics for rice were raised by 33 per cent, and for summer grains ranging from 33 per cent for white potatoes to 126 per cent for wheat. The adjusted production data on major crops for the last few years are shown in Table 2 while more detailed data are given in Statistical Annex Table 2. 2. We have some reservations about the new statistical series which will be dealt with in Section II, sub-section on "Administration and Statistics.;' Suffice to say here that it is not at all certain whether the samples of crop-cutting used were large enough and the results repre_ sentativet. Thus there is uncertainty about the level of production but since the correction factors so derived have been applied uniformly to the old production statistical series, the rates of increases(or decreases) remain largely unaffected. Based on the revised statistics, the growth of output-of the agricultural sector (including forestry and fisheries) in terms of value-added has shown a steady rising trend with sizable - fluctuations. While the output fluctuations have been influenced pre- dominantly by weather conditions, the long-term rising trend indicates continuous basic improvement in agricultural production. Thus the average annual rate of growth in agricultural value-added increased from 4 per cent during 1957-61 to 508 per cent during 1962-64, wrell ahead of the rate of population growth. Analysis in the previous Bank reports 1/ indicates that accidental or transitory influences play a minor role in this acceleration; it -was chieflr due to improved agricultural policies, increased use of inputs and the implementation of land and -vater develop- ment programs. 3. Agricultural output declinedby 1 per cent in 1965, increased steeply in 1966 (by 11 percent) and declined again in 1967. These year-to- year variations are partly the result of weather conditicns. Although the 1967 1/ "The Economy of Korea", Volume III Agriculture; Report No. FE-55a, dated June 17, 1966. "Appraisal of the Second Five-Year Plan"; Report No. AS_116, dated October 24, 1966. -2- production data for all crops were not available when the Mission visited Korea, the available output estimates for summer grains (barley, wheat and rye) showed a decrease of 5 per cent from the last year while rice production was also expected to be below the 1966 level because of drought in the southern part of the country. The low level of grain production will probably result in a decline of agricultural production of perhaps 2 - 3 per cent. The expectation of a 3 per cent increase, as stated in the Government's Overall Resources Budget 1968, has certainly not been realized. Table 1 Rate of Growth of Agricultural Output (Value-added at 1965 prices) Average 1962-64 1965 1966 ,Per Cent Increase over Previous Year G.N.P. 7.0 7.4 13.4 Agriculture 5.8 -0.9 11.0 i. Agriculture proper 5.6 -1.0 11.3 ii. Livestock 1.6 -10.0 6.5 iii. Forestry and logging 17.4 1.2 16.7 iv. Fishery 12.9 5.5 10.7 Agriculture as per cent of GNP 40.3 38.7 37.9 4. As the decrease in agricultural production in 1967 appears quite substantial, one would wonder whether it can be explained entirely by the poor weather. A brief revview of the use of agricultural inputs in the next section seems to indicate that there have been slow-downs in agricultural development in a nvunber of areas. If this loss of momentum is true and carried further, the long-term rising trend of agricultural production could become adversely affected. -3- Table 2 Produc+ction of IMajor Crops (In thousand YNetric tons) Average Crops 1962-64 1965 1966 1967 Cereals 5,262 5,757 6 4j1 6,125 Rice 3,57 0 1 3,919 353L/ Barley 1,270 1,807 2,018 1,916 Others 416 4S9 464 459 Pulses 185 203 195 n.a. Potatoes 2,193 3 X77 3,375 na. F-xuits 200 e20 n.a. Vegetables 1,303 1,576 1,87 n.a. Tobacco 35 56 75' n.a. Cocoon T.8 7.8 -.6 n.a. 1/ Tentative estimates of the lUission Source: Statistical Annex Table 20 B. Imports and Exports (i) Food Irports 5. imports of finished agricultural products, almost entirely food items, declined substantially in 1965 probably due to the previous year's bumper crops; but started to rise again since 1966, in spite of large-production in that year. In 1967, grain imports till aiTount to more than one million tons as compared to only 380 thousand tons according to the Second Plan. In view of be-low-e--ectation rice and barley production, the Governnent intends to import about 750 thousand tons in 1968, as compared lith 312 thousand tons envisaged in the Plan. It is, therefore, questionable whether the Plan objective of foodgrain self- sufficiency by 1971 will be achieved. Table 3 Imports of Finished Agricultural Goods (in million U.S. $) Average 1962-64 1 o65 1966 Total imports of all commodities 462,1 463.4 716.4 Total agricultural imports 81 . 65.3 76.h Foodgrains 69.0 52.3 59.5 Sugar and sugar preparation 4.3 400 6.2 Livestock products 5.8 6.7 7.4 Fish and fish products - 0.1 Others 2.3 1.9 3.2 Source: Statistical Annex Table 3. 6. In order to assess t'ne possibility of foodgrain self-sufficiencr, it is important to Im1ow more precisely the consumption and production pictures. A computation of per capita consumption on the basis of pro- duction and imports with allowance for industrial use, wlaste, feed, seed, etc., gives a result of 218 kg. per year during 1963-65. This is probably too high as the comparable figure for Taiwan is only 168 kg., where per capita incorme is higher. A possible inference is that the recently revised production estimates are too high. Regrettably, it is not possible to make a direct estinate of consumption by using the consumption surveys. The samrple of tlhe survey is too small (1:6,000 households) and the results are odd shouing a decline in per capita consumption in the face of rising incomes, rising grain production, and large imports. All tlhese factors should have made for a rise in per capita consumption. For the fornulaticn of a realistic grain policy, reliable data on grain production and consumption ar^e necessariy. Improvement of the consumption survey and of production estimates, possibly with technical assistance from abroad are needed. (ii) Imports of Agricultural Inputs 7. The increase in the import value of major agricultural inlputs (Table 4) is mainly due to larger fertilizer imports and to a lesser extent, to larger imports of insecticides, agricultural machinery and implements. Thanks to the completion in 1966 of three major fertilizer plants the future needs for most fe-tilizers will be met from domestic production. Phosphatic and potassic fertilizers will, howJever, continue to be imported, and in increasing quantities because of larger consump- tion (See Statistical Anrex Table 4). 1/ Third and Fourth Fertilizer Plants: capacity each 84,100 tons of urea and 180,600 tons of complex fertilizer; Fifth Fertilizer Plant: capacity 330,000 tons of urea. u --Table 4 Imports of Agricultural Inputs (In million U.S.$) Average 1962-64 1965, ; Total imports of all commodities 462.1 463.4 jj7 6.h Total imports of major agricultural inputs 60.6 73.0 98.1 Fe7rtilizer 55.4 66.8 88.9 Ii~secticides 1.5 4.0' 4.3 Agricultural machinery, implements 1.3 1.1 3.3 and tools Febding stuff 1.6 o.4 0.6 live animals 0.4 0.3 0.8 Seeds and other planting materials 0.1 0.2 0.1 Fishing materials 0.4 0.3 0.2 Source: Statistical Annex Tables 3 and 4. (iii) Exports 8. Recent developments in agricultural exports (Table 5 and Sta- tistical Annex Table 5) have been favorable, partly because of the Government's export drive and partly because of fortuitous circum- stances. Among the latter is the more than doubling of the silk price which accounts for the increase in raw silk exports. The drop in Rhodesian tobacco exports, which gave Korean exporters suddenly increased access to the European market, is another example. The increase in rice exports seems incongrous because of the country's need for grain imports. The explanation is the Government's policy to replace rice consumption to a small extent by wsheat, which has only about half of the value of rice and approximately the same nutrition value. 9. Livestock exports almost dropped to nil in 1965 and 1966 be- cause the Hong Kong market for live pigs uas Lost to China (mainland) which could supply at lowver price. As a result, pig production in Korea declined which also adversely affected the export of bristles. However, exports of fruits, vegetables, and a number of other agricul- tural products increased fairly rapidly. MIost of these products are in fresh condition. Exports of processed agricultural products are still negligible, far below the potential. Fish exports (including agar-agar) and laver, discussed in the annex on fisheries, moved up at a spectacular rate. - 6 - Table 5 Agricultural Exports (In n4laion U.S.$) Average 1962-64 1965 1966 All exports 86.9 175.1 250.3 Agricultural exports 33.0 42.1 67.0 Rice 4.0 3.2 6.8 Raw silk " 4.8 6.8 11.6 Dried laver 2.6 3.3 8.7 Fruits 0.8 1.9 2.1 Ginseng o.6 1.9 2.0 Tobacco O.l 0.9 6.5 Livestock 3.6 1.5 1.2 Other agricultural products 1.9 4.8 6.4 Fish and fish products 14.6 17.8 21.7 Source: Statistical Annex Table 5. 