Analysis of Farm Income Variation by Farm Typology in Case of Free Trade Agreements (FTA) Settlement

This paper examines the degree of the farm income variation by farm typology in case of Free Trade Agreements(FTA) settlement, using farm-level cross sectional data collected 2004 year. This study develops a model measuring farm income variation of individual farm household by tariff elimination and reduction of agricultural products, in connection to the variation of producer surplus by agricultural products. In order to categorize the degree of variation in the farm income, the farm households are classified according to the some characteristic variables such as farmer's age, standardized farming size, the level of farm income, and farming type. The results demonstrate that those farm households in the sample face significant decreases of farm income and agricultural income in both tariff elimination and 50% reduction of all agricultural products. It is found that farm income decreases in farm households with higher agricultural income. Larger farms producing fruits and vegetables experience the highest decreasing rates of farm income and agricultural income by tariff elimination. We also find that more human capital leads a rapid decrease in farm income. Based on our analysis, effective farm income stabilization by farm typology are crucial for reducing loss of farm income that be faced by Korean farms in further FTAs