Gov't will overhaul agricultural pricing to tame inflation

Economy

Published: 01 May. 2024, 16:51

Gov't will overhaul agricultural pricing to tame inflation

From left: Minister of Agriculture, Food and Rural Affairs Song Mi-ryung; Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok; and Minister of Oceans and Fisheries Kang Do-hyung during the Emergency Ministerial Meeting on Economic Affairs at the Seoul Government Complex in central Seoul on Wednesday [YONHAP]

The government pledged to rein in inflation to the 2 percent range amid persisting geopolitical uncertainty and outlined new plans to overhaul the pricing structure of agricultural and marine products.

The initiative, announced Wednesday during the Emergency Ministerial Meeting on Economic Affairs at the Seoul Government Complex in central Seoul, aims to cut intermediate costs by more than 10 percent in long term.

“Agricultural, marine and livestock prices, in general, have been declining as of late. Yet risks still remain, with persisting global crude price volatility and the recent price increases of some food products and daily necessities,” said Choi Sang-mok, deputy prime minister and minister of economy and finance, in his opening remarks during the meeting.

“The government will do everything in its power until the inflation rate stabilizes to the 2 percent level, while also taking a more fundamental approach including improving the agricultural and marine product distribution system,” said Choi.

The government will also set up a cross-functional organization dedicated to enhancing everyday livelihood, according to the deputy prime minister.

The Ministry of Economy and Finance forecast Korea's inflation to reach 2.6 percent this year. But the country's headline figure has accelerated since February with consumer prices rising 3.1 percent on year in March, surpassing the 3 percent threshold for the second consecutive month following February’s 3.1 percent. A sharp jump in agricultural product prices drove the uptick.

In order to reduce the distribution costs of fresh agricultural, marine and livestock products, the government plans to expand the online wholesale marketplace, which launched last November, by lowering the entrance barrier for sellers and expand the product catalog.

Its goal is to bring the market size to 5 trillion won ($3.6 billion) by 2027.

Moreover, the offline, state-run wholesale market, which has been criticized for a lack of competition and excessive margins, will go through an overall restructuring after a performance assessment.

“As the distribution structure has been considered one of the key factors driving price uncertainties in agricultural and marine products, the government set up a cross-functional task force and has conducted on-site inspections since April of last year,” Agriculture Minister Song Mi-ryung said Wednesday.

The climate crisis is another factor behind the instability of agricultural prices, Song said, adding that the ministry will examine the issue in collaboration with experts and government agencies.

Meanwhile, the Finance Ministry outlined new measures to boost labor force participation rates for women and younger generations during the Wednesday meeting.

The plan is part of the ministry’s policies to enhance social mobility, a pillar of its “Dynamic Economy” initiative, which it will announce in June.

The latest plan includes extending paternity leave from the current 10 working days to 20 and broadening the support program designed to help women relaunch their careers after breaks to include men as well.

The ministry will also provide an online, personalized job-seeker support program for younger generations and expand academic scholarships for middle and high school students from low-income households to include elementary school students. High school graduates will have more job opportunities in public service.

Moreover, an overall update to individual savings account (ISA) regulations is under way to help younger generations build assets with earned income, according to the ministry.

ISAs, which were introduced to Korea in 2016, allow their holders to shield certain amounts of their money from taxes. The plan is meant to enhance benefits and services by encouraging competition among sellers. The ministry is also considering easing the current regulation allowing only one ISA per holder.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]