As rice prices rise due to a lack of supply, the Ministry of Agriculture, Food and Rural Affairs has decided to supply 30,000 tons of government grain by the end of this month. However, the retail price of a sack of rice (based on 20 kg) remains at around 50,000 to 60,000 won. Prices are expected to rise further until October, putting a burden on retailers and consumers for the time being.
According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 27th, the retail price of rice for 20 kg as of the previous day is 59,818 won. This is an increase of 15.36% compared to the same period last year and 13.18% compared to the average. On the 31st of last month, the retail price of 20 kg of rice rose to 60,573 won.
By 12:30 p.m. the previous day, affordable rice on the shelves of a supermarket in the Mapo district of Seoul was already sold out. The rice with the highest remaining stock, based on 20 kg, was Cheorwon Odae rice at 79,000 won. Paju rice was priced at 69,000 won, and Jangsu rice at 57,000 won. A supermarket employee surnamed Park, 53, said, "Although Cheorwon Odae rice is considered the best, its high price means that relatively cheaper rice sells out first."
Housewife Hwang Young-sin, 56, said, "I usually buy Cheorwon Odae rice, but today I purchased 10 kg of relatively affordable Dangjin rice. It originally costs 36,000 won, but I received a 2,000 won discount," and added, "After harvesting new rice around the Chuseok holiday, prices should drop as usual, so I will buy enough rice to last until then at low prices."
The increase in retail rice prices is the result of multiple factors. The nationwide rice production for 2024 is projected at 3.585 million tons, a decrease of 3.2% compared to the previous year. According to the Ministry of Agriculture, Food and Rural Affairs, heavy rain concentrated in the Jeonnam region last year flooded 7,791 hectares of rice fields. Continuous heat waves due to abnormal high temperatures resulted in damage to rice cultivation over 34,000 hectares.
In addition, the government's market isolation of 200,000 tons of rice from the 2024 harvest has further reduced market supply. A representative of a rice production and distribution company, identified as A, stated, "Last year's abnormal climate resulted in many empty grains; thus, there is a shortage of actual rice production. However, at that time, the government estimated that there was a surplus and isolated 200,000 tons. This is why rice prices have risen."
The expanded demand for rice processed foods and convenience meals, along with strong Korean food exports, has also increased rice demand. Last year, the consumption of rice for processing was about 644,000 tons, which is a 31% increase over the past five years. Last year's exports of related products also increased by 38.4% to $300 million (approximately 419.4 billion won). In this context, the amount of processing grain allocated by the government this year is 340,000 tons, about 20,000 tons less than last year. A representative of a distribution company supplying rice to instant rice and processing companies, identified as B, stated, "Recently, I have received many contacts saying they couldn't secure stock. On busy days, it can be about 10 places a day," adding, "There are more and more places asking for stock to be secured, even offering to come directly with trucks to load the rice."
At a symposium on the "Development of the Rice Processing Industry and Food Security" held at the National Assembly on the 22nd, the Deputy Minister of the Rice Processing Food Association, Cho Sang-hyun, stated, "Industries that have already exhausted the government-allocated quantities are unable to fulfill delivery contracts due to the surge in private rice prices. About 70-80% of related companies are currently experiencing difficulties securing rice."
Industry experts forecast that rice prices will continue to rise until October when new rice is harvested. They assert that the government's release of grain is insufficient to resolve short-term inventory shortages. The Ministry of Agriculture, Food and Rural Affairs is supplying 30,000 tons of grain by the end of this month. This is a form of lending, where the amount borrowed will be repaid when early-maturing rice is harvested in 2025.
Kim Jeong-ryong, secretary general of the Rice Producers Association, predicted, "Once the new rice is harvested, prices will not rise as sharply as they are now, but they will maintain a steady state." Professor Lee Jong-woo from Ajou University's Department of Business Administration noted, "Even if new rice is harvested, we must consider the possibility that prices will not stabilize and continue to rise. This signifies the onset of price distortion in rice," emphasizing that the government's policy signal is crucial for certain wholesalers who do not release rice out of anticipation for further price increases while ensuring a certain revenue for farmers.