10. It is difficult to estimate agricultural exports in 1967 as data for only the first five months of the year were a.vailable at the time of writing this report. However, indications are that because of the low harvest of rice and s-ummer grains in 1967, there are not likely to be any exports of these commodities. Exports of silk, mushrooms', tobacco are likelv to be as high or higher than last year. Fisheries exports will also be higher than last year. C. Prices 11. The pricesi of agricultural commodities increased since 1962-64 at a somewhat lower pace as wholesale prices in general. Foodgrain prices dropped when the good 1964 harvest was followed by very large PL 450 grain Uiports 'cut went up rather sharp'ly in the next year. A remarkable feature is the sharp price rise of the -ain protein products in the last twelve months. The price of aninal and poultry products rose by 20 per cent, the price of edible marine products by 30 per cent as compared with an overall increase in wholesale prices of only 13 per cent (Statistical Annex Table 6). High income elasticity of demand for these products affords only part of the explanation. There are definite shortcomings in supply and distribution of these products which mainly account for this acceleration (for fisheries products see paras 44 ff of the annex on fisheries).. 7- 12. In order to assess developments in farm income the Govern-, ment computes monthnly the farimers' "terms of trade", the ratio be- tuecnprices paid and received by farmers. This ration had been running in favor of farmers during 1959-64 but has been declining considerably since then (from 124 in 1964 to 105 in 1966). This fact, and the much faster rise in production in urban areas had led to widening disparity between urban and rural incomes. A rough calculation shows that the' gap in per capita incomes (which by itself is perhaps less big than in most developing countries) increased sharply since 1964 (se6 Iain -Re- port para 45). The deterioration is considerable from the point of view of farmers, especially if one takes into account that 1966 had a record grain crop. IThile grain wholesale prices increased at a some- what lower rate than the overall wiholesale price index, prices paid by farmers for supplies and household goods have increased faster. The latter is partly due to deficient retail and distribution facilities in the countryside. D. Employment 13. The percentage of the labor force employed in agricultare has continued to decline (Table 6). Output per worker in agriculture is still low and there must still be considerable under-employment in agriculture. Crop diversification, especially in thle direction of labor intensive production of fruits and vegetables for industrinal processing, could increase agricultural enployment and alleviate seasonal under-employment. But undoubtedly a large number of workers can be permanently spared from agriculture without a drop in output and thus the pool of iworkers available for the industrial development of the country must still be very large. Such an employment shift ,ftuld be helpful in raising rural incomes, a matter which has obtained added urgency in view of the widening discrepancy between rural and urban incomes. A proper forecast of the required agricultural labor force and the number of people that could shift to non-agricultural occupations is only possible on the basis of much more thorough and reliable statistical information on the agricultural labor force than is available at present. Such improvement of statistical information would be extremely helpful for development planning in agriculture as well as in other sectors. Improved information on the regional charac- teristics of the agricultural labor force would moreover be very helpful in the Government's recently increased efforts for regional development planning. Table 6 Population, Labor Force and loyent in Agriculture Year Total Farm Economically Enployed in Agriculture Population Population Active and Forestry Total As JWof Population Total As % of Total Economically Active Population in million percent in m.llion percent 796L14 27.9 15.5 -55.2 0.7.0 6~ 1965 28.7 15.8 55.2 10.7 6.8 63.6 1966 29.2 15.8 54.0 11.0 7.0 63.9 Source: Bank of Xorea, Economic Statistics Year Book, 1967. - 9 - II. DEVELOPMENT EFFORTS A. Land and Water 14. In the efforts to increase agricultural production, land development has a very important place because of the small area of cultivated land per worker in agriculture. Previous Bank Missions had been favorably impressed by the momentum developed in land development efforts during recent years. Since 1965, however, some of the programs appear to have slowed down somewhat. Land development programs in Korea comprise reclamation of uplands (also known as bench terracing)3 land consolidation (locally termed paddy rearrangement), large and small scale irrigation projects (including repair and improvement of the existing irrigation facilities), and reclamation of tidal lands.. Achievements in the last two years are far below the targets earlier set by the Govern- ment and in some cases below the achievements of 1965. This is shown in the following table: Table 7 Lend Development Programs (Thousand Hectares) Total Second Plan 1965 1966 1 1968 1967-71 Achieve- Achibve- Target ment Target ment Te Taret Upland reclamation 36.7 50.0 22.3 140.0 10.0 20.0 200.0 Tidal land reclamation 1.1 4.0 - 4.0 1/ ? 20.0 Land consolidation 13.5 20.0 19.9 40.0 20.0 20.0 200.0 Small-scale irrigation ) 18.6 38.9 24.6 37.0 13.0 14.0 140.0 Repair and improvement 23.0 25.0 19.3 50.0 34.2 21.0 not given 1/ Nothing completed, but the following programs were reported to be under various stages of implementation. The Bureau of Farm Land could not indicate the area that would become fit for cultivation during the Second Plan period: Ministry of Construction 14,351 hectares Ministry of Agriculture & Forestry 1,432 '1 Ministry of Social Welfare 26,501 i Total 1T,-2,-7 " Source: Farm Land Bureau, in the case of upland reclamation and land consolida- tion; Union of Land Improvement Associations, in the case of irrigatior- and tidal land reclamation. - 10 - 15. Upland reclamation is largely financed by payment in kind of wheat flour to farmers working during the slack season. The wheat and wheat flour is received from the U. S. Government under Title II (Food for Work Programs) of PL 480 for the disposal of surplus agricultural commodities. Arrivals of wheat and wheat flour have continued at a high level but it seems that the Government did not give priority to the use of these grains in the land reclamation program., The potential of upland reclamation remains one of the few feasible avenues to increase cultivated area in Korea, and it is to be hoped that the program will again be pursued with strength. It is iimportant that the earlier, haphazard approach be discontinued and that future reclamation efforts are based on a comprehensive watershed and sub-watershed approach described in para 3h. If only bench terracing is undertaken at the foothills and the crest of the hills are not re-afforested and the slopes lower down are not covered by vegetation simultaneously, frustra- tion will follow unavoidably, when after a few seasons the terraces are being washed out. 16. In land consolidation, the earlier 1966 target was achieved but results in 1967 appear far below the target. This program also seems to be suffering under reduced allocation of PL 480 grains. The program is obviously important in view of Koreats badly fragmented paddy holdings. There is no justification for slowing down its implementation, particularly because it had produced very encouraging results in improving the productivity of land, intensifying crop production and increasing the size of holdings. 17. One reason for the slowdown in the upland reclamation and land consolidation programs seems to be that the responsibility for these programs has been passed on to the local (Provincial) governments. Tidal land reclamation which also appears behind schedule was passed on to the Ministry of Construction and the Ministry of Health and Social Welfare. These agencies appeared not immediately equipped to shoulder the responsibility to run programs in the order envisaged in the Second Plan. The Mission hopes the Government will make all efforts to implement these programs and, if necessary, re-adjust administrative responsibilities for the programs. 