Government to Lower Interest Rate by 0.5%P on Feed and Food Ingredient Purchase Funds in Response to Ukraine Crisis

[Asia Economy Sejong=Reporter Kim Hyewon] The government is lowering the interest rates on funds for purchasing feed and food raw materials by 0.5 percentage points in response to the rise in international grain prices and supply instability caused by the Russia-Ukraine situation. The allocated quantity for raw materials substituting feed grains will also be increased by about two times.

The Ministry of Agriculture, Food and Rural Affairs announced on the 4th that the interest rates on funds for purchasing feed and food raw materials (KRW 64.7 billion for feed, KRW 128 billion for food) will be reduced by 0.5 percentage points from the existing 2.5~3.0% to 2.0~2.5%.

The allocated quantity for substitute raw materials for feed grains will be increased from 40,000 tons to 100,000 tons for hulled barley and from 30,000 tons to 60,000 tons for wheat bran in March.

Looking at the current domestic feed industry inventory (3.05 million tons as of March 3), feed wheat is secured until early July (including contracted quantities until the end of October), and feed corn is secured until early June (mid-July). Among the contracted quantities of 1.53 million tons of feed wheat and corn, 260,000 tons are from Ukraine.

The domestic feed industry views that it is difficult to import contracted quantities of Ukrainian feed corn in the short term, and through alternative bidding, it has additionally secured 325,000 tons of feed corn (130,000 tons on March 2, 195,000 tons on March 3). Going forward, depending on inventory status, a consumption loan system (a system where companies lend and repay inventory quantities to each other) will also be promoted if necessary.

Regarding the domestic starch and sugar industry inventory (460,000 tons), edible corn is secured until early to mid-May (late June), and among the contracted quantities of 460,000 tons, 230,000 tons are from Ukraine.

The starch and sugar industry expects that the remaining 230,000 tons, which are from Eastern Europe or the United States other than Ukraine, can be imported domestically. Additional quantities of Ukrainian edible corn contracted quantities will be secured through alternative bidding, etc.

In addition, in consultation with the feed and starch and sugar industries, plans are underway to expand the safety stock days of feed grains (from 30 to 60 days), adjust the mixing ratio of feed raw materials, and promote consumption loans between companies.

Kwon Jaehan, Director of the Food Industry Policy Office at the Ministry of Agriculture, Food and Rural Affairs, said, "We are closely communicating with the industry to minimize domestic impacts caused by instability in Ukraine, carefully monitoring market conditions, and reviewing additional necessary measures," adding, "We ask the industry to actively cooperate in securing sufficient stocks of major grains, contracting quantities from stable origins, and, if necessary, facilitating smooth consumption loans between companies to stabilize supply and demand."

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