South Korean agricultural economic and financial challenges

South Korea’s agricultural sector is experiencing multifaceted economic and operational challenges. Initial reports highlighted rising safety concerns due to a surge in agricultural drone usage, which saw insurance payouts for accidents increase 4.7 times between 2022 and 2025. Additionally, farmers faced a credit crunch driven by declining farmland values, leading to a significant drop in new farmland mortgage loans and collateral valuations. Management issues also surfaced regarding the recovery of youth farmer settlement subsidies.

These financial pressures have extended to agricultural and fisheries cooperatives, which are facing stability risks due to an extreme concentration in real estate mortgage loans. Data indicates that over 83% of agricultural cooperative loans and 71% of fisheries cooperative loans are tied to real estate collateral, rather than direct farming or fishing activities.

This shift has resulted in high delinquency rates, with real estate-related mortgage delinquencies accounting for approximately 95.7% of overdue balances in agricultural cooperatives and over 91% in fisheries cooperatives. Specific instability is noted in ‘joint loans’ and high-risk real estate development or bridge loans, prompting calls for urgent reorganization of loan portfolios and improved asset management.