Apple and Pear Prices Continue to Rise After Seollal... "There Was a Separate Reason for the Increase" [Chosun Price Records]

⑦Thought to be temporary... Skyrocketing fruit prices
Apple prices up 16.5%, pear prices up 15% compared to before Seol
"Distribution system must change to respond to climate crisis"

The upward trend in fruit prices, which have become as valuable as gold, continues even after the Lunar New Year. Fruits have been stigmatized as the main culprit behind the instability of food prices at the dining table.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 16th, the price of premium-grade apples (10 Fuji apples) averaged 29,398 KRW as of the 13th. This is a 16.5% increase from 25,243 KRW on the 8th, just before the Lunar New Year holiday. It rose 12.3% compared to one month ago (26,187 KRW) and 28.1% compared to last year (22,954 KRW). Other fruits show similar trends. The price of premium-grade pears (10 Singo pears) averaged 36,506 KRW as of the 13th, up 15% from 31,739 KRW on the 8th and surged 19.7% compared to one year ago (30,501 KRW).

According to the Citrus Shipping Association, the wholesale price of Jeju open-field tangerines has surged by about 50% compared to January last year, averaging 14,000 won per 5kg this month. On the 10th, a customer visiting the Hanaro Mart Yangjae branch in Seocho-gu, Seoul, is purchasing apples. Photo by Jinhyung Kang aymsdream@

The sharp rise in fruit prices is driving up the overall food prices. According to the National Statistical Portal of Statistics Korea, the contribution of 'fruits' to the consumer price index in January was 0.4 percentage points. Generally, the contribution of fruit prices to inflation has been between 0.1 and 0.2 percentage points, indicating that their impact on inflation has suddenly intensified. The fruit price index includes apples, pears, peaches, grapes, chestnuts, persimmons, tangerines, oranges, Korean melons, watermelons, strawberries, bananas, kiwis, blueberries, mangoes, cherries, avocados, pineapples, almonds, and more.

However, some argue that blaming agricultural and food prices as the main cause of overall inflation is an overinterpretation. While supply surged ahead of the Lunar New Year, such price fluctuations are considered temporary. The Korea Rural Economic Institute explained in its report "Agricultural and Food Price Issues, Diagnosis, and Tasks," published on the 2nd, that "the weight of agricultural and food products in the overall consumer price index is not high, and except for pork (0.98), domestic beef (0.86), rice (0.42), and imported beef (0.31), individual items have weights below 0.3. Considering that these increases generally do not persist for long periods, this is a natural market phenomenon."

Why Have Fruit Prices Risen? ① Climate Change ② Import Restrictions ③ Structural Issues in Production and Distribution

What is clear is that the sharp rise in fruit prices is strongly felt by consumers. Ahead of the Lunar New Year, high-quality apples and pears used for ancestral rites once soared to around 10,000 KRW per piece. There are three main reasons for this.

On the 7th, gift fruit boxes were displayed at Gwangjang Market in Jongno-gu, Seoul, ahead of the major national holiday, Seollal. Photo by Jinhyung Kang aymsdream@

First is the impact of climate change. Global warming has caused poor fruit harvests. The number of honeybees, which transfer pollen to pistils to fertilize flowers and produce fruit, has decreased, and abnormal weather and pest damage have led to a sharp decline in production. According to Statistics Korea, apple production last year was 394,428 tons, down 30.3% from 566,041 tons the previous year, and pear production was 183,802 tons, down 26.8% from 251,093 tons the previous year.

In a situation where imports of apples and pears are restricted, the government's price management has shown limitations. Before the Lunar New Year holiday, the government applied tariff quotas (a system that lowers tariffs on certain imported goods for a set period) to six types of imported fruits, but apples and pears were not included in the tariff quota items. Furthermore, importing these fruits requires going through an eight-step import risk analysis procedure under the World Trade Organization (WTO) Sanitary and Phytosanitary Measures (SPS), and the strict conditions make importing apples and pears virtually impossible.

Structural problems in production and distribution also exist. Agricultural wholesale distribution is centered on public wholesale markets, and at Garak Market in Seoul, the largest public agricultural wholesale market in Korea, about 90% of agricultural products are traded through auctions. Agricultural products shipped from production areas come to Garak Market for auction, and through the auction, intermediaries called middlemen mediate sales to retailers, who then sell to consumers. In this process, wholesale corporations hire auctioneers to oversee the auctions and collect commissions of 4-7%.

The problem is that a few wholesale corporations hold exclusive consignment rights under the Act on Distribution and Price Stabilization of Agricultural and Fishery Products. This is why there have been ongoing criticisms that private wholesale corporations dominate price determination in the auction system. Except for the Nonghyup Garak Wholesale Market, five private wholesale corporations?Daeacheonggwa, Donghwa Cheonggwa, Seoul Cheonggwa, Jungang Cheonggwa, and Hanguk Cheonggwa?are responsible for sales of fruits and vegetables.

Baek Hye-sook, representative of the National Table Forum and former expert at the Seoul Agricultural and Marine Products Corporation, pointed out that insisting on the auction system amid the climate crisis is inappropriate. Baek explained, "When the quantity available at auction is insufficient, middlemen have to sell to their clients, so demand concentrates and prices rise. If middlemen win bids at high prices and there is a shortage, prices rise further, and distribution margins can also increase."

Baek also said, "People called 'sanji sujibin' (local collectors) buy directly from producers and put agricultural products up for auction, but farmers have no room to negotiate prices within the auction system. If a market wholesaler system is introduced, it would eliminate the need for local collectors and wholesale corporations for auctions, reducing two distribution stages. A distribution system that responds to the climate crisis is needed now."