Korea rethinks its vulnerability to imported grain

A combine is used to harvest oats on a farm in Russia. [LOTTE TRADING]

Korea, the seventh-largest importer of grain in the world, is feeling the surge in prices.

The Russian-Ukraine war and India’s export ban on wheat have contributed to rising prices and the start of food protectionism around the world.

Analysts say Korea should try to increase its self-sufficiency in grains and develop more secure supply chains overseas.

Korea’s grain self-sufficiency rate is the lowest among members of the Organization for Economic Cooperation and Development (OECD).

That rate plunged from 30.9 percent in 2000 to 19.3 percent in 2020, according to data from the Ministry of Agriculture, Food and Rural Affairs and Statistics Korea on Tuesday.

Based on 2020 data, the self-sufficiency rate for wheat was a miniscule 0.8 percent. For beans it was 30.4 percent. Korea imports most grains from overseas except rice, for which it has a self-sufficiency rate of 92.8 percent.

Beyond war and other temporary factors, the threat to Korea's food security is expected to grow with climate change.

“The rise in grain price has been a threat to the country’s economy every decade,” said a government source.

“The government should draw up measures that could increase the self-sufficiency rate before the same situation happens again, and consolidate the supply chain.”

The previous government’s attempt to raise the self-sufficiency rate failed due to factors such as the country’s small land size, decreasing farmland and an aging population among farmers.

“Domestic agriculture should raise self-sufficiency in edible crops rather than in feed crops,” said Kim Dong-hwan, research director of the Agro-Food New Marketing Institute.

“Korea needs to refer to other countries such as Japan to ensure a stable supply of grains that would not get overly affected by price changes.”

Local companies are forming new links to grain supply chains overseas.

Based on last year’s data, 106 firms have registered new agricultural development plans overseas.

The volume of crops produced overseas by local companies soared 20-fold in ten years from 108,000 tons in 2010 to 2.16 million tons in 2021.

Lotte Trading expanded its crop business to Russia in 2018, Posco International to Ukraine in 2019 and Pan Ocean to the United States in 2020.

“Russia is one of the [geographically] closest countries to Korea that only allows harvesting of non-genetically modified organism (GMO) crops,” said Choi Won-bo, a team leader at Lotte Trading, who once worked as head of its Russia office.

“The investment was made for mid to long-term effect as Russia is stably supplied with good ingredients and can make exports to neighboring countries such as China.”

A spokesperson for Farm Story, a company that expanded its crop business to Russia in 2008, added, “It was difficult in the beginning to make arable land and recruit local employees, but after ten years, the company’s productivity and profitability became high.”

Meanwhile, the Yoon Suk-yeol government is planning to support agricultural development overseas by providing subsidies to companies planning to expand their grain supply chains in foreign countries. The government will support local firms to expand their business abroad by helping them research countries' business situations.

However, the government will first need to deal with high inflation.

“We should come together to draw up efficient measures to stabilize inflation including the rising flour and diesel prices,” said Choo Kyung-ho, deputy prime minister for the economy and finance minister.

BY IM SOUNG-BIN [cho.jungwoo1@joongang.co.kr]