Chapter I
GENERAL PROVISIONS
Article 1.- Regulation scope and application subjects
1. This Decree prescribes the arrangement of, renewal of organization, management mechanisms and policies for, State-owned farms.
2. This Decree applies to State-owned farms, State-owned agricultural enterprises (hereinafter collectively referred to as State-owned farms), which have been assigned or leased land by competent State bodies for agricultural production as their principal purpose.
Article 2.- Objectives of arrangement and renewal of State-owned farms
1. To sustainably and efficiently use the existing land and material and technical foundations of State-owned farms.
2. To raise production and business efficiency and competitiveness of State-owned farms; to form concentrated agricultural goods production areas in close association with processing and outlets.
3. To create more jobs, increase incomes for laborers, contribute to socio-economic development, hunger eradication and poverty reduction, and assurance of security and defense in localities.
Article 3.- Principles for arrangement and renewal of State-owned farms
1. Arrangement and renewal of State-owned farms must be associated with local socio-economic development as well as agricultural production plannings and plans.
2. Arrangement and renewal of State-owned farms must guarantee the clear distinction between production and business tasks and public-utility tasks.
a/ Farms which perform business tasks as their major tasks shall shift to wholly engage in production and business activities and practice business cost-accounting according to the market mechanism.
b/ Farms which shift to do business but still have to partly perform the social and security and defense functions shall enjoy appropriate support policies of the State.
c/ Farms which are assigned public-utility tasks as their major tasks shall operate under the provisions of Article 19 of the State Enterprise Law.