Input 2021.02.03 06:00
Supply chain damage due to corona crisis, crop recession due to climate change
The government also pays close attention to the World Organization’s’food crisis’ warning
From the new year, shopping cart prices have skyrocketed. According to the consumer price trend for January released by the National Statistical Office on the 1st, agricultural product prices rose 11.2% due to heavy snow and cold waves, and livestock prices rose 11.5% due to the spread of avian influenza (AI) in Korea, increasing the total price by 0.27% ( p) raised. The increase was the highest since June 2014 (12.6%).
Inflationary uncertainty in shopping carts is expected to continue for a while. This month, it is observed that the pressure to increase inflation may be higher due to the surge in food prices. This is because the prices of industrial products such as bread and sweets are rising in turn as the prices of international grains such as soybeans and wheat are rising, while the crop is being sluggish due to climate factors such as cold waves and heavy snow. For corn, wheat, and soybeans, the international futures market trading price, which is a standard price, is recently breaking the highest since 2013-2014 every month. In Korea, where food self-sufficiency rates are low, the impact could be greater
Some are concerned that rising prices of agricultural and fishery products may lead to a surge in inflation, leading to an’agflation’. To make matters worse by rising global grain prices, domestic bad news such as cold waves, heavy snowfall, and AI epidemic hit the market, and shopping cart prices have already soared to the sky at the beginning of the year. Demand, which will increase during the Lunar New Year holidays, also acts as an upward pressure. The government is also paying close attention to this situation.
World food prices are rising rapidly. The new coronavirus infection (Corona 19) has damaged the food supply chain, and international grain prices are on the rise due to global climate change.
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According to the Ministry of Strategy and Finance on the 3rd, the March price of US corn futures ($5.5405 per bushel) rose more than 1% at the Chicago Merchandise Exchange in the US on the 1st (local time), reaching the highest level since June 2013 ($5.5575 per bushel). did. Corn futures prices rose 42% year-on-year, and soybean, wheat, palm oil, and raw sugar prices rose 53%, 18%, 28%, and 9%, respectively. It has been steadily rising since the second half of last year as the abnormal climate of major exporting countries such as drought and rising demand from China overlap.
Domestic agricultural and marine products prices are also rising. Following the aftermath of the sluggish crop last year, prices for vegetables and fruits surged due to cold waves and other factors, and prices for rice are structurally rising as the cultivation area decreases. The AI (bird influenza) epidemic is also overlapping, and prices of livestock products such as eggs, chicken, and pork, which are a substitute demand, are also skyrocketing.
The surge in world food prices is primarily due to the imbalance of supply and demand caused by unusual climate change. Due to the record heat that hit the Earth last year, extreme weather phenomena such as heatwaves, torrential rains, and droughts appeared in major food producing regions including the United States, China, Russia and Europe. Because of this, major crops such as rice and wheat were hit hard by cropping.
The shortage of manpower and transportation caused by the corona crisis has damaged the food supply chain. As re-blockade measures continued in many countries around the world, the number of seasonal workers in farms in major producing countries decreased significantly. Logistics costs between countries have increased significantly. Some of them were difficult to move and the market was completely broken.
Food protectionism movements in major countries are also raising grain prices. One of the direct factors behind the recent rise in wheat prices is Russia’s export restraint measures, the world’s largest wheat exporter. Russia is tightening measures to curb exports as the amount of wheat supplied in its country decreased. On the demand side, demand for feed grains such as soybeans and corn has increased due to the ASF (African swine fever) epidemic in China.
◇ FAO “Food inflation is a reality”… “Living prices’Yeuiju City'”
The World Organization and others are warning of food shortages. The World Food Program (WFP) warned that in 2021, a famine virus, more frightening than Corona 19, could threaten humanity. The Food and Agriculture Organization of the United Nations (FAO) predicts that “food inflation is now a reality,” and “the rise in food prices will continue for a while.” This is because supply chain problems cannot be solved in the short term.
This is expected to affect domestic food prices. Korea’s food self-sufficiency rate is low, so international food raw material prices have a significant impact. In the case of wheat, almost all of its consumption depends on imports. In addition, if the price of raw material grains such as soybeans and corn increases, the price of meat such as pork increases. If wheat prices rise for a long time, milling companies will increase the price of wheat flour, and food companies are likely to increase the prices of products such as ramen, bread, and sweets.
The government is watching the soaring shopping cart prices. This is because the price of domestic agricultural and livestock products is rising sharply due to the soaring world grain prices, climate factors, and AI epidemic. Ahead of the coming Lunar New Year, as a countermeasure for public welfare, the company plans to expand the supply of 16 major holy goods, and also plans to increase overseas imports of eggs that suffer from supply and demand problems with AI.
An official from the Ministry of Strategy and Finance said, “We are paying close attention to the rise in living prices, such as rising global grain prices and rising prices of domestic agricultural and fishery products. It seems that it will be able to find a balance,” he said. “We will try to respond with appropriate policies suitable for the situation, such as implementing a policy to expand supply in line with the New Year, etc.”