This study examines the production and income effects of the direct payments program newly introduced for Korea's rice industry under the assumption of price uncertainty. These effects are compared with those of government purchasing program which was abolished last year after more than 50 years of having served as a key price support policy for rice farmers. The results show that the direct payments program has substantial effects on production and income as well due mainly to variable direct payment linked to the predetermined target price. In terms of income stability, in particular, the new program with high target price and rate of support proves to be much more superior to the previous purchasing scheme. This study also shows that the fixed direct payment can have little effects on producer income as long as variable direct payment is in place although farmers have claimed its increase in anticipation of their welfare improvement.