South Korea audit faults farm policy loans
June 10 (Asia Today) -- South Korea's state audit agency said Wednesday that government-backed agricultural policy funds intended to help struggling companies recover have instead increased their dependence on public financing.
The Board of Audit and Inspection released an audit report on the operation of major agricultural policy fund programs.
The audit was conducted after criticism that the financial soundness of the funds has worsened every year while repeated support for marginal companies has produced limited results.
Agricultural policy funds refer to government-backed loans and subsidies provided to farmers and agricultural businesses to improve competitiveness and support young farmers.
The audit found that the current system tends to keep marginal companies alive over long periods rather than pushing them toward restructuring.
Marginal companies are defined as businesses that have been unable to cover even interest expenses with operating profit for more than three years.
According to the audit agency, only five of 71 companies that received support, or 7%, improved their interest coverage capacity between 2022 and 2024.
Thirty-five marginal companies remained chronically weak but received an average of 19.09 billion won, or about $12.66 million, over three years. That was more than 22 times the average 840 million won, or about $557,000, received by companies that returned to normal operations.
The audit also found that systematic management was lacking after funds were provided.
The Ministry of Agriculture Food and Rural Affairs conducted 144 agricultural management consulting sessions for related companies from 2020 to 2024. But only one of the 71 companies that received agricultural policy funds took part in the consulting program.
The Board of Audit and Inspection told the ministry to actively connect marginal companies with consulting support and manage whether recommendations are carried out. It also called for stronger monitoring of companies' financial conditions by using private credit-rating information and other data.
The audit also found problems in a youth farmer support program.
The ministry has expanded the number of young farmers selected since 2018 and has provided development funds on a rolling basis without separate screening. The number of selected young farmers rose from 2,000 in 2022 to 5,000 in 2024.
But the development fund was exhausted early in November 2023. Despite increasing the number of selected young farmers, the ministry kept the 2024 budget unchanged from the previous year.
As a result, new loans for young farmers were suspended in August 2024. Some young farmers who had prepared to buy land or build facilities based on expected funding had to pay additional costs out of pocket to avoid breaking contracts.
The audit agency issued a caution to the agriculture minister, calling for more careful reviews of the number of selected young farmers and expected funding needs. It also said the ministry should provide a sufficient grace period when changing the way the program operates.
-- Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260610010003608
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This story was originally published June 10, 2026 at 4:48 PM.