The Korea Rural Economic Institute (KREI) reported that there is a possibility that Korea will face ‘agflation’ in coming months, where rising prices for agricultural products causes inflation, largely due to high grain prices from overseas suppliers.
Korean food costs have been driven higher during 2012 – largely the result of the prolonged drought last spring, the impact of typhoons on Korean crops in 2012 and the ongoing drought in the US.
The KREI predicts that ‘agflationary’ effects would impact Korean consumers by the end of this year, as wheat, starch and forage prices are forecast to rise 30.8%, 16.3% and 10.2% in the first quarter of 2013.
In 2011 Korea consumed 20 million tonnes of grain, with domestic production only supplying 10% of total demand.
Korea’s self-sufficiency rate for rice dropped from 104.6% in 2010 to 83% in 2011 – the lowest level since 1981.
Last month Korea, the world’s third largest corn buyer, stated that it plans to stockpile 500,000 tonnes of corn, wheat and soybeans for feed use in 2014.
In 2011, the Korean government aimed to raise self-sufficiency levels for wheat, corn bean and various cereals to 14.3% by 2015.
Source: Argentine Beef Packers S.A.
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