18. Irrigation programs are behind the targets earlier set by the Korean Government. Progress in these areas is hampered by the lack of engineering and organizational experience. In order to overcome this shortcoming, FAO and IBRD are jointly advising Korean officials in the techniques of forimulation and appraisal of irrigation projects so as to determine properly priorities for irrigation projects. Two irrigation projects are now under preparation. - 11 - 19. In an earlier Bank report- it was noted that the Government, in 1965, had started a program to upgrade below-subsistence farms, with a size ranging between 0.5 and 1.0 hectares, to at least subsistence level, through loans of 100,000 won for each household as a package deal on short as well as long terms with a 9-10 per cent rate of interest. This program worked for 2 years when in all about 20,000 farm households were covered. The idea was to take up, as experience was gained, larger numbers of farms every year so that most such farms were covered during the Second Plan period. As a result of the implementation of this program, the size of holdings covered by this program, had increased by over 40 per cent with substantial increases in the farm income. However, the Government recently decided to discontinue the program, while the Mission feels that this useful and apparently effective program should be carried out to its end. 20. In recent years the average size of farms appears to have increased. The proportion of holdings below 0.5 hectares has decreased from hx2.per cent in 1963 to 35 per cent in 1966 while the number of holdings of 0.5 hectares and above increased correspondingly. Most rapid was the increase in farms of 3 hectares and above (see Table 8). Table 8 Number of Farm Households by Size of Farms in Korea 1963 1964 1965 1966 In thousands Total 2,416 2,450 2,507 2,5)o As percent of total Less than 0.3 hect. 20.3 19.0 17.2 16.9 From 0.3 to less than 0.5 hect. 21.5 20.9 18.7 18.2 From 0.5 to less than 1.0 hect. 31.5 31.9 31.7 32.2 From 1.0 to less than 2.0 hect. 20.6 21.5 25.6 25.9 From 2.0 to less than 3.0 hect. 5.7 6.o 5.6 5.4 3 hect. and above 0.4 0.7 1.2 1.4 Source: Economic Statistics Year Book, 1967; Bank of Korea. These changes in the size of farm households together with the steady increase in the total number of farm households, apparently are the 1/ FE-55a, Volume III Agriculture para 3. - 12 - result of the implementation of the upland reclamation, land consolida- tion, irrigation development, tidal programs of land reclamation and con- version of "below-subsistence-levelholdings" to "subsistence-levelholdings11. The improvement in the size of holdings is a healthy development and should help in increasing agricultural production and farm incomes. 21. The Government has under consideration a proposal for waiving the restrictions on ownership of cultivated land above 3 hectares, and permitting tenant cultivation and absentee ownership. These steps are meant to encourage the flow of capital from urban areas to agriculture and to some extent to help agricultural mechanization. However, the proposal is a step back from the post-war land reform and has potential social disadvantages. It is to be hoped that the Government will carefully weigh the prols and con1s before the final decision is made. B. Other Agricultural Inputs 22. Fertilizer: Consumption of fertilizer per unit of cultivated land in Korea is much below the level attained in Japan (304 kg per ha. as compared to 183 kg in Korea) and other developed countries. In relation to the poor fertility of the soils, the level of fertilizer consumption is definitely low. The Second Plan does not indicate the anticipated use of fertilizer during the period 1967-71, but the Ministry of Agriculture and Forestry (MAF) had the following program in view: The program aimed to step up eonsumption by 40 per cent in 6 years (1965-71), (about 6 per cent per year). This was a modest target - by 1971 consumption would be only about 260 kg per ha. However, the actual utilization during 1965 and 1966 showed a shortfall from the modest target of over 20 per cent each year. Thus in order to achieve the 1971 target, consumption would have to be stepped up by about 52 per cent (11 per cent a year) over the 1967 level. Table 9 Fertilizer (NPK) Consumption (Thousand Natrient Tons) Target Actual 1965 486 393 1966 535 423 1967 607 450 1o/ 1968 634 1971 686 1/ Rough estimate by the Mission. Consumption up to August 31, 1967, amounted to 387 thousand nutrient tons. - 13 - 23. Part of the explanation of the low absorption of fertilizer apparently is the predilection of Korean farmers for nitrogenous fertilizer, and their resistance to using balanced fertilizer which is - quite rightly - being advocated by the Government and supplied in increased quantities to the domestic market since the completion of the Third and Fourth Fertilizer Plants early this year. Another reason may be the relatively high price of fertilizer in Korea. However, with the increase in domestic production since early 1967, sale prices to farmers were cut; the price of nitrogenous fertilLzer was reduced by 15 per cent and of phosphate, potassic and compound fertilizer by 10 per cent. This should provide some incentive for the farmer to use more fertilizers. 24˘ Fertilizer is distributed by the National Agricultural Cooperatives Federation (NACF),, which is allowed by the Goverrnrment to recover only approximately one-fifth of its distribution cost in the sale price. This situation could be a disincentive for NACF to increase its sales and should perhaps be reviewed. 25. Lime: The soils of Korea are by and large acidic!/. Estimates by the United States Operations Mission in Korea show that at least 550 thousand tons of agricultural limestone is needed for application to the soil each year. This would mean that every 5 years or so, each hectare of cultivated land needing lime would get a reapplication as the soil amendment effect of lime tends to be lost after this passage of time. If the program of application and reapplication at this level is not sustained, crop yields are likely to suffer. The use of lime had gone up to 500 thousand tons in 1965 from a level of 300 thousand tons in 1964 but dropped in 1966 to only 175 thousand tons. Available data indicate that in 1967 use of lime continued to be at a low level. The Ministry of Agriculture ascribes the low performance to the shortage of transport facilities from the lime producing centers to the consuming areas. The main areas for limestone are also the areas for iron ore and coal which require transportation facilities too. Due to the shortage of freignt cars and other facilities, serious transportation difficulties arose in 1966 and 1967. The transportation of iron ore and coal was given higher priority than lime and therefore lime could not be made available to tne farmers in the quantities needed by then, Lime deposits are scattered in many parts of the country and as transport costs of lime are quite high, the possibilities of obtaining lime near the place of consumption should be explored. This should provide lime at cheaper cost and should alleviate the transportation problem. 26. The meagre data on the use of compost, barn yard manure and green manure show hardly any increases during recent years and are far below the targets of the Second Five-Year Plan. 1/ This fact was reconfirmed by the Soil Survey carried out recently under a UN Special Fund Project. -14 - 27. Improved Seed: The presen't improved seed distribution program is proceeding according to the physical targets laid down in the Second Plan. The system of seed muLtiplication, supervision and distribution is quite elaborate, and better than in many other countries, but there is ample scope for improvement. For example, as pointed out in the earlier Bank reportV/, the number of varieties is too large. Out of the 28 varieties of rice, 24 varieties of barley and a dQzen varieties of wheat being recommended by the ivlinistry for multiplication and distribu- tion, only the best should be retained. The number of rice varieties has now been reduced to about twenty but further improvements are still possible. A study by the FAO/IBRD Joint Program indicates that the quality of seed multiplication arrangements falls short of requirements. The deficiencies listed in this report include: inadequate control of quality in the field and laboratory; insufficient facilities for bulk handling and processing of seed; non-availability of machines for seed cleaning, drying and treating; and lack of local expertise to handle the seed industry and provide related services. The Government accordingly prepared a project for the purpose of improving the existing system, for which it hopes to obtain technical and financial assistance from abroad. 28. Pesticides: Pest and disease control, preventive and curative, is carried out by the farmers. The Government comes to help when there is a major epidemic. It is difficult to assess the increase in the use of pesticides, for the consumption of pesticides is not expressed in terms of active ingredient content, but as quantities used of different types of fungicides, pesticides and insecticides, which is not on a uniform basis for all the years. The analysis that follows, therefore, is only an approximation. 29. The use of pesticides had quadrupled during 1964 over the average consumption of the preceeding three years (Statistical Annex Table 7). The Governmentts intention was to encourage aother tripling during the Second Plan period. The earlier Bank report? had expressed doubts about the feasibility of this sharp increase. The performance during 1965 to 1967 confirms this skepticism, as shown in the followiing table. Data for 1967 were not yet available but consumption was not expected to be much higher than in 1966. Table 10 Targets and Actual Consumption of Pesticides (In thousand tons) Target Actual Consumption 1964 16.8 23.4 1965 29.7 22.0 1966 35.5 26.5 1967 38.6 26.5 Source: (i) Economic Statistics Year Book, 1967; Bank of Korea. (ii) Data supplied by Ministry of Agriculture and Forestry. ;/ FE-55a, Volume III Agriculture, para 206. FE-55a, Volume III Agriculture, para 207. - 15 - 30. The recent slow progress in pest and disease control operations was, according to the Ministry of Agriculture, due to the absence of serious pests and disease attacks on crops. But the high cost of pesticides and equipment might also have been a limiting factor. Report- edly, it costs about 3,50O won ($13) to spray one heeta.re of paddy. 