[Global Issue+] Grain Prices Surge After African Swine Fever Ends in China...Global Food Crisis Feared

China's Pig Inventory Recovers to 90% of Usual Levels... Grain Imports Increase
COVID-19 and Global Warming Also Play a Role... US Wildfires, Russian Drought

[Image source=AP Yonhap News]

[Asia Economy Reporter Lee Hyun-woo] As the African Swine Fever (ASF) crisis that struck China two years ago has settled and the number of pigs raised in China has returned to normal levels, international grain prices are now soaring. Prices were already on the rise due to abnormal weather caused by global warming and supply chain reductions caused by COVID-19, but the situation has worsened as China has begun importing massive amounts of grain for pig feed. Starting from March, this is expected to directly impact household expenditures worldwide, raising concerns that the financial hardships of ordinary people will deepen.

According to foreign media including the Associated Press on the 23rd (local time), the UN Food and Agriculture Organization (FAO) announced on the 6th that the global food price index reached 107.5, marking the highest level in the past three years. It has been rising for seven consecutive months. The corn futures price at the Chicago Board of Trade (CBOT) in the United States is also holding at over $5 per bushel, the highest in the past five years. International grain prices have been steadily increasing since the COVID-19 outbreak due to supply chain issues caused by closures of farmlands and farms and tightened cross-border movement controls, but prices began to surge sharply from October last year.

The main factor driving the price surge is China's "pigs." The Chinese government announced that since October last year, the number of pigs raised increased by more than 29% compared to the previous year, recovering to 90% of the usual level, which caused international grain prices to fluctuate. Previously, China's pig population had plummeted from about 400 million to 220 million due to the 2019 African Swine Fever (ASF) outbreak but has now recovered to approximately 380 million. As a result, China, facing a shortage of pig feed, began to scoop up massive amounts of grain, which is analyzed to have caused the international grain prices to skyrocket.

[Image source=EPA Yonhap News]

The massive flood in the Yangtze River in China last July also exacerbated the food shortage. It is estimated that about $26 billion in damages occurred due to this flood, and as vast areas of farmland were submerged, grain prices within China surged by more than 20%. Following the pork price surge in 2019, the recent rice price surge has pushed China's food shortage problem into a very serious state.

It is presumed that the Chinese Communist Party's regulation of mukbang broadcasts on the internet and the campaign to avoid food waste since the Yangtze River flood are due to this situation. Although the Chinese government released more than 70 million tons of government stockpiled grain last year, it failed to curb the price surge and responded to food security concerns by significantly increasing food imports by more than five times compared to 2019.

[Image source=EPA Yonhap News]

However, food conditions in other countries are also feared to be very poor. According to CNN, the United States saw prices of processed meat and groceries surge by about 20-30% last year as major farms and food factories were closed for extended periods due to COVID-19, and prolonged wildfires in California are expected to significantly reduce agricultural production. In major grain-producing regions such as Russia and Ukraine, prolonged droughts caused by abnormal weather due to global warming have reduced wheat production, and supply chain issues have been further hampered by stricter shipping and customs procedures due to COVID-19.

As a result, from March onward, food price increases are expected to directly impact household economies worldwide. According to CNBC, major grain and food prices are usually determined by futures market prices three months prior to the current time, so the price increases at the end of last year are expected to be reflected in consumer prices starting in March, raising concerns about a full-scale food price inflation from March. This is expected to create a double burden as small business owners worldwide, already suffering greatly from COVID-19, face overlapping food price hikes.