An analysis of the operation mechanism of price stabilization policy for vegetables and its effects on farmers’income

In this study, working mechanism of the vegetable price stabilization policy is theoretically identified and the effects of this policy on farm household income is empirically assessed. Farm household income is evaluated to be increased by KRW 119.36 billion for the producers of winter radish, autumn radish, autumn cabbage and garlic, if the actual supply amount from the farmers participating in the policy is the same as the contract quantity under this policy. In addition, the income increase of non-participating farmers is estimated to be 107.3 billion won which is very high compared to 12.03 billion won for the income increase of participating farmers. The estimated overall effect is larger than the vegetable price stabilization policy cost of 106.9 billion won in 2021, which imply that the policy needs to be continuously implemented.