Concerns are mounting that continuous rises in international grain prices, prompted by severe droughts in the U.S., will heighten inflationary pressure on the economy. The country is expected to begin feeling the full impact of the price hikes in about four to six months when its current stocks are used up.
Government officials are scrambling to cope with the increasing possibility of agflation, which would make the livelihoods of low-income families, in particular, more difficult.
In a meeting of economic officials last week, Finance Minister Bahk Jae-wan pledged to take measures to prevent rising crop prices on the global market from pushing up food costs and overall inflationary pressure here. He said the government would expand financial support for crop importers, keep low tariffs on major grain imports and secure stable stocks.
Concerns over reduced harvests in the U.S. and some Central Asian countries sent the international prices of corn and soybeans to record highs of $325 and $646 per ton, respectively, in late July. Wheat prices also soared by more than 50 percent over the past month.
Officials at home and abroad worry that the agflation this time, caused by supply shortages, would have more severe consequences than the 2008 food crisis that was prompted mainly by increases in demand from China and India.
They also fear droughts will more frequently hit major farming areas around the world in the years to come because of climate change.
These circumstances should be worrying especially for Korea, which relies on imports for most of its grain, except for rice, and thus remains vulnerable to international supply deficits and price hikes. The country imports 91 percent of its soybeans and 99 percent of its corn and wheat.
As a fundamental way to secure a stable crop supply, Korea needs to strengthen efforts to develop farmland abroad.
In the wake of the previous food crisis, it launched a long-term project aimed at increasing grain production overseas, which remained at 170,000 tons in 2011, to 1.38 million tons by 2018, meeting about 10 percent of its grain demand. The proportion is planned to further rise to 25 percent by 2030. But little headway has been made.
Efforts should be strengthened to secure farmland in countries such as Brazil, Australia and Ukraine. The government is urged to help develop grain companies capable of competing with major global firms in producing crops abroad and trading them.
