2026 Farmland Act Revision: 20% Factory Establishment Cost Reduction Possible

## Core Changes in Farmland Act Revision

The 2026 Farmland Act revision creates new opportunities for manufacturing companies preparing factory establishment. This revision goes beyond simple deregulation to provide practical cost savings and procedure simplification.

The Ministry of Agriculture, Food and Rural Affairs promoted this revision with the goal of creating new turning points for rural areas, with stay-type shelter introduction and smart agriculture facility expansion drawing particular attention.

### Ripple Effects of Stay-type Shelter Introduction

Unlike existing 6-pyeong (about 20㎡) farm huts, new 'stay-type shelters' are expanded to 33㎡ (about 10 pyeong). This is an important change enabling use as temporary office space or management offices when securing factory sites.

💡 Key Point With toilets, septic tanks, kitchens, and shower facilities installable, these can serve as accommodation for management personnel during early factory operations. Maximum retention period of 12 years (3-year extensions) ensures sufficient utilization periods.

## Farmland Preservation Charge Changes and Cost Impact

Changes in farmland preservation charge calculation standards bring practical cost reduction effects for large-scale factory site acquisition.

📊 Farmland Preservation Charge Calculation Standards Category|Agricultural Promotion Areas|Outside Agricultural Promotion Areas|Cap Amount Charge Rate|30% of individual announced land price|20% of individual announced land price|KRW 50,000/㎡ Installment Payment Standard|Over KRW 20M individuals/KRW 40M corporations|Within 4 years|30% initial payment

With farmland preservation charge per square meter capped at KRW 50,000, substantial burden relief effects can be expected for high-value farmland.

### Gyeongju Area Farmland Conversion Status and Outlook

Gyeongju City has traditionally developed agriculture and tourism industries but recently actively attracts manufacturing. 2025 farmland conversion status shows overall stable approval rates.

According to Korea Rural Community Corporation data, farmland conversion applications in Gyeongju area are steadily increasing, with manufacturing-related conversion permits particularly trending upward.

## Agricultural Promotion Areas vs Agricultural Protection Areas Strategic Choice

When selecting factory establishment sites, accurately understanding differences between Agricultural Promotion Areas and Agricultural Protection Areas is important.

📊 Farmland Zone Conversion Possibilities Zone|Conversion Difficulty|Permitted Facilities|Charge Level|Recommended Use Agricultural Promotion Zone|Very High|Agricultural/forestry/fishery processing facilities only|30% of individual announced price|Agricultural processing factories Agricultural Protection Zone|High|Some manufacturing facilities possible|20% of individual announced price|General manufacturing factories General Farmland|Moderate|Most possible|20% of individual announced price|Multi-purpose factories

Agricultural Promotion Zones only allow agricultural/forestry/fishery processing facilities, which can actually be opportunities for agricultural food-related manufacturers.

### Smart Agriculture Facility Linkage Strategy

The 2026 revision allows smart crop cultivation facilities and vertical farms, enabling linkage with agricultural processing factories.

💡 Key Point Vertical integration models handling everything from raw agricultural material production to processing can be built, securing both food safety and cost competitiveness simultaneously.

## Farmland Conversion Procedure Optimization Guide

Average farmland conversion permit review periods shortened to 20 days, but thorough preparation is necessary for smooth progress.

### Stage 1: Preliminary Feasibility Review (2-3 weeks)

Check zoning and various district/zone designations through land use plan confirmations. Agricultural promotion area status, development restriction zone inclusion, and cultural property protection zones must be identified in advance.

### Stage 2: Farmland Conversion Permit Application (3-4 weeks)

Submit farmland conversion permit applications with business plans, funding plans, and land use plan drawings. Farmland preservation charge payment plans must also be prepared.

### Stage 3: Review and Approval (2-3 weeks)

Final permits are decided through related agency consultations. For conditional approvals, quickly processing supplementary items is important.

## Cost Simulation: Based on 3,000 Pyeong Factory Site

Calculate farmland conversion costs for 3,000 pyeong (9,917㎡) general farmland (individual announced price KRW 100,000/㎡) in Gyeongju area:

📊 Detailed Farmland Conversion Costs Item|Calculation Basis|Amount|Notes Farmland preservation charge|9,917㎡ × KRW 20,000|KRW 198.34 million|20% of individual announced price Farmland conversion charge|Differential by area|Approx. KRW 5 million|Varies by local government Surveying/design fees|Service fees|KRW 3-5 million|Varies by land shape Administrative fees|Permit fees|KRW 0.5-1 million|Varies by local government **Total Expected Costs**|**-**|**Approx. KRW 210 million**|**Based on 3,000 pyeong**

### Installment Payment Utilization Strategy

When farmland preservation charges exceed KRW 20 million (individuals) or KRW 40 million (corporations), installment payments are possible. Only 30% initial payment required with remainder payable within 4 years.

## Recent Administrative Disposition Cases and Precautions

Analyzing administrative disposition cases from 2024-2025 post-Farmland Act revision, they mainly concentrate on unauthorized conversion and purpose violations.

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### Violation Case 1: Unauthorized Farmland Conversion

Most administrative dispositions involve factory construction without farmland conversion permits. In such cases, restoration orders are issued along with fines (up to 30% of farmland value).

### Violation Case 2: Use Outside Permitted Purposes

Cases of obtaining permits for agricultural/forestry/fishery processing facilities but using for general manufacturing are increasing. Permit revocation can result without going through purpose change procedures.

💡 Key Point Farmland conversion permits must be obtained before project commencement, and separate purpose change procedures are needed when using for purposes different from permitted uses.

## Strategic Approaches Post-2026 Revision

Factory establishment strategies utilizing farmland act revisions can be divided into three categories:

### Strategy 1: Agricultural Processing Companies - Utilize Agricultural Promotion Areas

Agricultural/forestry/fishery processing facilities can be established even in Agricultural Promotion Areas, utilizing relatively low land price advantages. Linking stay-type shelters with smart agriculture facilities enables integrated operations from raw material procurement to processing.

### Strategy 2: General Manufacturing - Choose Agricultural Protection Areas

Agricultural Protection Areas have higher conversion possibilities than Agricultural Promotion Zones while offering lower land prices than general farmland. Farmland preservation charges are also relatively low at 20%, favorable for small and medium manufacturers.

### Strategy 3: Large Factories - Purchase General Farmland

For large factory sites, purchasing general farmland is the most reliable method. Farmland preservation charge caps (KRW 50,000/㎡) provide burden relief even for high-value farmland.

## Isang Group's Customized Consulting

Isang Group provides consulting optimized for the 2026 revised Farmland Act based on 246 farmland conversion permit experiences and 98% approval rates.

We propose the most efficient factory establishment routes through 20 years of accumulated Gyeongju farmland conversion know-how and local government cooperation networks. Don't miss opportunities newly opened by Farmland Act revisions, and prepare for successful factory establishment with experts.