Is Food Stable Amidst Inflation?
Written by Son, Jong-pil (Policy Research Team)
Translated by Daehan Song (Networking Team)
As the outbreak of the Russian-Ukraine War destabilizes oil and natural gas supplies, the whole world suffers from high energy prices. Yet, not just energy prices, but also international grain prices are rising. The international agricultural price index has remained high since Jul. 2022, up 19% from Jan. 2022. At the time of COVID-19, international grain prices rose due to export restrictions. As the war broke out in Ukraine, a global granary, prices soared as export routes were blocked. Climate change has also affected crops, further increasing the instability of agricultural prices. The climate crisis, which is blamed for the natural disasters that occur in southern and northern hemispheres alike, has gone from being a variable in price increases to a constant.
The food supply and demand problem, together with Korea's weak agricultural production base, reveals the ineffectiveness of Korea’s policy in dealing with global food problems due to the international situation or climate change. Responding too complacently towards one’s agricultural and people’s food problems can threaten the economy and people’s survival when prices suddenly rise.
In 1980, in Korea, cold damaged crops nationwide, creating the worst harvest to date that resulted in a shortage of rice. At this time, international rice prices soared from $200 per ton in early 1980 to $600 per ton in late 1981. Yet, despite rice being nearly triple the price, Korea had no choice but to purchase it. Of course, at that time, the rise in global grain prices was not simply due to the cold in Korea. Supply and demand instability was due to a combination of factors such as abnormally low temperatures in Northeast Asia, drought in Australia and in the Soviet Union. While caused by domestic and global weather events, the situation highlighted the need for a mechanism to deal with our food problems, even those created by factors outside our control, thus revealing the importance of food security and self-sufficiency.
As the world's seventh-largest grain importer, Korea is one of the OECD countries most dependent on imported food. According to data from the Ministry of Agriculture, Food and Rural Affairs, Korea's food self-sufficiency rate was 45.8% in 2020. The food self-sufficiency rate had fallen sharply by 15% from 70.3% in 1990 to 55.6% in 2000. Since 2000, it has been falling at a slower, albeit continuous, pace. In the case of wheat, the self-sufficiency rate is even lower, barely registering at 0.8%. While there are various causes for the low self-sufficiency, the biggest factor is the decline in production due to the collapse of the agricultural production base. As the basis for stable agricultural incomes collapse, agricultural production becomes unsustainable. In addition, farmland decreases due to land development. The 1980 experience should teach us that food should be dealt with from the standpoint of national survival rather than simply that of consumer goods. Even if we exclude those situations we have no control over, it is necessary that we expand our control at the national level.
Source: Sisa Journal, Issue 1740, [Data News] The "Domestic Food Self-sufficiency Rate" is below 50%.
Beyond an economic problem, the issue of food is a matter of survival. In a world, where global factors, outside our control, amplify volatility, government policy to manage this is important. This is why agriculture should not be approached simply from an economic perspective especially in the age of climate crisis. Unlike industrial products, food should not be considered a product that can simply be imported if we do not have enough.