Over 10 Billion Won Spent on 'Powdered Rice'... Why the Food Industry Is Turning Away

Despite 10.8 Billion Won Invested, Sales Rate Stalls at 12% as Inventory Grows
Ambitious ‘10% Wheat Replacement’ Plan Faces Industry Skepticism Over Commercial Viability

The government’s industrialization project for powdered rice (rice flour), now in its third year, has failed to deliver the expected results. Despite pouring hundreds of billions of won into the initiative to replace imported wheat, the food industry remains reluctant, citing high costs and inconvenience. Production has increased, but sales remain sluggish, and there are growing concerns that the domestic wheat industry has also been negatively impacted.

Baromi powdered rice production site (left), Oyes made using powdered rice. Provided by Crown Haitai Confectionery

According to the food industry and government on October 31, last year’s purchase volume of powdered rice was 20,704 tons, but as of the end of August this year, sales had reached only 2,625 tons. The sales rate stands at just 12.6%. A demand survey conducted by the Ministry of Agriculture, Food and Rural Affairs targeting food and bakery companies also showed that the expected consumption by the end of this year will remain at around 5,300 tons. The government plans to convert approximately 15,000 tons of growing inventory for use as alcohol production (raw material for spirits).

The response from the food industry has been cold. A representative from a food company said, "During the pilot project, government subsidies allowed us to use raw materials at a low cost, but now it is much more expensive than wheat flour," adding, "The high cost burden undermines business viability." Another industry official explained, "To convert wheat flour-based production facilities for powdered rice, the entire process, starting from the mixing ratio, must be overhauled," and "Considering the investment required for equipment, it is not realistically feasible."

Since 2023, the government has invested 10.8 billion won over three years to accelerate the ‘powdered rice industrialization’ project. Although it set an ambitious goal of ‘replacing 10% of wheat,’ the Ministry of Agriculture, Food and Rural Affairs drastically lowered its production targets at the end of last year. The original plan (15,800 hectares and 75,000 tons of production) was revised down to 9,500 hectares and 45,100 tons. This represents a 40% reduction in just one year.

Fifty-two food companies participated in the ‘Powdered Rice Productization Package Support Project,’ including Nongshim, Samyang Foods, Harim Industry, SPC Samlip, Haitai Confectionery, Ottogi, Shinsegae Food, and CJ Foodville. However, many major conglomerates dropped out this year. Haitai Confectionery’s ‘Oyes Withmi (with米)’ has been discontinued, and Nongshim’s ‘Byulmi Bokkeummyeon Spicy Braised Chicken Flavor’ has also been withdrawn from the market. A representative from a leading domestic confectionery company commented, "There is not enough supply to replace imported wheat, and it is difficult to fully substitute wheat flour in terms of processability and texture."

Market validation has also been insufficient. Of the 52 participating companies, 39 refused to disclose their sales performance. The government is also unable to identify which products were sold or in what quantities. An industry insider said, "The direction of next year’s project is still unclear," and "Since the change in administration, related discussions have quieted down for some time."

However, the potential of powdered rice has not disappeared entirely. It is noted for its pleasant aroma and high stickiness, making it a possible substitute for wheat in certain product categories. However, the limited cultivation area and unstable supply chain for raw materials mean that costs remain high. A food industry official said, "If production expands and costs decrease, it could become a very attractive ingredient, but for now, it is still premature."

The decline of the domestic wheat industry has also been highlighted as a downside of the powdered rice promotion policy. According to the office of Democratic Party lawmaker Lim Mi-ae, domestic wheat inventory has surged sixfold from 10,000 tons in 2020 to 60,000 tons this year. This means 1.6 times last year’s production volume (37,000 tons) is now sitting in storage. Production volume also decreased from 51,000 tons in 2023 to 37,000 tons in 2024. There are concerns that government support has focused on powdered rice to the detriment of the domestic wheat industry.

Back in 2023, the government strongly promoted the project, calling powdered rice a "gift from God." The number of powdered rice production complexes increased from 38 (2,000 hectares) in 2023 to 135 (8,400 hectares) last year, and 151 (10,000 hectares) this year. The government promised up to 500 million won in facility and equipment support per complex. However, despite large-scale support, the pace of industrialization remains slow.

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