[Opinion] Food Security, Preparing Even for Emergencies

Professor Kim Sang-bong, Department of Economics, Hansung University

Recently, the inflation rate has been unusually high. Price increases have been confirmed in the majority of the 21 major categories of the Korean Standard Industrial Classification. In particular, the inflation rate in Agriculture, Forestry, and Fisheries (agriculture, forestry, and fishing), which is at the top of the industrial classification code, stands out.

The causes are very diverse. There are many reasons, including supply chain issues caused by COVID-19, the Ukraine war, and global inflation. The impact of the war was significant. Russia and Ukraine account for about 30% of the world's wheat exports and about 20% of corn exports. Additionally, due to abnormal climate changes in India and other factors, wheat exports were halted, causing wheat prices to rise from $204 per ton at the end of January 2020, when COVID-19 first emerged, to $341 per ton at the end of February 2022, when the Ukraine war began, an increase of 62%. After soaring 152% to $524 on March 7, prices have recently stabilized around the $450 range. Corn prices also rose from $150 per ton at the end of January 2020 to $275 per ton at the end of February 2022, an 83% increase, and further climbed 115% to $322 on April 29. In addition, prices of various grains such as soybeans have increased, affecting products made from grains like flour, bread, ramen, and snacks. The rise in feed prices also impacts meat prices such as pork. This, in turn, affects overall living costs, including dining out prices. The increase in producer prices, consumer prices, and import prices raises the perceived inflation rate, sometimes causing a gap between the actual inflation rate and the perceived inflation.

As price instability due to rising grain prices intensifies, concerns about food security and food sovereignty are growing in South Korea, where the food self-sufficiency rate continues to decline. South Korea's food self-sufficiency rate, which was close to 80% in the 1970s, dropped to 45.8% in 2020. The grain self-sufficiency rate also declined from 56% in the 1980s to 29.7% in 2000 and 20.2% in 2020. As of 2020, the rice self-sufficiency rate is stable at 92.1%, but wheat (0.5%), corn (0.7%), and soybeans (7.5%) are very low. Most grains with low self-sufficiency rates are imported from countries such as the United States, Canada, and Australia. The reasons for the decline in food self-sufficiency include the inclusion of feed grains with low domestic production shares and changes in dietary habits, but also the weakening of domestic production and supply conditions.

Although production was hindered by labor shortages due to COVID-19, the government needs to establish measures for food security and devise plans to supply adequate amounts of major grains and agricultural, livestock, and fishery products domestically. In this era of technological advancements such as big data, artificial intelligence, and smart farms, long-term supply strategies are necessary. Furthermore, in cases where production is not possible domestically due to climate or other factors, a system to procure grains overseas should be established to ensure stable long-term grain imports. It is also necessary to introduce stockpiling systems to prepare for price surges and emergencies such as wars. The COVID-19 pandemic has already shown us in 2020 and 2021 the phenomenon of increased living costs and the activation of non-face-to-face interactions over face-to-face. The main cause is that supply is insufficient despite relatively stable demand, and thus, policies that focus on matching supply in the long term rather than restricting demand are needed.

Professor Kim Sang-bong, Department of Economics, Hansung University

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