The impact of PL 480 shipments on prices and domestic production of foodgrains in Korea

The main purpose was to evaluate the effect of PL 480 shipments of cereals to Korea on domestic prices and production during the past fourteen years. Secondary data were used for the study with most of data derived from the publications compiled by the various governmental agencies in Korea. PL 480 shipments data were taken from the semiannual and annual reports on Food for Peace published by the House of Representatives of the United States. An attempt was made to analyze the impact of Public Law 480 gratis assistance to Korea and to identify some quantitative magnitude of effects of the commodities shipped under PL 480 on prices and domestic production of foodgrains. Though the accuracy of data and the performance of the model presented some problems, the results seem to be compatible with the hypothesis; that is, PL 480 imports tend to lower the price of domestically produced grains and lead to a decline in domestic production. However, after taking account of possible price and production dis incentives, the net effect of the imports indicates that there has been a positive contribution to domestic levels of consumption.