World Food Price Index Rises for 10 Consecutive Months... Government Announces "Tariff Adjustments"

Increase in Oils, Meats, and Dairy Products, Decrease in Grains and Sugar
Emergency Tariff Rate Quota for Imported Grains Including Corn at 0% Until Year-End

[Sejong=Asia Economy Reporter Moon Chaeseok] Amid growing concerns about food prices, global major food prices have been on the rise for 10 consecutive months.

According to the Ministry of Agriculture, Food and Rural Affairs on the 11th, the Food and Agriculture Organization (FAO) of the United Nations reported that the global food price index reached 118.5 last month, up 2.1% (2.5 points) from the previous month. The global food price index has been rising for 10 consecutive months since May last year (91.0). However, the rate of increase has slowed compared to January (4.3%) and February (2.8%).

The oils price index rose 8.0% from the previous month to 159.2. In particular, palm oil prices have increased for 10 consecutive months due to low stock levels in major exporting countries and a recovery in international import demand. Canola oil and sunflower oil prices also rose due to reduced stocks in Canada and the Black Sea region.

The meat price index increased by 2.3% to 98.9. Pork and poultry prices rose as sales increased in Europe during Easter earlier this month. Beef prices remained similar to the previous month as prices for Brazilian and U.S. beef rose while Australian beef prices fell. Lamb prices dropped due to increased supply from New Zealand.

The dairy price index rose 3.9% to 117.4. Butter prices increased due to a shortage of stocks caused by rising demand in Europe, and milk powder prices rose sharply due to a surge in Chinese imports amid concerns over short-term supply disruptions caused by reduced milk production in Oceania and container shortages in Europe and North America. Cheese prices slightly declined due to decreased demand.

On the other hand, the cereal price index fell 1.7% from the previous month to 123.6. In particular, wheat, a major imported grain, dropped in price due to forecasts of favorable production and supply this year. Rice prices declined due to the supply of newly harvested crops. Corn and barley prices also fell despite demand from China.

The sugar price index also fell 4.0% to 96.2. Rising crude oil prices have led to active ethanol production in Brazil, the world's largest sugar exporter, which is expected to reduce sugar production. Additionally, forecasts of increased sugar exports from India contributed to the price decline.

World grain production for 2020-2021 is expected to increase by 2.0% (55.1 million tons) from the previous year to 2.7652 billion tons. Global grain consumption is projected to rise by 2.4% (64.8 million tons) to 2.7767 billion tons during the same period, while ending stocks are expected to decrease by 1.7% (13.6 million tons) to 878 million tons.

Meanwhile, the government plans to apply an emergency zero percent tariff on major imported grains such as food corn. The existing 3% tariff on 1.28 million tons of food corn will be reduced to 0%. Earlier on the 7th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced, "We will temporarily apply a zero percent emergency tariff on some imported grains, including food corn, until the end of this year."

Regarding this, a Ministry of Agriculture, Food and Rural Affairs official said, "We plan to strengthen communication and cooperation with the industry and closely monitor product price trends to ensure that the measures confirmed at the emergency economic central disaster and safety countermeasures meeting on the 7th contribute to price stabilization."

World Food Price Index Trends. (Source: Ministry of Agriculture, Food and Rural Affairs)