Rice and Pork Prices Surge... Agricultural and Livestock Prices Up 4.4% in August

Rice Prices Surge Due to Inventory Shortages at Local Distributors
Ministry of Agriculture: "Complex Distribution Structure Increases Price Volatility... Improvement Measures to Be Prepared Within the Year"

Last month, consumer prices for agricultural and livestock products rose by more than 4%. The sharp increase in rice prices was driven by inventory shortages at local distribution companies, while livestock prices surged due to the base effect from last year and rising international prices.

On September 2, the Ministry of Agriculture, Food and Rural Affairs announced that, according to Statistics Korea's August Consumer Price Index survey, prices for agricultural and livestock products increased by 4.4% compared to the same month last year.

An official from the Ministry of Agriculture, Food and Rural Affairs stated, "Despite supply instability for certain items caused by heavy rains and heatwaves, the prices of horticultural products remained stable thanks to the government's supply of available stock and crop management by item." The official added, "However, prices for agricultural and livestock products rose due to higher rice prices resulting from inventory shortages at local distribution companies such as Rice Processing Complexes (RPCs), as well as the base effect from last year and rising international prices for livestock products."

Rice prices rose by 11% year-on-year as competition among local distribution companies to secure raw rice intensified, given that they failed to secure enough raw materials last year, just before the shipment of new crops. The Ministry of Agriculture, Food and Rural Affairs is supplying 30,000 tons of government rice stock to local distributors on a rental basis. The plan is to process all of this rice and release it to the market by the end of this month. Additionally, to ease the burden on consumers, major retailers have been running discount events since last month, offering a 3,000 won discount per 20 kilograms.

Livestock products saw a 7.1% year-on-year increase, driven by the base effect for Korean beef and rising international pork prices. According to the Ministry, the wholesale price of pork in the United States rose by 14.0% year-on-year, from $2.20 per kilogram in July last year to $2.51 per kilogram in July this year.

The consumer price index for Korean beef increased by 6.6% year-on-year due to the base effect, as retail prices hit their lowest point of the year in August last year amid oversupply. The Ministry plans to increase the supply of Korean beef during the Chuseok holiday season and, in collaboration with the beef self-help fund and major retailers, will hold discount events for Korean beef and pork to help ease the burden on consumers.

Pork prices rose by 9.4% year-on-year due to increased domestic demand following higher international livestock prices. The Ministry expects prices to gradually stabilize this month as the number of domestic pig slaughters increases. In addition, to disperse domestic demand, the Ministry is encouraging the early introduction of 10,000 tons of processed meat raw materials currently subject to quota tariffs, aiming to import more than 80% of this volume by the end of October.

Horticultural products, which are prone to supply instability during the summer, rose by 0.9% year-on-year in August, remaining stable so far. According to the Ministry, although cabbage shipments decreased in late August due to high temperatures and heatwaves, prices have remained stable thanks to the timely release of the government's available stock, which reached a record high of 35,500 tons. The area harvested for Chuseok is also expected to increase by more than 30% compared to last year, suggesting that supply conditions will remain stable going forward.

Shipments of apples and pears were delayed due to slower growth caused by heatwaves, but crop growth is recovering, with larger fruit sizes and farmers planning to ship more produce to coincide with the later Chuseok holiday. As a result, shipments are expected to increase compared to last year. The Ministry plans to supply contract-grown volumes to meet Chuseok demand and will strengthen crop management to respond to sudden weather changes until the harvest is complete.

Hong Ingi, Director of Distribution Policy at the Ministry of Agriculture, Food and Rural Affairs, stated, "To prepare for Chuseok, the time of year with the highest demand for agricultural and livestock products, we will jointly develop and implement supply measures and large-scale discount support plans with relevant ministries in September." He added, "Recognizing that recent abnormal weather and complex distribution structures are increasing price volatility, we will not only work to streamline distribution stages, but also prepare measures to improve the distribution structure in connection with production and supply-demand by the end of this year."