Korean economic overall has went through varieties of structural changes since 1960's, especially due to external policy on industrialization towards economic liberalization. The industrial structures, in perspective of economic importance, has been moved from agricultural one to manufacturing or service industries. Due to this tendency, comparably, the agriculture industries could not be fully developed, somewhat falling behind. As a result, many problematic shortfalls of the agricultural industry have raised.
One of the manifest case is found in farmhouse debt problem. To overcome this situation, the Korean Government has been adopting policies since 1986, as measures to reduce farmhouse debt. Some of initiatives such as finance policy to postpone redemption and reduction of interest and mutual savings and finance are the parts of those policies. These governmental measures are necessary to minimize social cost which has invested already on those filed.
However, the current policies on farmhouse debt envisages limits in certain extend. To be more specific, they are not able to sufficiently satisfy important elements, for example, economic efficiency, social equity and laxity of moral in farmhouses.
In this situation, in order to reduce heavy burdens of farmhouse debt problems, the farm land purchasing policies of the Farm Land Bank to support the regeneration of farmhouses have been adopted since 2006. This thesis uses real GDP, nominal GDP, price index(CPI), interest rate(CB), M2, housing price index(HI), rice price(RSI), vegetable price(BSI) and land price index(FI) as variables which are directly related to the price of the farm land to figure out the price structure of the farm land price.
Data for the analysis starts from the first quarter of 1988 to the last quarter of 2009. The forecasting periods in this thesis cover from 2010 to 2015, totally 6 years overall.
When take a look at the price variation relationship between farmland price and other variables, except in case of the open market interest rate, RGDP, NGDP, M2, CPI, HI, RSI, BSI show steady rising curve in times series analyse. This increasing tendency is similar to the farmland price. This rising curve is applicable in usual economic situations, not in some of abnormal economic states such as IMF financial risks period.
The results of Granger Causality test on each variables show that RGDP affects rice land price under the 1% significance level, and NGDP affects under the 5% significance level. In the same test, CPI, CB and HI affect the rice land price when the significance level is 10%. The results of Granger Causality test for the farm field price show that NGDP, RGDP and CPI affect farm field price under the 1% significance level, CB and HI affect farm field price under the 5% significance level. In the same test, CFAI affects the price when the significance level is 10%.
As a forecast model, Exponential Smoothing Method, ARIMA model, ECM model and VAR forecast models are adopted.
This thesis figured out whether the redemptive right can be exercised or not, by calculating expected future price of the farmland. Consequently, first, redemption is possible in those following scenarios; based on ARIMA model and ECM model, rice filed and farm which are higher than 95% confidence level. Redemptive is also feasible according to ECM model, when the expected price of rice field or farm which are higher than 95% confidence level. When VAR model is applied, redemption is practicable when the field or farm which are lower than 95% confidence level or when their expected price is higher than those 95% confidence level. This assumption related to VAR is based on the expectation that the price will be raised in significant level which is higher than interest on governmental policy fund to supporting farmers(currently 3%). Thus, repurchase will be surely tangible. Second, when it comes to Exponential Smoothing Method, it is forecasted that the price will be raised less than 3%, which means less than interest on governmental policy fund to supporting farmers, expected price of the rice field and farm, in these following situations; expected price of rice field from the result of ARIMA model, rice field and farm which are lower than 95% confidence level of ECM model, rice filed in beyond range of VAR model, farm which are lower than 95% confidence level of VAR model. In these cases, repurchase is depends on differences between market price and appraised value and expected rise in prices. In other words, if the market price is higher or than appraised value or same as it, and if the rise rate of prices are lower than rise rate of the farm price, redemption will be accomplished. Last, price will drop in these cases; when price of the farm and rice field which are lower than 95% confidence level of ARIMA model, rice field price which is also lower than 95% confidence level of VAR model. The repurchase will not easily achieved because of tendency toward decrease of the farm value, unless appraised value is obviously lower than market price.
In order to lead more repurchase, the thesis introduces the plans as follows.
First one is to implement the reserving account for repurchase. Second one so providing incentives, such as rate of interest addition. Third one is adopting a measure to widen possibility of amortize with equal-dividing of the principal. Last one is promoting efficiency in the operation.
These are the reform measures which are achieved by figuring out the downfalls of Regeneration Project Management Support farmland for Purchasing farm land policy. The reform measures are aimed at reinforcement of the policy to provide better alternatives for the farmhouse debt matter. First of all, related law should be clarified. Second, the countermeasure policy should take refund-ability of the debt into account. Last, advanced tax system should be considered.
This thesis have largely three parts; examine and analysis the process of determining sale price and rent price, especially through the Regeneration Project Management Support farmland for purchasing farm land policy by farmland bank, clarify peculiarity of the policy via econometrics analysis about the price of farmland which will be repurchased after 2011, and also point out some of problems awaiting solution and reform measure of the policy.
Despite this achievement, still there are some limits such as the fact that repurchase period has not come yet, this thesis is full of suggestions in light of the fact that varieties of characteristics which are related to price of farmland are thoroughly introduced and tested. This paper also adopts and fully applies reasonable and econometrics measures so as to provide contribution on politically suggestive meanings.