Has the Reform of the Public-Benefit Direct Payment Improved the Inequality?

Abstract

The Direct Payment Policy on the Rice Acreage played an important role in ensuring the stable production of rice. However, it was pointed out that the policy causes an oversupply of rice has been continuously raised. In addition, a problem was raised that the policy worked in favor of large scale farmers. Accordingly, the government introduced a new public-benefit direct payment system in 2020, which was designed so that the direct payment system was not linked to cultivation, and the payment unit price was also designed to decrease as the area increased. As a result of comparing the effects of the reorganization of the direct payment system, the proportion of direct payments paid to the dry field in the past was only 14.5%, but increased to 28.3% in 2020. Thus, the rice-oriented support structure was improved. On the other hand, the ratio of mean to median (RHS), fell from around 2.2 to 1.69, confirming that the gap between farm households improved significantly. In addition, the Gini coefficient was also lowered to 0.46 from the level at the beginning of 0.6, indicating that the distribution equity was improved.