Building Factories on Agricultural Land: Complete Guide to Agricultural Land Conversion Permits and Costs

When establishing factories in the Gyeongju-Gyeongbuk region, many attractively priced lands are agricultural (fields and paddies). The problem is that building factories on agricultural land is far from simple. You need agricultural land conversion permits under Agricultural Land Act Article 34, and this procedure ranks among the most challenging in factory establishment permits.

The difficulty of agricultural land conversion permits varies dramatically depending on whether the agricultural land is inside or outside 'agricultural promotion areas.' Agricultural promotion areas are prime farmlands with established agricultural production infrastructure, where conversion is very restricted. Conversely, non-agricultural promotion areas (agricultural lands outside agricultural promotion areas) allow relatively easier conversion. Agricultural land conversion for factory establishment purposes mostly occurs in non-agricultural promotion areas.

Looking at the specific procedures: application for agricultural land conversion permit → review → decision → assessment and payment of agricultural land preservation charges → permit issuance. Processing periods are 30 days for areas over 30,000㎡ within agricultural promotion areas or over 200,000㎡ in non-agricultural promotion areas, and 20 days otherwise. However, in practice, including revision requests, 2-3 months is common.

The Agricultural Land Act revision effective from January 3, 2025 (revised January 2, 2024) brought several important changes. First, restoration targets were expanded. The scope for receiving restoration orders when failing to properly conduct intended projects after agricultural land conversion has broadened. Second, the agricultural land use planning system was abolished. While positive from a procedural simplification perspective, this represents strengthened post-management.

The most notable change is the reduction in agricultural land preservation charges. From July 2024, agricultural land preservation charges for non-agricultural promotion areas were reduced from 30% to 20% of official land prices. For example, when converting 3,000㎡ of non-agricultural promotion area farmland with an official land price of KRW 100,000 per ㎡, the charge decreased from KRW 90 million (100,000 × 3,000 × 30%) to KRW 60 million (100,000 × 3,000 × 20%). The KRW 30 million cost saving is significant for small and medium enterprises.

There's one practically important tip: when receiving factory establishment approvals under the Industrial Cluster Development Act, you can utilize the consolidated processing system to avoid separate agricultural land conversion permit applications. Agricultural land conversion permits are automatically processed through consultation with relevant agricultural departments during the factory establishment approval process. This can save separate agricultural land conversion permit application procedures and timeframes.

However, consolidated processing may not be easy when trying to convert agricultural land within agricultural promotion areas. Since agricultural promotion areas are prime farmlands directly connected to national food security, relevant departments are often passive about consultations. In such cases, it's practical to look for sites within industrial complexes or find alternative sites in non-agricultural promotion areas.

Agricultural land conversion involves costly and time-consuming procedures, but risks can be greatly reduced through thorough advance preparation. You can check whether land is in agricultural promotion areas at Land Integration (eum.go.kr) and official land prices at the Real Estate Public Price Information System (realtyprice.kr).