Rice price set to remain low

By Choi Sung-jin

The domestic rice price remains weak and is expected to stay low for some time, putting a strain on farmers and throwing policymakers into a dilemma.

The average price during the last harvest season was 152,158 won ($128.6) per 80 kg, down 15,188 won, or 9.1 percent, from the 2014 season, according to CS&J, a private think tank specializing in food and agricultural research.

It attributed the price weakness to last year’s bumper crops and huge government stockpiles. The “reverse seasonal fluctuation” _ the price fall in the non-harvest season from the previous year’s harvest season _ also stood at a relatively high 4.5 percent in 2014, discouraging processing companies from buying more.

As a result, the rice price remained low during the last harvest season despite the government’s additional purchase of 200,000 tons, it said. On Dec. 25, the price in production areas fell a further 504 won from 10 days before, down 10 percent from the same day in 2014.

Another big factor behind the price softness is the long-suspended grain aid to North Korea. According to the Korea Rural Economic Institute, rice aid of up to 400,000 tons to North Korea between 2002 and 2007 helped push up the consumer price by 1.4 percent on the annual average by reducing the government’s stockpiles, from 26.2 percent to 13.7 percent. Farming households’ selling prices also rose 1.3 percent during the period. The isolationist regime suffers from chronic food shortage.

The Ministry of Agriculture, Food and Rural Affairs said last week it would supply surplus rice as animal feed while taking 30,000 hectares of farming land, out of production.