31. A very large proportion of the supplies of agricultural inputs is handled by the NACF. As NACF is the sole agency appointed by the Government for supplying inputs like fertilizer and as most of the pesticides are sold by the NACF to the farmers, the purchase by NACF of these supplies for onward sale to the farmers has been more or less parallel with the end use of such inputs. The total purchases by NTACF of these items increased in real terms sharply during 1964-66, by about 75 per cent. This is mostly due to increased use of fertilizers between these years. However, there appears a slowdown in fertilizer use in 1967, as reflected in the lower program figures (Table 11). Table 11 NACFts Purchases of Farm Supp.ies (In mil'ion won) 1964 1965 1966 1967 (program) Total 17,029 33.000 35,1441 32,964 Agricultural supplies 16,740 32P894 35,411 32,939 Fertilizers 13,994 30,105 32,538 28,180 Pesticides 1,439 1,227 1,358 2,274. Feed 178 163 86 96 Material for consumption 289 206 30 25 Source: Economic Planning Board. C. Forestry 32. Of the total land area of 9.85 million hectares, over two-thirds are covered by 'forests'. Over 80 per cent of the 'foresti land had trees or vegetation of one kind or another wliile the remaining one million hectares was considered denudedi. The Second Plan aims at afforesting 1.4 million hectares of land during 1967-71 in addition to the afforesta- tion program which was to be carried out during 1965 and 1966. The demand - 16 - for domestic fuel wood is met by indiscriminate felling and the use of leaves and branches. In 1966, 6.6 million tons of actual firewood and other fuel wood in addition to over a million tons of leaves and branches were used as fuel in the country. This demand is likely to increase with population growth and put a great strain on forest resources, unless alternative means (electricity, kerosene stoves) are provided to the rural population to meet their needs. Domestic production of timber, which met over threefourths of the total requirements (excluding imports for plywood manufacture) in 1961, dwindled to half the requirements in 1967. This downward trend is likely to continue for some time. However, the soil, climate and topographic conditions are favorable for tree growJth so that in the years to come, Korea could not only become self- sufficient in meeting its wood requirements (fuel as well as timber) but could also enter the export market. Furthermore, well-planned program of afforestation would help check soil erosion. 33. A program for afforestation has been in operation during the last decade. The area covered by the program reached 140 thousand hectares in 1966; most of the plantings were for fuel wood production. The target for 1967 is 433 thousand hectares, of which again about 90 per cent will be for firewood. The Korean officials believe that the target set for 1967, though quite ambitious, would be achieved because of a nationwide campaign carried out under the direction of the President of Korea for planting firewood species on privately owned forest lands. 34. Soil erosion is a serious problem in Korea. The soil conserva- tion (or erosion control) program is to cover 100 thousand hectares during the 1967-71 period. According to NPF about 86 thousand hectares were covered in 1966 and a program of 33 thousand hectares was most likely to be accomplished during 1967. The Mission feels that the whole program needs to be reviewed to establish whether the approach to this vital problem is on the right lines and whether lasting results can be achieved from the large investments made during the past few -ears. Anti-erosion measures have to be based on a well-plannled program on a watershed or sub-watershed basis, including soil sur-1 T, so.- fertility studies, ownership pattern studies, land use and land -;apabl`ity classi- fication, forest conservation, range managament ard c-r uio. The implementation of such a program requires coope2a;tiGT o.&d cs-:-Ldination between various bureaus, departments and agenc˝-cs; T3 e TUN S-xcial Fund has done considerable work: in terms of soil sarveys, land capability and land use classification, ownership status, determi.nation of soil 1/ Soil Reconnaissance Survey, Soil Fertility Survey, Upland Reclamation Program which includes Agricultural Survey and Demonstration in selected watershed, Korean Forest Survey Project (including the Management Plan for Chang Cheon Working Circle) and Pre-investment Survey of the Naktong River Basin. - 17 - fertility and testing of various techniaues for soil conservation. Intensive use of the results of these surveys and studies can be made to develop a coraprehensive plan for erosion control. I4ore effective coordination between the Office of Forestry and the various Bureaus in the Ministry of Agriculture should result in a comprehensive and well implemented program for erosion control. Perhaps it would be useful to create a new administrative entity with full responsibility to planning and implementing a comprehensive erosion control plan. D. Livestock 35. Livestock contributes about 6.5 per cent to total value added by agriculture. The relative importance of t'his sub-sector has recently declined because of more rapid increases in crops, fisheries, and forestry. Draft cattle (which are the major contributors to the value of this sub-sector) had gradually increased in number from 1950's up to 1963 (Statistical Annex Table 8) but since then declined mainly because of rapid adoption of engine-operated ploughs and threshling machines by the farmers. Pig production, which had reached a peak in 1962, also declined in the following years as the Hong Kong market was captured by the Mainland Chinese in 1964. The number of goats also declined and in 1966 was 40 per cent below the average for 1962-64 seemaingly becaulse of the larger demand for meat and of the rising prices of beef. The number of dairy cows and poultry, on the other hand, increased by 150 and 20 per cent respectively during the past three years or so, as a result of the GovernnentIs policy for improving the milk supply, particularly in big cities, and for promoting a broiler industry to produce meat which is comparatively more economical and quicker to develop. Arable land in Korea being very limited, any program of cattle raising based on fodder cultivation would compete with the requirements for crop production. The present policy of the Government to promaote farm mechanization for replacing bullock power appears generally sound and should be pursued in the coming years. 36. In order to promote the dairy industry, the Government imported 1,226 dairy cattle during 1965 and 1966, bringing the total number of dairy cows to 8,500 and milk production to ro-ughly 14 thousand tons. In 1967, the number is likely to increase to 10,000. The Canadian Government has extended a $1 million loan for the import of about 1,500 dairy cows, dairy equipment and grass seed for pasture development. The additional milk production will increase the supply to the dry and con- densed milk plants. Similarly, an agreement with West Germany to provide a $352 thousand loan has been reached for the import of dairy equipment and agricultural machinery. A demonstration farm will provide heifers on loan to selected cattle breeders for future production and to train young farmers in better techniques of livestock management, especially in regard to dairy cattle. - 18 - 37. For developing the broiler industry, the Government is providing feed at subsidized rates to interested producers. External aid amounting to $500 thousand has also been made available for the import of raw materialsand equipment for breeding poultry birds. In October 1967, a loan of about $1.7 million was obtained for the import of foodgrains for poultry production mainly for export to Viet Nam. It was reported that about half a million birds might be exported to South Viet Nam during 1967. About 1 ton of broiler poultry meat has already been exported to Hong Kong in 1967 as a test case and if a market develops these exports will be stepped up in the coming years. Renewed exports of pigs to Hong Kong is also a possibility since the recent riots have made the supply of pigs from China mainland less assured. In fact, South Korea is expected to supply about 1,500 head of live pigs to Hong Kong in 1967, 50,000 in 1968 and 100,000 in 1969. E. Processing 38. The contribution of agricultural processing to GNP in Korea is very small for a predominantly agricultural economy. There is a correspond- ing lack' of Droduction of agricultiural commodities that could be processed industrially. However, in the last couple of years, the Koreans have been emphasizing the expansion of facilities for manufac- turing starch from sweet potatoes, processing meat and milk, manufac- turing edible oils and canning fruits and vegetables (Statistical Annex Table 9), mainly to meet increasing local demand and for import substi- tution. However, most of the industries have operated below capacity; in a few instances, like the meat processing plants, utilization was extremely low. In other instances, like milk processing plants, utiliza- tion has increased (almost doubled in 2 years) but is still below the optimum. For certain industries like starch manufacturing based on sweet potatoes, seasonal availability of the input may explain a low year-round degree of utilization, especially since storage costs are high. In many other instances like meat and milk, season is not an important factor in determining input supply. The existing processing industry should be studied so as to determine the factors responsible for low utilization. Most likely a large part of the reported capacity is obsolete and should in fact be discounted. 