The world’s food demand has been increasing due to population increase, increasing incomes of developing nations and the resulting changes in diets, and the increasing use of biofuels. However, grain production and exports is greatly dependent upon only a few countries, and with the recent global climate change, questions over sustainability have been increasing steadily. Korea’s case looks particularly serious because most of its grain supply, except for rice, is imported This study analyzes how to secure a stable supply of grains with a high level of reliance on imports, and examines our current efforts to secure primary grains, which include wheat, corn, and soybean. It also looks at other countries in similar situations and their current trends in securing grain supply; potential partnerships with those countries are also discussed as well as policy implications.
Our analysis suggests each grain needs to be matched with a partner country based on its characteristics and with a specialized plan. Also this study focuses on grain import trends and policies for grain procurement in China and Japan, whose sufficiency patterns look similar to ours and could pose political implications for our use. Based on the analysis, this study suggests the following tasks to secure a stable grain supply, with the first task being the national grain procurement system, initiated in 2010, which entails a joint effort between a private enterprise and the government to secure a grain distribution network and their intentions on selling grains domestically and also exporting to Korea or other countries nearby. In the long term, a national grain procurement system requires strategy, large capital, and expertise related to the international grain market, and ultimately requires participation from private enterprises with capital, professionalism, and a quick decision-making process.
The second task is a long-term plan to support private enterprises by organizing an investment environment, ODA, provision of relevant information, and etc. For instance, Japan, whose sufficiency patterns look similar to ours, could pose political implications for our use. The effort by the Japanese government has lasted over a long period of time and has yielded success stories such as the Cerado farm in Brazil. Additionally, aside from the government, general trading companies played a key role in creating cooperation between private enterprises.
The third task is supply and demand control via public stock increase. Expanding overseas agricultural development and securing an overseas grain distribution network stocks represent long-term plans, as we need to have a stable stores domestically in order to cope with sudden grain price hikes or supply restrictions in producing countries.
The fourth task is risk management via domestic commodity futures listing. Domestic grain market insecurity spreads instantly and globally in the form of price fluctuations, and an ultimate solution call for a way to control risk in price fluctuations instead of simply securing grain supply. If a grain commodity future is listed on the domestic exchange, current spot trades will become more diversified, and we will have measures to minimize risk that comes with price fluctuations.
And finally, we can invest in agriculture overseas with global cooperation. Securing a stable grain supply is not only Korea’s concern but a universal condition for survival, and it must be addressed by global cooperation. Many countries have realized the importance of agriculture and created investment funds to support agriculture from a long-term perspective and to yield not only quick monetary results but also improvements in other grain-supply-related areas. Likewise, the Korean government must look further and consider aggressive cooperation and investment in not only grain production but also the front-back industry including transportation, storage, and distribution by means of close partnerships with countries in similar situations.