Soybean paradox unfolds in South Korea

The South Korean government, which had previously encouraged farmers to replace rice with soybeans, is now considering reversing the decision and cutting back on soybean farming, even though farmers have already made significant investments in soybean production.

South Korea’s soybean stocks reached 88,000 tonnes at the start of the year, nearly double the level of last year, as imports fell by 40,000 tonnes. The move comes amid a glut of domestic soybeans, with production outpacing the development of new markets. Because the government bought up much of the soybeans grown in former rice fields to build up its stockpiles, it cannot sell them at lower prices without destabilising the market. At the same time, a reduction in soybean import quotas, intended to boost domestic consumption, has led to a shortage of imported, cheaper beans. Critics say the government is mismanaging soybean supply and demand by focusing solely on curbing rice overproduction, write The Chosun Daily’s Kang Woo-ryang, Kim Yoon-ju and Kim Mi-gon.

The Korea Institute of Rural Economy reported on August 18 that the area under soybean plantings in former rice fields is estimated at 32,920 hectares this year, up 46.7 percent from 22,438 hectares in 2024. The sharp increase follows the government’s 2023 decision to classify soybeans as a “strategic crop,” offering farmers 2 million won ($1,440) per hectare if they grow soybeans instead of rice.

The government has also set up mechanisms to stabilize prices. The government has pledged to purchase up to 60,000 tons of soybeans annually for reserves and has bought back the entire soybean harvest from rice farmers who choose to sell. Without such guarantees, officials argued that falling prices caused by increased production would erode farmer profits by removing incentives to abandon rice. In July, the wholesale price of soybeans reached 231,280 won ($166) per 40-kilogram bag, up 4.1 percent from 222,200 won a year earlier.

However, stockpiles have nearly reached the limit of storage capacity. By the beginning of 2025, total reserves stood at 88,000 tons, up nearly 80 percent from 49,000 tons a year earlier. Although some volumes have been released, stockpiles still exceed 80,000 tons.

The government’s decision to reduce soybean plantings has sparked a backlash from farmers. Yoon Kwang-ho, secretary general of the Korea Central Association of Field Cooperatives, said many farmers had invested hundreds of millions of won in combines, tractors and other equipment to grow soybeans in former rice fields. “Now, by asking farmers to reduce their plantings, we are shifting all the responsibility for overproduction onto them, while the government is trying to wash its hands of it,” he said.

At the same time, the government is working hard to stimulate demand for domestic soybeans. The Korea Agro-Industry and Food Trade Corporation this month ordered a 9.6 billion won public relations campaign to promote local soybeans. Starting in September, the campaign will highlight the health benefits on TV programs and use YouTube and TikTok influencers to promote consumption.

The government has also decided to end the guarantee for the complete purchase of soybeans from rice fields starting in the second half of this year. However, analysts say it will be difficult to find new major markets for Korean soybeans in the next one to two years, which will inevitably affect production adjustments.

The import cut policy has also come under criticism. Earlier this year, the government cut its annual import volume from 280,000 tons to 30,000-40,000 tons. However, most tofu makers are small businesses that are unable to absorb the higher cost of domestically produced beans. The Korea Soybean Association said Korean soybeans cost more than 5,000 won ($3.60) per kilogram, about three times the cost of imported ones at 1,400 won ($1). Even with subsidies, prices are expected to remain at around 3,000 won ($2.20) per kilogram. The Korea Soybean Association said supplies of imported soybeans could run out as early as October.

Tags: South Korea, soybean