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Food supply disruptions a concern in South Korea

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Posco International has a grain export terminal with a combined capacity of 2.5 million tonnes. Posco International Corp/THE KOREA HERALD

Food supply disruptions a concern in South Korea

Amid the coronavirus outbreak, concerns are growing that South Korea’s food supply chain may become disrupted if the pandemic is prolonged, adding weight to the calls for establishing a national food procurement system.

Last month, UN secretary-general Antonio Guterres said even in countries with abundant food resources, Covid-19 risks disrupting food supply chains. “Our food systems are failing and the Covid-19 pandemic is making things worse.”

In South Korea, although the self-sufficiency rate of rice, the staple food, is high at 97.3 per cent as of 2018, the rate of other grains is starkly low, with 1.2 per cent for wheat, 3.3 per cent for corn and 25.4 per cent for soybeans.

Gyeonggi Research Institute researcher Kim Yong-joon said: “If the export ban of major agricultural exporters such as Russia continues to be extended and the international logistics system continues to be suspended, prices will soar and domestic food security concerns will aggravate.”

Russia recently restricted exports of wheat, corn and barley to less than seven million tonnes, while Cambodia, Myanmar, Malaysia and Ukraine also pushed for restrictions on exports of grain-related products.

In South Korea, there is no national grain procurement system.

Instead, some private companies are stepping up efforts to strengthen their position in the international grain market, contributing to national food security.

Early last year, Posco International Corp signed a deal with Ukrainian logistics firm Orexim Group of Companies to acquire a 75 per cent stake in a grain export terminal located in the Ukrainian Black Sea port of Nikolayev.

The terminal was completed in September to enable the Korean trading company to control the logistics of the production, inspection, storage and shipment of grain produced in Ukraine.

As of this May, sales of wheat and corn have reached about 300,000 tonnes and sales to China have also been on the rise, Posco International said.

The firm’s spokesperson said: “Posco International has a grain export terminal with a combined capacity of 2.5 million tonnes, and plans to focus on expanding the value chain of its food business while making efforts to stabilise the grain market fluctuations in the future.”

Another local trade and logistics company Pan Ocean Co Ltd signed a contract in May to acquire 36.25 per cent of the stake in a US Pacific Northwest terminal known as the Export Grain Terminal (EGT).

EGT owns and operates one of the largest grain export facilities on the west coast of the US.

Pan Ocean believes that the acquisition, when completed, will pave the way for its grain business to make inroads into the global market by strengthening ties with major grain exporters.

Although private firms seem to fare well, calls are also growing for the nation’s grain procurement system to be put into operation amid concerns that the spread of Covid-19 could trigger a global food crisis.

A majority of experts said the current procurement system would struggle in the event of a food crisis, a 2019 survey by the Korea Rural Economic Institute (KREI) found. They note that a procurement system involving private capital is needed based on government policy support.

Choi Ji-hyun, an honorary researcher at the KREI, said: “As a way to cope with the food crisis, we must ultimately activate the national grain procurement system.

“Since there is no way to force grain to be brought into the country in an emergency, the government’s equity investment [in private projects] is needed first.”

In April, Vice-Minister of Economy and Finance Kim Yong-beom said the government was raising its guard against the food supply disruptions.

He said: “Major international food producers such as Russia, Vietnam and Ukraine are restricting food exports.

“In Korea, there is room for an inventory of major food crops such as rice, but it is necessary to proactively respond through monitoring the international grain market in preparation for the prolonged export restrictions of each country.”



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