"Ukraine Prolongation May Disrupt International Grain Supply Chain," Agriculture Ministry Struggles to Respond

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[Asia Economy Sejong=Reporter Kim Hyewon] The government has begun preparing countermeasures, anticipating inevitable disruptions in the international grain supply chain if the Russia-Ukraine situation prolongs. Key responses include financial support using policy funds, increasing quota tariff volumes, and expedited customs clearance.

On the 9th, the Ministry of Agriculture, Food and Rural Affairs held the 'International Grain Supply and Demand Countermeasures Committee (hereafter Committee)' at the Osong Observation Center conference room of the Korea Rural Economic Institute, chaired by Kwon Jaehan, Director of the Food Industry Policy Office, to discuss these measures.

The Committee assessed that since August 2020, international grain prices have been on the rise, and with the recent escalation of tensions between Russia and Ukraine, close monitoring and response to international grain market trends are necessary.

Russia and Ukraine are major global exporters of wheat and corn. The domestic industry mainly imports wheat and corn for feed purposes, with Russia and Ukraine accounting for about 10% of the annual domestic feed wheat, corn, and soybean imports (17.22 million tons) on average from 2019 to 2021. However, feed grain origins are determined based on bidding prices, making import sources flexible. Currently, the industry has secured quantities of feed wheat until the end of July and feed corn until mid-May.

Committee participants noted that although recent volatility in international grain prices has somewhat increased, considering the domestic import share and stock levels, short-term direct impacts are expected to be limited. However, they agreed that if the situation worsens and prolongs, it could negatively affect the domestic market through disruptions in the international grain supply chain and price increases.

The Ministry of Agriculture, Food and Rural Affairs stated that if the situation deteriorates, it is reviewing countermeasures to alleviate industry cost burdens from further international grain price hikes, including ▲ lowering interest rates and expanding support scale for policy funds (2022 raw material purchase funds: 128 billion KRW for food, 64.7 billion KRW for feed) ▲ adjusting feed raw material mixing ratios (with feed industry cooperation) and increasing quota tariff volumes for substitutable raw materials ▲ supporting expedited customs clearance upon domestic arrival.

Additionally, beyond these short-term responses, the Ministry plans to consider mid- to long-term stable supply measures for international grains, such as supporting private sector overseas grain distribution network acquisition, expanding stockpiles of major grains like wheat, and diversifying import sources to prepare for potential structural supply instability.

Kwon Jaehan, Director of the Food Industry Policy Office, said, “This meeting will serve as an opportunity for the government and industry to frequently discuss both short-term countermeasures against the worsening Ukraine situation and mid- to long-term plans for stable supply of major grains.” He added, “We also urge the industry to make independent efforts by sufficiently securing stocks and contracted quantities of major grains in preparation for emergencies.”

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