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The Korean 2008 self-sufficiency rate for grain was only 26.2%. Because of this, the quantity virtual water (VW) for crop product imports is much greater than that of other countries. International VW trade is especially important to Korea due to its dependency on foreign imports to maintain food security and to establish an agricultural water resource policy. Using international crop products trade statistics during 2003-2007, this study analyzed the virtual water content (VWC) and international virtual water flow (VWF) of major crops. The national water savings and global water savings were also estimated. Major grain products, including 28 products made from 13 crops, were selected for the analysis, based on the net import and export of products totaling more than 10,000 tons. VWCs were computed for the selected major crop products using the VWC of the primary crop of Korea. International VWFs were estimated using the VWC of each crop products. The amount of imported VW was 16,804 and 226 M m 3 was exported, so that the net imported VW was 16,578 M m 3 .VW import is concentrated in wheat, rice, maize (corn), and soybean crops. A small number of countries, including the USA, China, Brazil, etc., account for over 96% of the imported VW, indicating Korea's heavy dependence on these countries. The average national water savings for Korea and the average global water savings according to crop were estimated using VW flow from international crop products trade during 2003-2007. The estimate of national water savings was 23,870.3 M m 3 . Three major crops, namely wheat, maize and soybean, account for 95.3% of this total VW saving. Global water savings from the VW trade amounted to 7,253.0 M m 3 . Korea depends heavily on VW imports concentrated in specific crops and which are primarily imported from a particular set of countries. This indicates that Korea is vulnerable to disruptions in the international grain harvest such as those caused by natural disasters such as floods and drought. Any such disruption could easily become a critical issue for governmental planners who establish food and water supply policies for Korea.

Purpose The purpose of this paper is to develop an equilibrium displacement model (EDM) that is able to evaluate the impacts of a free trade agreement (FTA) on the profits of farmers. Empirical applications of the developed EDM are performed for evaluating the influences of Korea-Chile FTA on the grape industry in Korea. Design/methodology/approach Supply and demand equations together with profit function of individual farmers are converted into log-differential forms that compose the EDM. The cost function of grape producers is estimated for deriving the parameters that are required in applying the developed EDM. Findings The share of profit within revenue and the elasticity of cost with respect to quantity in the cost function play key roles in assessing the change in farmers’ profit. The empirical assessment of the effects of Korea-Chile FTA indicates that this FTA has little impact on the Korean grape market and grape producers in Korea. Originality/value Usefulness of the existing EDM has been limited in evaluating the impacts of exogenous shocks on the individual farmer level. This paper fills this gap by developing an EDM that assesses the impacts of tariff reduction on farm-level profit.

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