Due to Falling Mountain Rice Prices... Government Considers 'Temporary Distribution Reduction Card'

80kg Sanji Rice Price Falls Below 200,000 Won... Increased Inventory Impact from Sanji Nonghyup and Distributors
Measures to Ease Inventory Burden if Rice Prices Fall Further

As the price of locally produced rice this year falls below the target of 200,000 won (80kg), the government is considering temporarily reducing rice distribution to stabilize prices. It is judged that rice prices are showing a downward trend due to a temporary increase in inventory caused by the recent rise in paddy purchase volumes by local distribution companies, and measures are being prepared to alleviate this.

Photo by Jinhyung Kang aymsdream@

A Ministry of Agriculture, Food and Rural Affairs official said on the 23rd, "As a result of preemptive supply and demand measures such as the strategic crop direct payment system, the paddy cultivation area has decreased, reducing the production of 2023 rice. Considering the early purchase volume in September due to the shortage of 2022 stock and the lower rollover volume compared to previous years, overall stable supply and demand management is expected." However, the official added, "Since the paddy purchase volume by local distribution companies such as NongHyup has increased compared to last year, causing rice prices to decline, we are reviewing measures such as temporarily reducing distribution volumes to ease their inventory burden."

According to Statistics Korea's survey on 2023 rice production, rice production decreased by 1.6% (62,000 tons) from last year to 3.702 million tons. However, as of the 15th, the local rice price dropped below 200,000 won to 199,280 won per 80kg. Farmers concentrated their shipments to local NongHyup, which offers relatively higher purchase prices, and as local NongHyup increased supply due to the burden of increased inventory, rice prices have been declining, according to the Ministry of Agriculture, Food and Rural Affairs. In fact, NongHyup's inventory stands at 1.272 million tons, an increase of 15.1% (167,000 tons) compared to the average for the same period.

First, to stabilize local rice prices during the harvest season, the Ministry of Agriculture, Food and Rural Affairs decided that the government will purchase all 120,000 tons of paddy rice from the 400,000 tons of public reserve rice starting next month and will not supply it to the market. The remaining 280,000 tons of dried rice will also not be auctioned under the current rice price situation. In the same context, NongHyup is providing additional support to reduce the inventory burden on local NongHyup. An additional 300 billion won will be added to the existing 2.2 trillion won paddy purchase fund, making a total of 2.5 trillion won, the largest ever, to support local NongHyup. This is to help local NongHyup, which has purchased more than usual, to have the capacity to delay the timing of rice shipments.

The government plans to prepare additional measures to reduce inventory burdens, such as cutting distribution volumes, if the local rice price as of the 25th, to be announced at the end of this month, continues to decline. If the downward trend in local rice prices intensifies, there is also a possibility of temporary market isolation. A Ministry of Agriculture, Food and Rural Affairs official said, "Since this year's excess production is less than the market isolation requirement (excess production exceeding 3% of total production), we intend to minimize market isolation." However, the official added, "In the worst case, temporary market isolation, where rice is purchased temporarily and then supplied back to the market after a certain period, is one of the options to stabilize rice prices."

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