South Korea Rice insights

[Reporter Kang-san Lee of the Korea Agricultural and Fishery Newspaper] On the 7th, South Jeolla Province urged the government to come up with measures to secure farm income and stabilize rice prices, such as isolating an additional 200,000 tons of rice from the market. South Jeolla Province Governor Kim Young-rok said in his proposal, “The government announced measures to stabilize rice prices, but it is not sending a clear signal to the market,” and “In reality, this government policy is being evaluated as a policy for intermediate distributors rather than farmers.” He continued, “If the current trend continues, the purchase price of public reserve rice for rice farmers is expected to fall by more than 10% compared to the previous year, which will reduce farm income by 1 trillion won nationwide,” and “The government promised to provide rice to farmers.”

Domestic rice production is continuing its slow decline in South Korea as the government incentivizes farmers to switch to planting alternate crops while also fostering a domestic wheat industry, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.

The price of rice in the harvest season, which had been falling, has started to stabilize. Attention is focused on how much the final rice production this year will decrease compared to expectations, which is the variable for the price rebound. According to Statistics Korea, the national average price of rice in the harvest season on the 5th was 182,700 won per 80kg bag, down 200 won (0.1%) from the previous season (182,900 won). The decline has slowed compared to the 1.8% and 1.1% decreases in each season since the price of new rice started at 188,156 won on October 5th. It is analyzed that this reflects the outlook that the supply will decrease due to government measures such as market isolation of 200,000 tons (based on rice equivalent) of new rice and decreased production due to poor harvest. The remaining variable is the results of the final rice production survey this year, which Statistics Korea will announce on the 15th. There is speculation that the extent to which production decreases compared to the October forecast (3,657,000 tons) will be the key to whether rice prices will rebound. The government and producers are reporting that production will decrease more than expected due to the high temperature and low sunlight during the ripening period. According to recent test results from the National Agricultural Products Quality Management Service Testing and Research Institute, this year’s milling yield was 70.8%, down 2.3 percentage points from last year (73.1%). In the purchase inspection of this year’s public reserve rice, the proportion of special and first-grade rice was 92.3% as of the 6th, lower than last year (95.1%) and the average year (93.7%). An official from Nonghyup Economic Holdings said, “The crop conditions are so poor that there are forecasts that this year’s rice production will decrease by about 10% compared to last year,” adding, “The expected production volume per 10a was 524kg, but in reality, it could be at the average year (518kg) or even lower.” An official from the Ministry of Agriculture, Food and Rural Affairs said, “It is certain that this year’s final rice production will be lower than the expected production,” and “There is talk that it is difficult to obtain rice even in the producing areas, so we believe that this will affect the rise in rice prices and the rebound in rice prices.” He added, “Following additional measures such as the acquisition of all commercial rice, we have recently requested that large distributors and local governments refrain from holding discount events for rice during the harvest season.” Meanwhile, the opposition party and farmers’ groups