39. The responsibility for setting up agricultural processing industries has rested mainly with the NACF. As this organization is preoccupied with other activities, such as the provision of farm credit, it has given little attention to the development and proper management of processing industries. Private initiative did not come forth because of the vast difficulties in organizing and financing regular supplies to processing industries. Realizing this situation, the Korean Government recently decided to set up an Agriculture and Fisheries Development Corporation (AFDC) with the main purpose of raising the income of the farming and fishing population through developing agricultural, livestock and fisheries processing industries. Another objective is to increase - 19 - exports and obtain more foreign exchange earnings. In order to provide raw materials for the proposed industries, production of given crops, if already grown, would be increased or-otherwise newly introduced. This will be done on a 'selective-production' principle by earmarking certain areas for the-development of given suitable crops or raising of specified livestock. It is believed that this will help diversification of crops and livestock in the transition from subsistence to market-type farming. The Cor- poration intends to establi6h, during the Becond Plan period, over 400 plants involving about 30 industries at a total cost of about US$120 millicn of which almost half would be in foreign exchange. The Government is contributing won 5 billion (about US$19 million) in h years in the form of equity capital of the Corporation. Private enterprise will be encouraged to set up plants with or without participat~ion,of the Corpora- tion. If private enterprise, domestic or foreign, is shy, the Corporation itself will invest. It will also provide technical know-how to potential investors. It is important that in the initial stage of its establishment, the Corporation takes up only projects which promise high returns. F. Exte.sion, Research and Trainin 40. Extension services: The Second Five-Year Plan env-saged a doubling ot the number of extension workers by 1971. Dn the Bank's appraisal/ of the Plan, it was observed that there was little justifica- tion for such an increase. The number of extension workers as compared to many developing countries was already quite large. The immediate need was for improvement in the quality of workers through in-service training and better transport and other facilities to increase mobility and effectiveness. The Government seems to have given up the idea of increasing the number of extension workers, and started on a sound policy of imparting more and better in-service training and improving training before service. The number of Rural Guidance personnel who get in-service training for varying periods in 1966 was over 2,000 as compared to less than 800 in 1964. It is hoped that the main factors which in the past adversely affected the quality of training, such as part-time instructors, inadequate field training, a limited number of and below standard books, would be gradually removed. Duplication between the extension workers of the Office of Rural Development (ORD) and those of the National Agricul- tural Cooperatives Federation should also be avoided. 41. Research: Since our last report there has been marked improve- ment in the coordination between the research staff of the Office of Rural Development and those wdrking in the agricultural colleges, especially at Suwon, and the various Bureaus of the Ministry of Agriculture. 42. During 1966 and 1967, over 2,000 research projects were underway in different disciplines of agriculture, such as food and commercial crops 1/ AS-116, Appendix on Agriculture, para 25. - 20 - (including fruits), sericulture, livestock, veterinary services and agricultural engineering. Work on 'regional' experiments i.e. different types of trials on crops (varietal, manurial, cultural and alike) under given local conditions has been intensified. An interesting step is the importation from the International Rice Research Institute of the Philippines of varieties which are dwarf, high yielding and responsive to high doses of fertilization, in order to try them under local ecological conditions. These varieties in the experimental fields were showing good prospects, but it is premature to pass a judgment until the actual results are known for a couple of years. 43. Education: In our earlier report it was observed that there was justification for (i) reducing the number of agricultural colleges, (ii) improving the quality of education in these colleges, and (iii) achieving better coordination between Ministry of Education and Ministry of Agriculture and Forestry for the purpose of determining the type, syllabi and duration of training. Some progress has since taken place in this direction; for example, steps are being taken to improve the training facilities, including post graduate training, at the universities and some arrangements have been made to coordinate the activities of Ministry of Agriculture and Ministry of Education. More effective steps should be taken in'the future. If need be, external technical assistance may be sought. 44. The Government is seeking financial assistance for a project for the expansion and modernization of technical training facilities and the development of fisheries and marine education. Of the total estimated cost of US$16 million for the project, approximately $1.8 million is for agricultural schools (half of this cost is for equipment and the other half for buildings) and $4 million is for the development of facilities for fisheries training. The idea is (i) to set up trade and industrial departmients at 10 of the existing agricultural high schools located in the rural areas so that training in industrial skills including the processing of agricultural products could be undertaken at these schools, and (ii) to modernize 'shop' facilities in 5 out of 149 agricultural high schools to serve as demonstration schools. G. Subsidies and Credit 45. In order to encourage the use of agricultural inputs, various incentives have been provided by the Governnent, mostly in the form of subsidies and cheap credits. The policy of subsidizing important agricultural inputs, including irrigation water, has continued with some modifications since the previous Bank Mission. In the case of irrigation schemes, a subsidy of around 50 per cent of the cost was given by the Government and the balance was provided as a loan at a very low rate of interest (3.5 per cent a year) payable in 30 years from the date of completion of the project with a grace period of 5 years. Wi-th effect from August 1966 this policy has been modified to treat the entire cost - 21 - as a loan without any change in the rate of interest and other concessions. The same decision has been taken in the case of subsidies for tidal land reclamationa. h6. The subsidy on fertilizer continues to the extent of handling and transport costs and to the extent of the differential between the rate of interest (8 per cent) allowed on credit and the commercial rate of interest (26 per cent). In spite of these incentives and the reduction of the purchase price of fertilizer by 10-15 per cent during 1967, fertilizer intake is growing slower than is desirable. h7. The subsidies on lime and pesticides have varied from year to year depending presurmably on the availability of financial resources. Such an approach would perhaps be justified if the cost price varied from year to year and changes in subsidies were made only to keep the prices of the inputs stabilized; otherwise yearly fluctuations in sale prices will adversely affect the accelerated use of these inputs. 48. The supply of seedlings of fruit crcps and seeds of certain other crops is also subsidized to provide incentives to growers for their cultivation. In some cases (like the raising of mu berry trees for silk production), long-term loans on easy terms including low rates of i-nterest are provided to the farmers. 49. By far the largest part of the credit needs for farmers is met from non institutional sources.!