The Ministry of Agriculture, Food and Rural Affairs (MOLFA) of South Korea held a meeting to review the supply and demand situation of agricultural products on Tuesday, May 9. The afternoon meeting was chaired by Vice Minister Kim In-jung at the MOLFA’s conference room on the 5th floor of the Government Sejong Office Building.

 The meeting was organized to check the supply and demand situation in the agri-food sector and to seek ways to stabilize supply and demand by listening to opinions from the field, including the distribution industry. This is even as prices of some vegetables such as radishes and onions are showing strength while consumer prices in the agri-food sector are generally stable, and prices of food outlets are still at a high level.

  * Consumer price inflation in the agri-food sector (YoY, %) is as follows:

Agricultural products : (‘22.8) 7.7 → (10) 5.1 → (12) △0.9 → (‘23.1) 0.1 → (2) 0.02 → (3) 2.3 → (4) 0.2

Processed food : (‘22.9) 8.7 → (10) 9.5 → (12) 10.3 → (‘23.1) 10.3 → (2) 10.4 → (3) 9.1 → (4) 7.9

Eating out: (‘22.9) 9.0 → (10) 8.9 → (12) 8.2 → (‘23.1) 7.7 → (2) 7.5 → (3) 7.4 → (4) 7.6

Here’s a look at the supply and demand trends and countermeasures for each major agricultural sector:

Agricultural products have been stabilizing downward, with prices of  vegetables in Korea, which had been strong due to the winter cold snap and lack of sunshine, falling across the board. They are, however, expected to remain stable after May as supply conditions improve, such as the rising temperatures and spring shipments.

However, some items such as radishes, onions, and potatoes, which have decreased in storage, are expected to remain strong until June, when the spring harvest will be shipped in earnest.

To stabilize the supply and demand of agricultural products, the Ministry of Agriculture, Food and Rural Affairs plans to release government reserves to the wholesale market (including 5.8 thousand tons of radish), direct supply to large supermarkets (215 tons of radish to Nonghyup Hanaro Mart at the end of April and 200 tons to Nonghyup Hanaro Mart and Lotte Mart in May). It also plans to expand the supply of imports through quota tariffs (quota tariff: unlimited radish for processing from May to June, 12,810 tons of potatoes for processing from May to November and an increase in low-rate tariff quota (TRQ) for 20 thousand tons of onions). The quota tariff system will also extend to direct supplies to large consumers through state-owned trade for 6,300 tons of onions.

 In livestock products, prices are stabilising, mainly for beef and eggs. Pork prices are trending upward due to seasonal demand, but are at a low level compared to the previous year, and chicken prices are high due to a decrease in supply, but prices are expected to gradually stabilise as supply increases due to the recovery of broiler productivity due to rising temperatures from the end of May.

 The Ministry of Agriculture, Food and Rural Affairs plans to continue promoting measures to keep supply and demand steady, such as discount events using livestock subsidies, while continuing to support funds for additional broiler chickens. The Ministry also aims at flexibly adjusting supply volumes through the operation of quota tariffs (on 30,000 tons of chicken in May-June).

 Since February 2023, when the consumer price inflation rate reached 10.4% year-on-year, processed foods have continued to decline, recording 9.1% in March and 7.9% in April due to continuous communication efforts with the food industry.

 Going forward, the government will continue to promote tax support such as expanding the application of quota duties on food ingredients and increasing the deduction for agenda purchase tax, and strengthen communication with the food industry to actively stabilise prices.

Regarding sugar, which has recently seen an increase in international prices, the government will strengthen the monitoring of the domestic and international markets, communicate closely with the industry, and consider support for diversifying the import lines of raw sugar, the raw material for sugar.

The consumer price inflation rate for eating out rebounded temporarily from 7.4% in March to 7.6% in April after a six-month decline from a peak of 9.0% in September 2022. Due to the nature of the restaurant industry, which provides food and services at the same time, the increase was reflected in various costs such as labor, utilities, and rent in addition to food costs.

However, from May, the inflation rate is expected to resume its declining trend due to the refraining of the franchise industry from raising prices.

The Ministry of Agriculture, Food and Rural Affairs plans to continue to request proactive cooperation in stabilizing food prices through communication with the industry, while improving employment regulations for foreign workers, such as applying quota duties on major food materials such as coffee beans and cooking oil (‘23.1.1-12.31). It will also offer F-4 (overseas Korean) visas to work as kitchen assistants in restaurants (‘23.5.1), and discover tasks to ease the management burden of the industry, such as increasing the deduction rate for agenda purchase tax.

Kim In-joong, Deputy Minister of Agriculture, Food and Rural Affairs, said, “Agricultural food prices remained relatively stable in April, but there is a possibility of fluctuations in the future due to decreased production of agricultural products due to severe weather conditions, rising prices of international food raw materials such as sugar, and rising utility and labor costs. We will do our best to stabilize agri-food prices by checking the supply and demand situation of agri-food products on a daily basis, securing and releasing stockpiles, introducing imports on a timely basis, and expanding the number of livestock, while continuing to promote support for consumer price discounts and strengthening communication with the food and restaurant industry to provide tax support and resolve difficulties.”

Source: Mafra.go.kr