Korea plans to set up grain procurement companies in major countries such as the United States and Brazil to directly bring in agricultural products as part of its long-term effort to fend off consumer price inflation.
After initially establishing a grain company in North America, the government plans to make active inroads into the markets, which include South America and Central Asia, by 2020.
According to the Ministry of Strategy and Finance, the government will establish a joint company in coordination with the private sector in Chicago that can diversify the country’s grain procurement systems currently controlled by a few multinationals, such as Cargill and ADM.
Initiated by Finance Minister Yoon Jeung-hyun last year, the state-controlled Korea Agro-Fisheries Corp. has been pushing for the project forming a consortium with four conglomerates ― Samsung Corp., Hanjin, CJ and STX.
“Agricultural product exporters including China, Russia and India are restricting their of grain exports,” a government official said. “Securing a certain amount of grain at normal prices has been a crucial national task.”
Excessive reliance on major dealers has made Korea vulnerable to international speculation in the grain market that sometimes causes spikes in prices.
Seoul depends almost entirely on imports to meet its demand for wheat, beans, corn and barley, with a rise in prices having adverse effects on consumer prices and the overall economy.
Government officials say it is urgent for the nation to set up an independent firm which can directly procure grain on the international market for the country.
On average, the country imports 14 million tons of grain products from abroad each year, with major dealers handling most of the shipments.
The government said that even if a new grain handling company is set up, the goal will be to handle about 20-30 percent of local demand in the next 10 years. For 2011, the company may be able to import about 50,000 tons of grain, with numbers to be increased gradually.
In addition, the farm ministry said policymakers were actively weighing the option of creating a state reserve for such products as corn, beans and barley in the future to protect the country from international grain price fluctuations.
Korea already maintains a sizable rice reserve to handle emergency situations, but has not stocked up on other grain products.
The government had said it would raise the ratio of food sovereignty to 47 percent from the current 27 percent level by mapping out efficient measures.
By Kim Yon-se (email@example.com)