/ Chief source of institutional credit is the National Agricultural Cooperatives Federation (YT.ACF) which extends loans (short, medium and long), helps market. produce, makes available farm su.pplies like fertilizers and seeds, and establishes processing facilities for agricultural produce. 50. Outstanding loans of the NACF increased at a much slower pace than the total volume of bank credit in Korea (Table 12), although some improvement occurred in 1967. Table 12 Outstanding Loans of all Banking Institutions and NACF (end of period) (In billion won) NACF All banking inrstitutions 1962 18.6 47.8 1963 19.7 59.1 1964 23.1 67e1 1965 23.3 94.9 1966 27.1 130.5 June 1966 27.4 116.8 June 1967 34.2 170.7 1/ According to the Rural Credit Survey in 1964, about 70 per cent of the credit needs of agriculturists were met by non-institutional sources, - 22 - 51. The increase in NACF loans also falls far short of the tempo of the general price increase. As a result, the total real value of agricultural credit slightly decreased between 1964 and 1966 (using as a yardstick the implicit GNP deflator). In view of the still very inadequate coverage of agricultural credit needs by institutional sources and the very fast rate of growth outside agriculture, this continuing credit starvation appears to be one of the elements contributing to the seemingly widening disparity between agriculture and non-agriculture income. In an effort to channel more resources to agriculture, the Government ordered in 1966 the commercial banks to increase their deposits with the NACF. There has been some improvement in the situation since then. H. Administration and Statistics 52. Efficient adiniistrative machinery and reliable statistics are important instruments in development planning and Lmplementation. In agriculture, efforts have been made in recent years to improve both. In particular, the elevation of the Bureaus of Forestry and Fisheries to the status of "Offices", which in Korean administrative practice allows considerable independence of action, is a step in the right direction. However, in the field of agricultural planning and project evaluation, wh-ile some progress has been made, further strenghtening appears to be necessary in both the Planning Office of the MAP and the agricultural cell of the EPBo M4ore officials with soiund training and experience in agri- cultural economics or agricultural project evaluat-on are needed. It would be worthwhile for the Government to consider obtaining external technical assistance to fill whatever staff gap appears to exist. 53. Efforts have been made to improve agricultural statistics, the main emphasis being on the estimates of output of crops ETee para 1). Improvement of agricultural statistics is important, especiaily of those relating to production of crops, and the efforts taken by the Government to introduce a more objective metlod for estimating output of crops is certainly commendable. But there is a danger that the revision was carried out on inadequate and unreliable experimental data. As this is a highly specialized and basically im,portant field of work, it may be advisable to obtain tne services of qualified experts from an international organization like the FAO to help conduct the crop-cutting experiments, carry out other allied research, and train local staff. - 23 - III . INESTIENT ALLOCATION TO AGP.TCULTUTE A. The Overall Picture 54. Total investment in the Korean economy has in recent years been increasing at a much faster pace than foreseen lwhen the Second Plan wms drafted. Investment in agriculture and forestry had also increased substantially until 1966 when its rate of increase compared notably unfavorably with that in fisheries, manufacturing and trans- portation. For 1967 and 1968, the Government estimated that investment in agriculture and forestry will be just over one-half of the total investment requirement for the five years covered by the Second Plan. This would be only slightly below the corresponding performance ex- pected for all the other sectors of the economy. (See Table 13). 55. Howevrer, our earlier.analysi§ of a number of agricultural development programs and the pace in t'ne use of essential agricultural inputs cast somie doubts on this optimism. It seems likely that the actual 1967 investment achievements will turn out a good deal lower. According to Government's projections, in 1967 and 1963, agricultural investment by the Goveriment would be lagging conside2ably behind its non-agricultural investment as shown in Table 13. For 1968, the offi- cial estimates may only be reached if Governmient developmotit momentum is recovered and agricultural investment climate for the private sector is improved. Table 13 Estimated Investment in Agriculture and Cther Sectors of the Economy (1 965 cons-,ant prices) (billion won) Second Five-Year Tnvestments during (2) as per Plan (1) 1967 and 1968 (2) cent of (1) Total Investment 9580.1 500.6 51.1 Agriculture and forestry 128.6 65.5 50.9 Other sectors 851.5 435.1 51.1 Government Investment 401.1 179.3 4147 Agriculture and forestry 85.7 30,1 35.1 Other sectors 315.4 149.2 47.3 Sources: Overall Resources Budget 1968 and Second Five-wear Plan. - 24 - 56., Detailed capital expenditures by the Ilinistry of Agriculture for 1965-1968 are given in Statistical Annex Table 10 and are consoli- dated in Table 14. Ceaution is necessary in interpreting the tables, especially when malkng yearly conlpaiisons in the case, of land develop- ment programs which since 1966 were partly transferred to other agencies._ The capital expenditure program given in the tables does not include expenditure by these other agencies during 1967 and 1968. Expenditure in terms of grain or flour obtained under FL 480 (Title II) is not in- cluded either. Table 14 Capital Expenditures by the Panistry of Agriculture (current prices) 1965 1966 1967 1968 (actual) (aztual) (budget) (budget) In million won Agriculture and Forestryjr 5,944 11,897 11,178 17,755 Land development 1,238 1,868 1,188 724 Irrigation 1,500 3,882 4,269 5,003 Seed, pesticides, machinery 933 818 1,574 1,156 and soil improvenent Special crops 343 694 281 795 Livestock 222 349 459 745 Forestry B99 l,163 1,&'6 3,018 Research 325 527 509 653 Extension 284 227 312 461 Credit 3/ 200 2,369 700 7CO Other agriculture programs ( - - 4(500 Education 4/ (114) (170) (185) (227) I/ Upland reclamation and land consolidation uas shifted to the provin- cial governments; tidal land reclamation twas shifted partly to the Ilinistry of Construction, partly to the ITinistry of Health and So- cial Welfare, and partly it remained a responsibility of the Hlinistry of Agriculture. 2/ These do not include the contribution in kind made under PL 480 Food for Work Programs and by the local governments. 3/ Includes Debt Settlement Loans, and funds for raising farms from below subsistence level to subsistence level. 4/ Hot included in the total. Source: Statistical Annex Table 10. _ 25 - B. Assessment og Investment Progr;ns 57. As far as land development is concerned, the target for up- land reclamation dur=ngfg amounts to not more thaft 15-20 thousand hectares against the yearly target of roughly 40 thousand hectares- envisaged in the Second Plan. The same is true for land consolida- tion where again not more than half tlhe yearly target of 40 thlousand hectares set in the Second Plan would be accomplished. According to Korean officials, the progress of these programs is correlated with the availability of foodgrains under Title II of PL 480. However, as discussed earlier, thiis does not adequately explain their poor imple- mentation. There would have been justification for some slowlng doia of the upland reclamation program if preparation were made to revise the program on the basis suggested in para 34, as there would have been a time lag between the formulation of the proJect and its implementa- tion. Howfever, the Mission has not been informed that such a revision is being made. It also is difficult to find justification for the poor progress of the land consolidation program. The Uovernment should give increased attention to these important programs and try to attain the set targets. It is also desirable t1hat irrigation efforts are stepped up. The financial allocation f-or 1°68 b irrigation development and for repair and improvement of exibting irrigation facilities seems more or less in line with the Second Plan framework, but the physical targets to be achieved appear below the level envisaged in t.he P'an. 58. Among the other agricultural in-outs fertilizer and lime are the most important and, being in the private sector, neither of them is reflected in the public investment program. However, data supplied by the iJnistry of Agriculture show that physical targets set for 1968 are low. For example, lime consumption has been estimated at 370 thousand tons a year required to maintain good productivity from acidic soils. The target for fertilizer consumption is 634 thousand tons during 1968 against the likely consumption of 450 thousand tons during 1567, i.e. an increase of over 40 per cent. In the last couple of years, the use of fertilizer has increased at a yearly rate of not more than 8 per cent. It is therefore unlikely that the target wiill be met unless the effort is stepped up decisively. 