Flour import costs up 21.8% as war and pandemic hit supply

Flour products are displayed at a discount mart in Seoul on March 22. [NEWS1]

The cost of flour imports rose more than 20 percent in February in wake of supply chain disruptions caused by the pandemic and more recently the Russia-Ukraine war.

This could drive up the price of bread, instant noodles and packaged foods, which use flour as a key ingredient.

Korea imported 2,090 tons of flour in February, down 1.6 percent on year, according to data from the Korea Agro-Fisheries & Food Trade Corporation on Monday. Total cost of the imports was up 21.8 percent during the same period to almost $2 million.

Prices of other types of wheat also jumped. Imports of wheat starch in February were 3,276 tons, up 10.5 percent on year. The cost of the imports jumped 20.4 percent to $75 million. Imports of wheat bran, often used for livestock feed, were up 38 percent, but its import costs soared 95.1 percent during the same period.

Supply-chain disruptions caused by Covid-19 and the Russia-Ukraine conflict have raised the price of wheat.

The international price of wheat stood at $361.74 as of April 1, up 61.1 percent on year, according to data from the Korea Rural Economic Institute. The average price of beans was up 31.1 percent and corn 12.9 percent during the same period.

The recent price increase of grains in Korea has not yet fully reflected Russia's invasion of Ukraine, which started in late February. Russia and Ukraine together supply more than a quarter of the world's wheat. The countries are also key suppliers of barley, sunflower seed oil and corn.

Korea "relies heavily on imports for grains like wheat, so the impact on various food and dining costs are considerable," said Lee Eun-hee, who teaches consumer studies at Inha University. "The extended supply-chain disruptions due to Covid-19 and the Ukraine crisis are expected to further affect the food prices."

Kwon Young-se, vice chairman of President-elect Yoon Suk-yeol's transition committee, said, "Domestic food conglomerates have minimized the impacts through preemptive mass purchases at the signs of the Ukraine crisis, but not local bakeries and kalguksu or mandu soup stores."

Kwon added the price increase of wheat could bring a "serious social crisis."

On Tuesday, the Bank of Korea said consumer prices could hit the 4-percent range for the time being due to the price increases of raw materials, including wheat and crude oil.

Korea's consumer prices in March were up 4.1 percent on year. It was the first time the figure broke 4 percent since 2011.

The central bank added that the consumer price increase of dining out (6.6%) and processed food (6.4 percent) "contributed considerably to inflation."

BY CHO HYUN-SUK, JIN MIN-JI [jin.minji@joongang.co.kr]