South Korea’s Young Farmers Face Mounting Debt and Policy Gaps

South Korea’s efforts to revitalize its agricultural sector by attracting young farmers are facing significant headwinds, as many new entrants struggle with substantial debt and limited access to effective policy support. A recent report from the Korea Rural Economic Institute (KREI) highlights a growing crisis among young agricultural businesses, with over half resorting to measures like reducing living expenses or taking on new loans simply to service existing debt.

Rising Debt Burden Among Young Farmers

The average debt of young farmers – those aged 40 or under – reached 239 million won (approximately $176,000 USD as of March 22, 2026) over the past three years, according to KREI’s report, “Insolvency of Agricultural Businesses and Policy Tasks.” A substantial 84.2% of this debt is directly invested in agricultural activities, with nearly half (49.1%) allocated to purchasing or leasing farmland. Another 41.5% is used for essential inputs like machinery, facilities, labor, and seeds.

Repayment Difficulties and Financial Strain

More than three times as many young farmers report difficulty repaying their principal and interest (55.3%) compared to those who uncover it manageable (17.1%). The primary driver of this difficulty is fluctuating and unstable agricultural product prices, cited by 46.5% of respondents. Rising production costs also contribute significantly, impacting 14.8% of young farmers.

Looking ahead, a concerning 74.8% of young farmers anticipate a potential crisis in debt repayment if conditions like interest rates or income change. Even under current circumstances, 38.7% expect a loan repayment crisis within the next five years. Kim Mi-bok, a senior researcher at KREI, emphasizes that over one-third of farmers are already feeling the pressure of potential loan defaults, indicating a widespread vulnerability within this cohort.

Coping Mechanisms and the Risk of Abandoning Farming

Faced with these financial pressures, 56.5% of young farmers are reducing living expenses or taking out new loans to cover existing debt. Alarmingly, 40% of young farmers are considering leaving the agricultural sector altogether due to their debt burden. Kim Mi-bok stresses the need for effective debt management strategies to support the growth of agriculture and rural areas by attracting and retaining young farmers.

Limited Access to Policy Support

Despite the availability of policy funds designed to assist struggling farmers, utilization rates remain low. Only 2.6% of young farmers have accessed the ‘Agricultural Management Recovery Fund,’ which provides low-interest loans during periods of price declines. Similarly, the ‘Business Recovery Support Farmland Purchase’ program, aimed at helping farmers restructure debt, has been used by only 2.5% of eligible young farmers. A significant barrier to access is a lack of awareness, with 58.4% and 63.1% of respondents respectively stating they were unaware of these programs.

The Need for Asset Building and Policy Improvements

KREI’s research suggests that increasing asset ownership among young farmers is crucial for improving their financial stability and long-term viability. “As the amount of assets increases, the ability of young farmers to repay principal and interest increases, and the possibility of continuing farming also increases,” explains Kim Mi-bok. She advocates for policy support focused on helping young farmers build assets to ensure sustainable repayment and continued engagement in agriculture.

South Korea’s Commitment to Young Farmers

The South Korean government has demonstrated a commitment to supporting young farmers, aiming to increase the number of grant recipients to 23,000 by 2025. These grants are designed to provide crucial income support and encourage urban-to-rural migration. The Korea Rural Economic Institute (KREI) also recently signed a Memorandum of Understanding (MOU) with Pusan National University to strengthen cooperation in agricultural and rural policy research and exchanges.

Addressing the debt crisis and improving access to policy support will be critical to ensuring the success of these initiatives and securing the future of South Korea’s agricultural sector.