59. The target of 62.6 thousand tons of pesticide consumption for 1968 is also desirable but is high when compared with the performance in the past; consumption in 1967 is estimated to be not more than 23 thousand tons against the target of 36 thousand tons. Allocations in the public sector to meet any serious epidemic are only nominally larger in 1968 than in the previous years. 60. Substantial increases in 1968 (almost seven times the level of 1967) of subsidies for more use of farm machinery and implements like power-driven plows, threshing machines, power tillers and sowing machines reflect the policy of the Government to replace bullock labor. The Mission supports this policy. - 26 - 61. With a view to increasing thle production of silk cocoons for larger exports, the planting of mulberry trees is being expanded. In order to provide necessar-y mulberry seedlings and silk worm eggs, allo- cations for these purposes have been tripled during 1968 over the pre- vious year's level. This would enable farrmers to bring about 19 thousand hectares of land under mulberry plantation, a target which is not impossible to achieve. 62. For livestock improvement, allocations proposed for 1968 are about 84 per cent higher than in the last year. Host of the increases are for improvement of livestock through the setting up of additional artificial insemination centers for improving the animaal stock, setting up pilot dairy farms and for promoting pig and poultry production for export to Hong Kong and South Vietnam. In addition, funds have been provided for subsidizing feed supply to Governnzent-oined farms and some selected livestock oiners. 63. Planting of fuel iwood during 1967 was given a high priority and a big program to cover aoout 400 thousand hectares w^Tas launched during the year under the direction of the President of Korea. The tempo of this program is expected to be mlaintained, if not accelerated, during 1968 in order to realize the target of afforesting 1.4 million hectares during the Second Plan as soon as possible. In addition, it is planned to invest about won 535 million on erosion control work to cover around 20 thousand hectares during 1968. The -Lission considers this program of high priority and reconmends that it be worked out on -a water-shed or sub-watershed basis wtth as close coordination as possi- ble between the various agencies concerned with erosion control lwork. If this approach is fo lowed, it would perhaps not be possible to cover the target area during 1960, as prelixinary surveys and the formulation of the p^roject would take considerable time before implementation starts. 6h4 Funds allocated" or extension services ard research are being increased by 28 and 48 per cent respectively in 196b over the past year. MH,ost of the funds for extension services would be for providing trans- port facilities for the village workers, strengthening audio-visual and other educational facilities, and providing in-service training for the staff wJorking at various tiers. Th-is emphasis on improved quality of extension work is very desirable. A major part of the funds for re- search in 1968 is to be utilized for experiments on crops, including horticulture and sericulture. The Mission recommends greater emphasis on trials with high yielding and disease resistant varieties of rice and barley which could withstand and response to higher doses of ferti- lization. The beginning in this direction by importing rice varieties from the International Rice Research Institute of the Philippines needs to be followed up by expansion in scope and coverage in the shortest possible time to select or evolve varieties best suited to local condi- tions. 65. The expenditure allocated for 1963 also includes a contribution of' won 2,000 million towards setting up agriculture processing indus- tries by the newly created Agriculture and Fisheries Development Corpora- - 27 - ti on; in addition, an allocation of wzon 2,500 million has been made to zeet the Debt Settlement and carry out the Price Stabilization Program. C. Possible Output Targets 66. The Overall Resources Budget anticipates 8.0 nillion tons of grain production during 1 968, of which 4.5 million tons wTould be rice, about 2.2 million tons barley and wheat and the rest would be pulses and potatoes, expressed in grain equivalent. Separate targets for each grain are not given. These targets of production, according to the ORB represent an increase of 5.7 per cent over 1966 production of 7.6 million tons. This is a very large increase in production. The 1Iission thinks that, given normal weather conditi6ns, these produc- tion targets may not be achieved unless efforts are made to increase sharply the use of agricultural inputs, particularly of fertilizer, lime and pesticides, and the program for land and wiater development is accomplished in full. On the other hand,it should not be impossi- ble to realize the targets for silk cocoons, tobacco, mushrooms and other 'special' (commercial)crops. 67. The ilssion estimates that if the Government's goal of rice production for 1968 is reached and a normal crop of summer grains during 1969 is reaped, Korea Aill still have to import about 300 - 400 thousand tons of foodgrains during 1969. However, if actual produc- tion falls short of the target, the country may have to import more. STATjISTICAL AN1EX Table 1. - Value Added in Agriculture, Forestry and Fisheries Table 2. - Production of Agricultural Crops Table 3. - limports of 4inished Agricultural Goods Table 4. - Imports of Chemical Fertilizer Table 5. - Export of Agricultural Commodities Table 6. - WTholesale Price Index of I'ajor Agricultural Commodities Table 7. - Use of Chemicals for Production of Agricultural Crops Table 8. - Number of Livestock Table 9. - Agricultural Processing Plants: Number, Capacity, Utilization Table 10. - Capital Expenditure by the Ministry of Agriculture for Development of Agriculture and Forestry Table 1 Value Added in Agrjculture, Forestry and Fisheries At constant 1965 prices 1962 1963 1964 Average 1965 1966 1962 -64. 1anount (In billion twon) Gross National Product 634h97 693.03 750.31 692.77 8V,585 913.82 Total value added bv Agricultural Sector 252.37 270X56 314X31 279X08 311063 3)5.91 "including forestry & fisheries) As percent of total agricultural sector i. Agriculture 80.9 80.1 82.4 81.2 82.3 82.5 ii. Livestock 9.3 8.9 7.4 8,5 6.7 6.5 iii. Others (attached 1.6 1.5 1.3 1.h 1.7 1.5 services & aux- illiary production iv. Forestry & logging 4.4 5.3 4.8 4.9 4.9 5.1 v. Fishery 3.8 4.2 4.1 4.0 4.4 4h4 Source: Bank of Korea. Table 2 Production of Agricultural Crops (in thousand m. tons) 1962 1963:; 1964 Average. 1965 1966 1967 - - - 1962-64 (a) Qereals 4,802 5,o46 5,939 ,261 5,747 6,401 6 125 Rice 3,015 3y758 3,954 3,576 3,501 3919 37 Barley 1,378 918- 1,515 1,270 1,807 2,018 1,916 Tiheat 268 228 309 268 300 315 Plillets 76 81 84 80 70 67 Rye - 42 35 35 37 29 41 459 Corn 17 20 35 24 30 34 Biack-heat 6 --6 7 6 10 7 'Pulses 182 182 191 185 203 195 Soya beans -7 1W6 16 5U - 7T 161 Others 26 26 28 27 29 34 P-^tatoes 1,563 1,795 3,222 2,193 3,577 3,378 Sweet ,i E§ 173i: T,7 2,997 9O90 *hite 412 391 571 458 580 688 Fruits 192 174 234 200 305 326 Apples T: 110 35 121 177 7 Peaches 20 19 35 25 54 63 Pears 28 24 28 27 39 41 Persi zr:s 17 14 24 18 25 22 Grapes 8 6 11 8 19 24 Oranges 1 1 1 1 1 2 Vegetables 1,3C0 1,187 1,436 1,308 1,576 1,584 Radish L-0 I8 --b 70-1 60- 78 5T7 Chinese cabbage 428 367 450 415 480 520 PRed pepper 35 34 47 39 46 67 Others 377 368 438 394 465 400 Special crops 41 33 39 38 h1 57 Cotton ) 1T2 13 4 12 7 Others 23 21 26 23 29 43 Tobacco 35 29 49 38 56 72 Cocoon 5.5 6.2 5.8 5.8 7.8 9Q6 Source (1) Year Book of Agriculture and Forestry, 1967; Mi-nistry of Agriculture and Forestrye (ii) Data supplied by 1inistry of Agriculture to IEssion0 (?) - esti-tes cf the Ni.sio.nn Table 3.. Trhpcrts of Finished Agricultural Goods (n _thousamiD.s.