International food prices surged to record high levels in February after eight consecutive months of increases.
The United Nations Food and Agriculture Organization data showed the index of a basket of food commodities at their highest-level of 236 points since the agency began tracking food prices 20 years ago, sparking an agflation scare – inflationary pressure fueled by the raising costs of farm produces – around the globe. Compared to a year ago, the price of flour and corn is up a whopping 75 percent and 77 percent, respectively. Major grain buyers and speculative capital are gobbling up global inventories, fanning the price increase.
The UN agency warns that the situation could get worse next year, as the grain inventory will fall to its lowest level in a decade and crop harvest is expected to worsen this year.
At the moment, global food supplies are chronically unbalanced. Grain output around the globe increased 8 million tons last year from a year earlier while demand surged by 18 million tons because middle-class consumers in highly-populated China and India are eating more grain and meat.
China’s imports of feed corn jumped significantly, while flour imports surged 32 percent. But exporters are taking protective actions, banning shipments of flour and some crops to Russia and India to increase their own stockpiles.
The International Monetary Fund has warned of a global grain crisis, fearful of a recurrence of riots in poor countries in 2008 due to the worsening food shortage.
Higher food prices can take a devastating toll on developing economies in particular. Korea, too, is vulnerable. The self-sufficiency rate in terms of agricultural production is 26.7 percent, the lowest among the Organization for Economic Cooperation and Development member countries.
Apart from rice, a staple food, the self-sufficiency rate for wheat is 26.6 percent; soybeans are at a mere 8.7 percent. Wheat and corn supplies are entirely dependent on imports.
Against this backdrop, pre-emptive measures can minimize the damage from higher food import prices. The government should increase the inventory of grain imports and take protective measures to help low-income consumers deal with higher oil and food prices, which are a burden for them.
Ensuring stable supplies from abroad is the only option, including preparing programs to grow crops on foreign soil.