The government is establishing a dedicated task force (TF) to proactively prevent price instability for essential goods closely related to people's livelihoods, such as eggs and cabbage, and will inspect the overall supply and distribution structure. Additionally, in response to rising international raw material prices and climate anomalies, the government has decided to implement short- and medium-term stabilization measures across the agricultural and food sectors.
On the 18th, the Ministry of Agriculture, Food and Rural Affairs reported this at a meeting of vice ministers regarding prices held on the 16th, announcing the formation of the 'Agricultural and Food Supply and Distribution Structure Reform TF.' The TF will assess the supply situation for key items such as agricultural products, food, and dining, and analyze structural factors contributing to price instability centered around wholesale markets to devise improvement measures.
According to the Ministry of Agriculture, Food and Rural Affairs, recent prices of processed foods and dining have continued to rise due to increases in international raw material prices, exchange rates, and accumulated burdens of labor costs and rent. As of May, processed food prices increased by 4.1% compared to the same month last year, while dining prices rose by 3.2%. During the same period, the international price of palm oil was $945 per ton, and cocoa was $9,499, which represents increases of 5% and 2.9 times, respectively, compared to 2023.
In response, the government is applying allocated tariffs on 21 types of food raw materials and is maintaining a value-added taxes exemption on coffee and cocoa imports until the end of this year. To alleviate the burden of labor costs on dining establishments, it has relaxed the requirements for employing foreign workers and is also supporting consumer public delivery app coupons worth a total of 65 billion won.
Additionally, the government has reflected 20 billion won in supplementary budgeting, adding to the 105.6 billion won allocated for purchasing domestic agricultural products this year. A total of 30 billion won has been assigned for funding the development of small food businesses and 500 million won for group purchasing support.
Cabbage is a highly volatile item in terms of price due to its sensitivity to high temperatures during the summer. Actually, the production and shipping expense per unit of summer cabbage is over 50% higher than for spring cabbage, and the possibility of poor harvest due to unusual weather conditions such as heat waves and heavy rainfall is substantial. The area for summer cabbage cultivation has also decreased from 4,929 hectares in 2010 to 3,747 hectares this year.
To prevent supply instability during the summer, the government has increased the storage volume of spring cabbage by about 10% with a focus on private sectors, and has expanded the government’s purchasing reserve by more than 50% compared to the previous year, securing a total of 23,000 tons. Of this, 5,000 tons are planned to be directly supplied to small kimchi businesses.
The government is securing areas for summer cabbage cultivation through advance purchasing contracts and is also conducting major pest and disease control along with supplying preliminary seedlings. Moreover, additional responses will be initiated based on the results of the area intention survey conducted in early July. Furthermore, starting next year, the government plans to pilot a summer cabbage import stability insurance, actively pursuing medium- to long-term measures such as developing heat-resistant new varieties and identifying alternative cultivation sites.
Due to the price increase affected by the Layer Poultry Association and rising demand, the farm price of eggs increased by 17.4% and the retail price by 8.3% as of early June compared to the previous year. However, the Ministry of Agriculture, Food and Rural Affairs anticipates that prices will stabilize in July and August due to decreased demand during school vacations and holidays, as well as an increase in imports of egg products.
To expand egg production, the government plans to extend the average rearing period for layer hens from 84 weeks to 87 weeks and increase the quantity of allocated tariffs on egg products to 10,000 tons. Funds for facility investments due to expanded cage standards (14.4 billion won) have also been included in this supplementary budget.
In response to questions about the possibility of egg imports, it drew a line. An Yong-deok, the Director of Livestock Policy at the Ministry of Agriculture, Food and Rural Affairs, explained, "It is different from the unstable supply situation in the country caused by the outbreak of highly pathogenic avian influenza (AI) in 2021. Since there are enough layer hens raised for more than six months, we are not at all in a position to consider importing eggs."
The Ministry of Agriculture, Food and Rural Affairs is also working on improving distribution. It will centralize the egg farm price survey system under the Livestock Product Quality Evaluation Institute and also establish a consultative body for introducing standard contracts and fixed trading methods. The Ministry is simultaneously pursuing consumer price reductions by lowering the supply price to large discount stores by 1,000 won per 30 eggs.
In the case of chicken meat, imports have been suspended since the shipment on May 15 due to outbreaks of highly pathogenic avian influenza (AI) in Brazil. To prevent supply shortages, the government plans to urgently import 4,000 tons of Thai chicken starting at the end of July and increase the supply through expanded domestic chick placements. Chicken from Brazil is set to resume imports from the 21st, but only from regions where highly pathogenic AI has not occurred.
An official at the Ministry of Agriculture, Food and Rural Affairs said, "We established the TF to rationally improve the distribution structure of agricultural and livestock products, which is cited as one of the causes of price instability," adding, "We plan to quickly devise measures for supply stabilization and structural improvement."