$) Average Commodity 1962-64 1965 1966 A. Wlieat (unmilled) 43,108 35,890 4o,482 Wheat flour 3,790 5,171 11,752 Rice (polished) 5,8h1 h 3,088 Barley (unmilled) 11,619 4,759 657 Maize (unmilled) 1,088 146 2614 Flour of cereals (other than wheat) 3,503 6,710 3,296 Oilseeds, nuts and Kernal 809 328 1,370 Fruits and vegetables 367 510 114 MAiscellaneous food preparation 240 26g 307 Vegetables, oils and fats 582 366 455 Tobacco (including manufactured) 52 7 23 Sugar and sugar preparations 4,337 4,004 6,232 Coffee, pepper and spice 139 256 261 Beverages 126- 178 243 Total 75,601 &8,1498 68i944 B. Animal fat and oil 3,186 3,398 5,036 Meat and meat preparations 143 205 167 Dairy products and eggs 2,1451 3,130 2 143 Total 5,780 6,733 7,346 C. Fish and fish products 38 23 125 D. T^tal Finished Agr. .mports (= A+B+C) 81,419 65,254 76,415 E. Total imports.into the Country 462,131 463,1414 716,1441 Fp Percent of D to Z. 17.6 1i.1 10.7 Source: BS= on N'orocz, Economic 5tatiatics Yea-x Book, 1967. Table 4 Imort,s oL Cbemical Fertilizer : . f (in thousand tonej Fertilizer 1962 1963 1964 1965 1966 Urea 79.86 0.27 79.07 171.86 37.85 Ammonium Sulphate 612.43 609.65 207.03 345.28 81.01 Ammonium Nitrate 14.34 1.63 2.00 2.74 4.18 Nitrogenous fertilizer(NES) - 59.87 247.11 52.67 0.11 Calcium phosphate 56.37() e 10.28 79.70 18.71 Phosphatic fertilizer (excl. calcium phosphate) - 250.72 243.77 204.22 320.34 Potassic fertilizer 8.21 54.12 10.04 0.50 315.36 Manufactured fertilizer m.e.s. 391.55 Nil 57.01 79.00 27.53 (a) Calcium superphosphate (b) Potassium chloride Note: As the nutrient content for each fertilizer differs, the quantities of fertilizers imported each year have not been totalled-up. It was also not possible to convert the different types of fertilizers into nutrient content because in some of the items (such as nitrogenous fertilizers not otherwise specified), the nutrient content is unknown. Source: BEn'=- o- corea, Economics Statistics Ye.rbook- Table 5 Export of Agricultural Gommaodities (Mri thousand US$ Commodity- Average 1362-64 1965 1966 Total of all eports 86,891 175,C82 250,334 All agriculture; 31,329 2,140 67,212 Agriculture sub-sector 12, 481 cg29 32,380 Rice (polished) 4,017 3,242 6,841 Other cereals & their preparations 199 332 457 Fruits & vegetables 1,140 2,223 2,670 Raw silk 4,785 6,794 11,632 Waste silk 451 625 854 Ginseng 581 1,877 1,971 Tobacco & tobacco manufacture 141 870 6,498 Sugar & sugar preparation 884 769 718 Beverages 50 27 394 Coffee, tea, etc. 15 71 47 Oilseeds, oilnuts & kernels 63 6 35 Cotton 89 108 135 Vegetable oils 38 52 104 Jute 28 33 24 Livestock 3,578 1,484 1,230 Hides & skins & furs 145 189 346 Bristles 1,086 881 442 Feeding stuffs 92 165 151 Animal bones, horns, etc. 145 228 258 Animal oils & fats 45 18 33 Swine 2,Q65 3 - Forestry Wood, lumber & earth 95 170 281 Fisheries 15_175 23,457 33,321 Fish & fish preparations 10,890 17,838 21,673 Dried laver 2,586 3,315 8,710 Agar-agar 1,699 2,304 2,938 Agricultural exports as percent of total exports: 36.1 24.1 26.8 Source: Bank of Irarea, Bcononic Statistics Yearbook, 1967. Table 6 Wholesale Price Index of Major Agricultural Cornodities (1960 100) Average Overall of Wholesale Edible Barley & Pulses Animal & Edible Edible Price Index Agr. Wheat Poultry Oils Marine ProdJucts P Products Products 1961 113.2 120o0 135.4 99.6 112.9 114.7 96.9 1962 123.8 130.3 155.1 104.8 124.8 114.0 113.4 1963 149.3 189.6 243.1 172.4 139.2 171.7 149.5 1964 201.1 245.6 324.4 263.8 188.0 256.9 194.0 1965 221.2 244.2 259.7 277.9 247.5 273.8 231,3 1966 238.0 257.2 261.2 308.5 263.7 303.7 275.4 1966 241.2 264.8 245.7 311.6 267.3 328.4 281.0 June 1967 254.1 307.9 295.1 426.4 321.1 315.8 366.9 June Source: Bank of Korea, |onthly Statistical, Review. Ta~bl1e 7 TUse of Different Chemicals, for Prodiction o'_Agricutur>alCrops ,&u snd; s m-n. tons Year Fungicides Insecticides Others Total 1960 n.a. n.a. n.a. 4.9 1961 3.4 2.1 0.1 5.6 1962 4.6 2,7 0.1 7.4 2.063 15.1 3.0 o.6 18.7 1964 18.4 3.6 1.3 23.3 1965 22.0 1966 29.5 n.a. = Not available. S.ources: (i) Year Book of Agriculture and Forestry, 1965. (ii) Bank of Korea, 3conoimic Statistical Iecx* Book, 1967. (iii) Data supplied by the Ministry of Agriculture anid Forestry. Table 8 I-Tumber of Livestock (Im thoasands) Average 1962 1963 19642 1962-64 1965 1966 Draft cattle l,252.6 1,363.3 1,350.6 1,322.2 1,313.5 1,289.7 Dairy cows 2.4 3.5 5.2 3.7 6.6 8.5 Horses, asses and mules 1/ 25.o 26.8 27.0 26.3 27.8 27.8 Pigs 1,671.9 1,510.1 1,255.5 1,4(79.2 1,381.9 1,L57.3 Goats 313.4 286.14 224.9 274.9 17765 161.3 Sheep 1. 1.2 1.0 1.2 1.0 1.1 Rabb_ts 1,316.7 1,131.4 79,9.5 1,080.9 763.0 908.5 Chickens 13,oL6.9 11,907.2 10,282.0 11,745.4 11,892.6 l4,007.7 Ducks 219.0 172.8 i48.6 180.1 209.5 232.6 Turkeys 2.5 2.2 2.1 2.3 1.9 1.8 1/ The number of asses and mules is around 1 thousand only. Source: Bank oC Norea, :3conric Statics Year Book, 1967. Table 9 Agricultui'al Processing Plants- Nu.wbe,r, Capdcjt7- 3tilization Utilization of capacity Capacity per Actual per year I,amne of Number of ycw of consuzption (in terns of industry Year plarts raw materials of raw materia.s raw materials) Number Thousand metric tons Percent Sw,eet- p otato starch 1964 85 148.8 88.3 59,3 1965 96 180.0 86.4 8eO 1966 110 261.3 152.2 58.2 Mln z - . cessmng 1964 25 )43.8 n,a. n.a. 1965 32 53J4 *0 1.1 1966 47 55.8 0,8- 1,4 Iik pro- cessing '1 2 ~~~~~~ 1964 11 17-57 5 52 g 29.7 1965 17 20e3 8:72/ 42e9 1966 18 206 1223- 59-7 dible oil 1964 67 69.1 4o.5 58,6 l965 75 91.3 33.5 36.7 1966 80 172.-4 64.6 37.5 Filature 1964 25 8,1 5.1 63,0 1965 26 9.9 5.4 54.5 1966 27 111.2 7.3 65.2 train pro- cessin 1964 25,897 16.3 4.6 28.2 1965 25,257 1.5.9 4.3 27.0 1966 24),9)46 15.6 5.)4 34.6 n. a. Not available. Capacity per year in terms of finished products. 2/ Production per year in terms of finished products, Source: 1. Swseet potato starch: Manufacturing Starch Association. 2. Meat pro TnssirF Livestock Saniitation Section. 3. Vegetable oil: Vegetable Oil Corporation. 4. Fi1itre7-ericu.?tu-re Section, YivF. 5. Grain process m: Bureau of Food Administration, WAF. Table 10 Capital Expenditure by the Ministry of Agriculture for Development of Agriculture and Forrt In million won 1965 1966 1967 1968 (actual) (actual) (budget) (budget) A riculture cludin- forest 5,94 A 11,897 17,755 Land development 1,23 1 172 Upland reclamation 19 221 - Tidal laid reclamation 961 1,420 1,188 524 Land consolidation 79 227 - 200 Irrigation and other allied facilities 1,500 3 882 4,269 5 003 Yield improvement 933 -7 Seed .163 197 232 Insect and disease control 80 112 128 146 Agricultural implements and machinery 74 103 60 4114 Soil improvement 0616 4°5 1,154 321 Development of _pecial crops 343 694 281 795 Industrial crops 19 1-3 79 Mulberry for cocoon 324 511 200 582 Others 78 17 134 Livestock 222. 349 459 745 =pxGovement of stock (breeding) 73 -105 201 339 Feed 65 100 136 3014 Veterinary services 49 100 68 9.2 Processing industry 140 36 45 Others - 8 9 10 F2K2SEt5Y 899 1 163 1 886 3,018 AfLorestation 290 3T7 Erosion control 399 398 3 535 Others 210 378 737 1,219 i ultural research and extension 609 754 821 1 114 Research 327 27 °9 Extension 284 227 312 461 Alicultural credit 200 2,369 700 700 Agricultural production fund 20O0 700 700 Others 3/ - 1,700 - - Other agricultural programs (including - - 4,500 AricuLtue-r- and Fliseries Development Corporation) Agricultural education V (114) (170) (185) (227) 1/ These do not include the contribution made by P1 480 funds and by the local government. 2/ Includes funds for fertilizer, lime, facilities for improved cultivation, etc. T/ Includes Debt Settlement Loan and funds for raising below subsistence level farms to subsistence level. 4/ Notincluded in total. Source: Economic Planning Board. TABLE OF:- CONTENTS Volume II Fisheries Page No. SUITARY AND CONCLUSIONS i - iv I. INTRODUCTION ............, ..,...... ,....... 1 II. TRENDS IN FISHERIES ......... .......... . .. .............. 3 A. The Fishing Fleets e ....**...*..****4****** .......... 3 B. Fish Handling and Processinig ......................... 4 Fish Handling ............ a........I.. ...... . 4 Fish Processing ..* ..... ..... .......... 5 C. Investment .... .. a............*.......*. .*.................... 7 D. Fishery Production, Exports and Domestic Consumption . 9 Fishery Production (Landings) ....,,.............., 9 Output of Fishery Products ....................... 12 Exports ......... ................................. 13 Domestic Fish Consumption .................... . 15 E. Prices .......*.... f . 16 ITholesale and Export Price Movements ............ 16 Prices to Fishermen ,........,........0.... ... 18 III. ACHIEVE2HE TS AND PROSPECTS ................ . 19 ' Investment Projects ... ..................... 19 B. Production and Export Targets ... .o.n aae.a.,a, 23 Production 4oo.rec.a..a,. aa.e,*o.o. t,....*. 23 Exports .4 .0.a* t ,.a ,,....., * .f 0..C, a.. . . . 24 C. Fishery Administration ..... ..,.. ...... 25.... * a5 TABLE OF CONTENTS (Cont'd) Page No. D. Fishery Training and Education ............. ... 26 E. The Role of the Central Federation of Fisheries Cooperatives ... ........... ** t*****..- 27 F. Other More Recent Developments ..................... 28 Agricultural and Fisheries Development Corporation ** , , , 28 Aquiculture,Development Plan ................... 28 Joint Fishery Project ........................... 29 STATISTICAL ANNEX (Tables 1 - 7) SUIIRARY AND CONCLUSIONS 1. The fishery industry is ole of Korea's most promising fields for economic development in view of the availability of fish in nearby waters, the country's scarce alternative natural resources, and the labor intensive character of the industry, In addition, export possibilities for fishery products are favorable so that increased fishery production can help reduce the country's big trade deficit. 2. During the last five years, but particuljrly since 1964, there have been large investments in the industry.- The distant water fleet alone) which at present consists of some 175 vessels - compared with 18 in 1962 - is estimated to represent an investment of about $75 million. There has also been considerable vessel mechanization and some improvement in fishing facilities. As a result, fishery production has-been increasing at an annual rate of 9%7 per cent, The value of exports more than tripled during the last five years. The expansion was however too intent on immediate production and development needs in related fisher-y fields were relatively neglected, Some imbalance in the fishery sector has thlus been the result, 3. .As far as distant water