Imported Grain Prices Up 47% in 2 Years... Is Another Domino Effect on Food Table Prices Coming?

[Asia Economy Reporter Song Seung-yoon] Concerns are rising that dining table prices may surge once again amid the continued increase in imported grain prices due to Russia's invasion of Ukraine.

According to the Korea Customs Service and the food industry on the 16th, the price of imported grains has risen by more than 47% over the past two years. Last month, the volume of grain imports was 1.964 million tons, with an import value of $758.31 million. The price per ton was $386, a 26.0% increase compared to $306 in the same month last year. It is also 47.4% higher than $262 in February 2020, just before the outbreak of the COVID-19 pandemic.

In the case of wheat, prices have steadily increased due to high global demand and unstable supply. Last month, the price per ton of imported wheat (including meslin) was $369, up 37.3% compared to one year ago and 46.6% compared to two years ago. Corn prices are also rising sharply due to concerns over crop conditions in Argentina and Brazil, as well as the increase in wheat prices. The price per ton of imported corn was $335, up 40.1% from one year ago and 63.4% from two years ago.

This situation is expected to continue for some time due to Russia's invasion of Ukraine. Wheat and barley produced in Russia and Ukraine account for one-third of global exports, but grain production and distribution have been fundamentally blocked by this incident.Some countries have already started controlling grain exports in preparation for a food shortage crisis.

The rise in imported grain prices is expected to affect the price increase of domestic food products and feed that use these grains as raw materials. In this case, consumers and farmers will inevitably bear the burden. South Korea mainly imports feed wheat and corn from Russia and Ukraine, but domestic food companies do not rely heavily on raw materials from these countries. Additionally, the industry believes the short-term impact will be limited as several months' worth of grain stocks have already been secured.

However, if the conflict prolongs, the overall impact of price increases is expected to be unavoidable. Earlier, domestic food companies had already implemented price hikes last year, citing rising costs of raw materials such as grains and logistics expenses. Food companies tend to have a higher raw material cost ratio compared to other industries.

In this regard, the Ministry of Agriculture, Food and Rural Affairs is planning various measures, including checking the supply status of raw materials and industry inventory, changing import sources, and alternative bidding to respond comprehensively.