Imported food prices surge and may continue rising

Economy

Published: 31 Mar. 2022, 18:21 Updated: 31 Mar. 2022, 19:43

Imported food prices surge and may continue rising

An employee displays imported meat packs at a mart at Eungam-dong, northern Seoul, in December. [NEWS1]

Imported food prices are soaring as China locks down, the Ukraine-Russia conflict drags on and the United States deals with labor shortages.

Beef imported from the United States or Australia is considered a cheaper alternative to hanwoo, or Korean beef, which is almost twice the price of Australian beef at discount marts.

But experts forecast the gap between the local and imported meat prices will be much narrower if the current trend continues.

China's lockdown of Shanghai has strained global supply chains, while the United States, a major meat exporter, is struggling with labor shortages at livestock farms.

U.S. beef ribs retailed at 3,765 won ($3.1) per 100 grams Wednesday, up 53 percent from the previous year's average of 2,454 won, according to the Korea Agricultural Marketing Information Service run by Korea Agro-Fisheries and Food Trade Corporation.

Australian beef ribs are 40 percent more expensive year-on-year and are selling for 3,497 won per 100 grams. The price of Canadian pork belly increased 36 percent, or 500 won, to 1,880 won per 100 grams.

Imported fruit prices sharply surged as well.

Oranges imported from the United States are 23 percent more expensive, to 13,453 won for 10 oranges, while imported mangos and bananas became 16 percent and 9 percent costlier, respectively.

The price of Norwegian salmon, which is imported through Russia, is rising.

Norwegian salmon sold at an average price of 20,600 won per kilogram from March 21 to 26 at Noryangjin Fisheries Wholesale Market in southern Seoul, an 80 percent increase year-on-year, according to the market's website.

The U.S. Meat Export Federation cited the increase in demand, the shortage of labor in the livestock industry and cargo congestion at West Coast ports as the main causes for the current supply instability and resulting price jumps.

People shop for groceries at a traditional market in Cheongnyangni, eastern Seoul. [NEWS1]

Bottlenecks at U.S. West Coast ports were due to the post-pandemic economic recovery and a consequent surge of freight. According to the New York Times on Monday, the ports are facing possible labor disputes as the contracts for 22,000 workers are set to be expired in June, which may lead to a worsening of vessel backlogs.

Meanwhile, the Russian invasion of Ukraine lifted the global wheat prices. Wheat futures traded at a monthly average of $409 per ton in March, up 75 percent on year, according to data from the Chicago Board of Trade compiled by the Korea Rural Economic Institute.

Ukraine and Russia account for 14 percent of global wheat production, and 29 percent of all wheat exports, according to Gro Intelligence.

The price fluctuation also affects Korea, where 99 percent of wheat comes from overseas.

Krispy Kreme, operated by Lotte GRS in Korea, said Wednesday it will raise the prices of donuts by an average of 5.8 percent starting from April 1. Dunkin' upped the price of its mini doughnuts to 7,500 won, about an 8 percent increase.

"We mostly use wheat imported from the United States or Australia, but it seems the prices will only increase from now on," said a local bakery industry insider.

The wheat price jump boosted animal feed prices, which has led to more expensive meat products.

"The situation won't get better any time soon, since several factors, such as feed prices, the oil price and foreign exchange rates, are complexly intertwined," said a spokesperson for the U.S. Meat Export Federation.

Local retailers are striving to stabilize the prices by diversifying supply channels and stocking frozen food products.

Frozen pork belly was 7 percent cheaper compared to last March at Emart, as the company made bulk orders last year in advance.

"There used to be many workers from Central and South America at farms in California before," said Im Jeong-bin, a professor of agricultural economics at Seoul National University.

"Labor shortages caused by Covid-19 and the meat demand increase in China led to a sharp surge of agflation — inflation caused by a grain price increase — which was expected," said Im.

BY KIM MIN-SANG [shin.hanee@joongang.co.kr]