What if our food gets cut off?

Kim Dong-hwan
The author is the president of the Agro-food New Marketing Institute and professor of Anyang University.

Global food prices have shot up after Ukraine was battered by Russia’s invasion. India suspended exports of wheat, which made prices jump. Wheat prices rose from $208 per ton in January 2020 to $392 last month, an 88.5 percent increase. During the same period, corn prices jumped 56.6 percent to $238 from $152 per ton, and bean prices 82.3 percent to $618 from $339 per ton. The war in Ukraine fanned prices that have been rising from shortages due to supply chain disruptions from the Covid-19 pandemic. Russia and Ukraine combined have been responsible for 30 percent of global wheat shipments and 20 percent for corn.

The upward spiral in grain prices is expected to continue due to the continuation of the Ukraine war. Grain yields in Ukraine are projected to shrink 20 percent from last year due to the destruction of farming land. Sanctions on Russia for its aggression have also fueled prices of fertilizer. Farmers across the world will be restrained from farming due to a shortage of fertilizer.

The surge in international grain prices has a big impact on consumer prices in Korea. Livestock feed prices, which hinge on international grain prices, have shot up, pushing up prices of cooking oil, pork, eggs, ramyeon, and snacks.

South Korea is alarmed about the spike in international food prices due to its own sinking self-sufficiency in food.

The self-sufficiency rate for grains, which was 56 percent in 1980, fell to 29.7 percent in 2000. It slipped to a record low of 20.2 percent in 2020. Aside from rice, domestic production of wheat only accounts for 0.5 percent, for corn 0.7 percent and for beans 7.5 percent. The ratios has been dropping steadily.

Climate change and policies on carbon emission reductions will likely cause negative effects on our food security. Scientists project global crop output could decrease by up to 30 percent by 2050 due to global warming, leading to more food shortages. Food supply chains would be disrupted by extreme weather conditions.

When China’s self-sufficiency in food starts to fall, the world’s most populous nation will have no choice but to increase imports, driving up international grain prices. As the urea solution ban from China has underscored, nationalistic trade action by food producers could become a big risk. South Korea is highly reliant on imports for processed food products and livestock feed.

Although South Korea is self-sufficient in fresh vegetables and rice, it has to rely on imports for other major grains. Food security is as important as energy for our livelihoods and everyday lives. Action must be taken on food security. A strategic action plan to secure a stable supply of raw materials for processed food and feed must be drawn up, and a certain self-supply ratio of key grains needs to be ensured.

For stable supplies of grains, importers must be nurtured to establish independent grain import networks. Grain majors Cargill, ADM, Bunge and Louis Dreyfus handle more than 75 percent of the global grain trade. Korea also depends on them for about 60 percent of its needs. Korea must establish a direct supply system with grain producers. It needs to seek long-term supply contracts with grain-producing countries to ensure stable prices during times of volatility like now.

Overseas farmland development also must be addressed in any new approach Korea chooses to take. Imports to home from overseas farmlands make up a mere 110,000 tons a year as shipments hinge on the whims of the host countries. Future food supply systems should prioritize allies like the United States and Australia, rich with food resources, to secure grain supplies in times of need.

Secondly, emergency plans must be set up in case of war and price volatility. We should be ready for the worst case of reduced or prohibited imports. Japan sets up food contingencies by calculating calorie requirements for its population in case its imports are cut off.

Thirdly, the government emergency system of stocking rice should include other staple grains like corn, beans and wheat. The government plans to stockpile 450,000 tons of rice, 14,000 tons of wheat, and 25,000 tons of beans, but that is not enough in an emergency. The government must set the appropriate level for each grain and budget accordingly.

One idea is for Korea to offer itself as a warehouse for global grain traders and host processing factories so that we can use the reserves in emergencies. Saemangeum and other reclaimed land could be used by grain majors to build terminals or processing factories.