Rice Prices Plummet but Ramen Prices Stay the Same... Companies Full of Profits

Ministry of Agriculture and Livestock Announces Designation of 'Price Management Officer'

Although grain prices, which had been soaring, have stabilized and fallen to levels seen two years ago, food companies that raised product prices citing raw material costs are maintaining prices and reaping profits, raising concerns.

According to the Chicago Mercantile Exchange futures market on the 19th, grain prices such as wheat (-30.2%), corn (-30.3%), and soybeans (-11.1%) have returned to early 2021 levels this year due to oversupply.

Ramen displayed at a mart in Seoul.
Photo by Yonhap News

International oil prices, which had surged since 2020, have also stabilized after peaking last year. West Texas Intermediate (WTI) crude oil rose above $90 in September but has since fallen to around $70.

While raw material prices that triggered inflation are calming down, the perceived prices of processed foods remain high. According to the National Statistical Portal of Statistics Korea, the consumer price index for milk rose 14.3% year-on-year last month.

Meanwhile, major ramen and snack manufacturers recorded double-digit growth in operating profits in the third quarter compared to the same period last year, leading to interpretations that they increased profitability under the pretext of rising costs.

This year, Haitai Confectionery's operating profit increased by 247%, while Nongshim and Ottogi's operating profits rose by 103.9% and 87.9%, respectively.

Nongshim showed willingness to cooperate with price stabilization by lowering the shipment price of Shin Ramyun by 4.5% in July, but this has been criticized as insufficient compared to the decline in wheat prices.

The Korea Consumer Agency stated, "Although raw material prices such as wheat and palm oil are declining, companies are not reflecting this in consumer prices," adding, "Ramen, which can be called a national food, has seen a cumulative increase of 21.1% over three years, and snack prices have also continuously risen."

As high food prices freeze the real economy for ordinary people, the government announced plans to continuously monitor prices by item. The Ministry of Agriculture, Food and Rural Affairs will appoint a 'price management officer' at the assistant director level to request restraint on price increases. The monitored items will include 14 agricultural and livestock products such as napa cabbage, apples, eggs, and rice; 5 dining-out menu items such as hamburgers, pizza, and chicken; and 9 processed food items such as milk, bread, ramen, and ice cream.

Meanwhile, prices of sugar, raw milk, and alcoholic beverages have risen this year and are expected to continue increasing into next year. In August, Baskin-Robbins raised prices by an average of 8%, and Lotte Wellfood and Binggrae also increased prices on some ice cream products. OB Beer announced last month that it would raise shipment prices of major products such as Cass and Hanmac by an average of 6.9%, and Hite Jinro raised the shipment price of Chamisul by 6.95% starting from the 9th.

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