Even India, whom I trusted, fanned the burning food prices

Photo courtesy of Yonhap News

India recently announced that it will halt exports of wheat, a major food resource. It has been implemented since the 13th. India is the third largest wheat producer in the world after the European Union and China. However, exports are not very large, as most of them are consumed domestically. Indian wheat accounts for about 4% of global exports, making up a small share of the international wheat market. Still, India’s wheat embargo is making big international news.

India’s sudden change, fueling fires in prices

Russia’s invasion of Ukraine and India’s sudden change of position are behind the shock of India’s announcement in the international grain market. In announcing the export ban this time, India cited the rise in international wheat prices and poor crop yields due to the unusually high temperature this year. Domestic wheat production decreased, but after the Russian invasion, international wheat prices rose and exports surged.

But just a few days ago, the atmosphere was quite different. The Indian media reported earlier this month, citing a senior government official, that “the Indian government has no control over wheat exports and is promoting wheat exports.” It was like that two months ago. On March 15, Reuters reported that the Indian government plans to increase its wheat exports to increase its global market share. At the time, a government source predicted that 10 million tonnes of wheat could be exported after the March harvest season. Indeed, India has significantly increased wheat exports since Russia’s invasion of Ukraine. India exported 1.4 million tonnes of wheat last month, more than five times the amount a year ago. At a time when international grain markets and wheat importing countries want to breathe, India suddenly announced an export ban.

Even India, whom I trusted, fanned the burning food prices

Photo courtesy of Yonhap News

Dominos on embargo on price instability from Russia

India isn’t the only country with embargoes. Indonesia, the world’s largest producer of palm oil, has banned palm oil exports since the 28th of last month. This is an urgent measure in response to a shortage of edible oil in the domestic market as the international price of palm oil soared and exports surged. A major factor in the surge in international palm oil prices this year was the Russian invasion of Ukraine. Ukraine and Russia are the first and second largest exporters of sunflower seed oil, but as exports were disrupted due to the war, overall edible oil prices such as palm oil and soybean oil rose significantly.

In addition to India and Indonesia, Egypt has suspended exports of major grains such as wheat, wheat and soybeans for three months, while Turkey, Argentina and Serbia have already banned or are considering controls. As each country promotes food security, a vicious cycle of rising international prices – rapid export – instability in domestic demand – export ban – soaring international prices is taking place.

Even India, whom I trusted, fanned the burning food prices

Ramen/Bread..Red light on the side of the table

South Korea is not directly affected by India’s wheat export ban. This is because about 95% of imported wheat for flour comes from the United States and Australia. The remaining 5% is from Canada. But already international wheat prices are skyrocketing. According to the Rural Economic Research Institute, the average wheat import price in March was $0.4 per ton, up 47% from the same month a year ago. According to the International Food Policy Institute, international wheat prices soared 30% in just over a month since Russia invaded Ukraine on February 24. If India’s embargo is prolonged, international wheat prices will rise again, and Korea will inevitably be affected.

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Domestic food companies are responding that they are still waiting a bit more for price hikes. We have wheat for milling to be used until the beginning of August this year, and if we include the contract amount, we have secured the supply until the end of October. Ramen manufacturers such as Nongshim, Ottogi, and Samyang raised their prices in the second half of last year, so it is burdensome to raise prices again in a short period of time. Another consideration is that the new government is making price stability a top priority.

Naengmyeon is 10,000 won, Jajangmyeon is 6,000 won, Kalguksu is over 8,000 won…

According to ‘Participation Price’, a price information portal of the Korea Consumer Agency, the average price of naengmyeon at restaurants in Seoul last month was 11,192 won, exceeding 10,000 won. The average price of Jajangmyeon is 6,146 won, and Kalguksu is 8,269 won. Compared to a year ago, jajangmyeon rose 14.1%, kalguksu 10.8%, and naengmyeon 9.4%. In addition, the rising trend of international food prices such as wheat and cooking oil is a burden not only for large businesses, but also for the self-employed and consumers.

The Ministry of Agriculture, Food and Rural Affairs announced in a press release yesterday (15th), which is a holiday, that in order to minimize the domestic impact of the international grain market instability, the government has prepared a budget for flour price stabilization, 54.6 billion won, etc. He said that he would actively seek mid- to long-term measures such as raising the domestic self-sufficiency rate and securing a stable supply chain for grain overseas. Measures to secure food and stabilize prices have already reached a stage that cannot be finished with words.

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