60,000 Won per Sack of Rice... Rising Burden of 'Jangbaguni Prices'

Citizens are shopping at a large supermarket in downtown Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Seungjin Lee] As social distancing measures in the Seoul metropolitan area have been raised to level 2.5, the demand for “home-cooked meals” is expected to increase significantly, while prices of major food ingredients are rising one after another, with rice prices hitting an all-time high.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 7th, the retail price of 20kg of rice as of the 3rd was 60,424 won, up about 2,300 won in one month. Compared to a year ago (52,334 won), this is about a 15% increase, marking the highest price ever recorded.

Usually, rice prices peak in early October and gradually decline as the autumn new rice harvest begins. This year, due to poor crop conditions, the harvest volume has decreased, but the demand for rice has increased as home meal consumption rose amid the COVID-19 pandemic. As a result, even though the new rice harvest is in full swing, prices continue to rise.

In response, the government plans to deliver 80,000 tons of paddy rice, currently being purchased for public stockpiling, to local distribution companies around January. The 370,000 tons of rice already stockpiled will be gradually released to the market. Considering market supply and demand, the government will adjust the supply plan based on the rice consumption statistics announced by Statistics Korea in January next year, taking demand changes into account. For the time being, rice prices are expected to continue rising.

The rising rice prices not only burden household grocery expenses but also add pressure to the dining-out industry, which is struggling due to COVID-19.

As the number of customers visiting restaurants decreases while ingredient prices keep rising, it is becoming difficult to make a profit. In this situation, some restaurants have reduced the portion size of steamed rice or changed the policy from offering free rice with main menu orders to charging an additional fee.

Additionally, after pork prices, which surged sharply in the first half of the year, stabilized, concerns have shifted to rising chicken and egg prices due to highly pathogenic avian influenza (AI). AI was confirmed at a meat duck farm in Sijong-myeon, Yeongam-gun, Jeollanam-do, following cases in Jeongeup and Sangju. Within a 10km radius of this farm, there are 44 poultry farms housing 1.7 million chickens and ducks, making the risk of AI spread very high.

According to aT, as of the 3rd, the retail price of chicken was 4,929 won per kg, showing little change from 4,923 won a month earlier. The retail price of 30 eggs was 5,577 won, also not significantly different from 5,562 won a month ago. However, the recent noticeable increase in AI spread is problematic. When AI hit domestic poultry farms in 2016, chicken prices surged by more than 30%.

Moreover, most food ingredients have formed higher prices than usual due to the longest rainy season and typhoon damage last summer, which is expected to further increase grocery burdens. As of the 3rd, the retail price of peeled garlic exceeded 10,000 won per kg, a 45% increase compared to 7,017 won a year ago. Sweet potatoes, cabbage, spinach, and others are also 10-20% more expensive than a year ago.

Meanwhile, due to the COVID-19 situation, household consumption of pork and Korean beef (Hanwoo) has increased significantly compared to last year.

According to the December issue of the Livestock Outlook by the Agricultural Outlook Board, based on a survey by the U.S. market research firm Kantar Worldpanel Division, the average pork purchase per household in South Korea from July 10 to October 11 was 5.99 kg, an 11.5% increase from 5.37 kg previously. Among this, domestic consumption rose 16.5% from 3.40 kg to 3.96 kg, and imported pork purchases increased 3.0% from 1.97 kg to 2.03 kg.

As household consumption continued to rise, pork prices remained strong. Last month, the wholesale price of pork was 4,222 won per kg, up 14.0% from the same month last year and 3.0% above the average.

Korean beef prices also maintained an upward trend supported by household consumption. Since the full spread of COVID-19, the average monthly purchase growth rate of Hanwoo beef at home compared to the same month last year was 6.1% in March, 6.2% in April, 7.2% in May, 4.6% in June, 9.8% in July, 3.1% in August, -8.3% in September, and 15.7% in October, increasing every month except for a dip in September.

Accordingly, from January to November, the wholesale price of Hanwoo beef was 19,917 won per kg, up 11.2% compared to the same period last year.

This content was produced with the assistance of AI translation services.