Asia Sentinel | 29 April 2011
Written by John Berthelsen
If there is any country on the planet worried about its food supply, it is South Korea, which imports more than 90 percent of its food from overseas, including almost all of its wheat and corn.
The government recently bought more than 325,999 hectares in Mongolia as part of its effort to develop an overseas food base to procure more food resources. That is after the Daewoo chaebol was stymied in its effort in 2008 to lease 1.3 million hectares of Madagascar – almost half the country's arable land -- for 99 years. South Korean farmers are growing corn in Cambodia. As many as 60 South Korean companies are involved in farming in 16 countries, harvesting some 87,000 metric tons of grain from 24,000 hectares of farmland, according to Anders Riel Muller, a Research Fellow at the Institute for Food and Development Policy, USA and an adviser to the, Nordic Center for Renewable Energy, Denmark in a March 19 article.
The coming crisis, if it is that, has shaken awake the Samsung Economic Research Institute, an arm of the giant Samsung conglomerate, which this week issued a 16-page report on food security. The report, titled New Food Strategies in the Age of Global Food Crises, advocates that "it is necessary to secure foreign bases for food production through overseas agricultural development," providing comprehensive support for domestic firms striving to build food production bases abroad," and pay for it through overseas agricultural development funds. Among other things, the report advocates that the government draw up a roadmap for agricultural cooperation to develop food resources in the starvation-ridden North Korea "through inter-Korean agricultural cooperation is useful in the context of building South Korea's overseas food base, while at the same time preparing for surging food demand upon unification."
In particular, according to the report, there are concerns that food-producing companies will "weaponize" food through export restrictions. "It is now increasingly likely that food security among importing countries will be threatened by diminishing supplies," the authors write. "In the summer of 2010 when anxiety over food supplies grew intense, Russia and Ukraine imposed restrictive measures on grain exports. Coupled with a forecast for severe weather abnormalities to increase in the next few years, it is likely that anxiety over food supplies will spread, and weaponization of food will occur more often."
South Korea, according to the report, is particularly vulnerable, suggesting an urgent need to upgrade food security levels. "Korea's food security has significantly worsened since 2006," the authors note.
"The overall food security index declined from a peak of 100.9 in 2006 to its lowest level of 95.2 in 2008. In particular, safety appears much poorer than stability (in 2008, the index was 96.2 for stability versus 94.2 for safety). Food security levels stabilized in 2005 and 2006, but significantly fell from 2007 due to deterioration in overseas variables, import structure, and food safety.
Food stability in South Korea has experienced a continuous decline, caused by rapidly increased grain price volatility and intensified import source concentration as the western countries, particularly the United States and the European Union, devote more and more of their corn production to biofuels. It is estimated that 35 percent of corn production is now going into biofuels. In addition, the report says, "food safety fell to its lowest level in 2008 at 94.2, down more than 5.85 compared to 2005, indicating a need for efforts to improve food safety. quality, soil, and ecosystems.
The report notes with something akin to alarm that the international grain market "is subject to an oligopoly of the four major global grain conglomerates: Cargill, Archer Daniels Midland, LDC, and Bunge," which have the power not only to perform grain trading functions but to "affect government policy with respect to international trade and agricultural markets using their massive capabilities to obtain information worldwide. South Korea imports 80 percent of its gran through the four. The four giants, the report continues, "exercise tremendous leverage over the worldwide food industry. Business for grain majors has expanded beyond traditional trading of crops to seeds, fertilizers, food and food processing, finance, and bio-energy production. At times, the four grain majors have encroached on consumer welfare by exerting their influence on agricultural producers, or by creating an oligopoly regime."
As food imports have increased, so has anxiety over agricultural product safety, the report notes, with "spiraling increases in the share of GMO food imports, which have risen from about 30 percent to over 50 percent in 2008, "posing a greater threat to food safety."
Climate change, the report notes, is detrimental to water quality, soil pollution, and ecosystem degradation, hampering productivity.
"Although warmer temperatures and increased precipitation owing to global warming may actually play a positive role in Korea's agriculture by improving conditions for its traditional flooded paddy rice farming, increases in temperature and rainfall beyond optimum levels are likely to bring adverse effects that outweigh any benefits,"the report notes. "In the medium- and long run, uncertainty and volatility from global grain production will increase due to changes in water quality, soil, and ecosystems."
South Korea's big problem, according to Anders Muller, is partly to history, in which Japanese colonizers'only interest was to convert Korea in to a supplier of food and other products to fuel their imperial ambitions. In doing so, the Japanese administrators allied themselves with the ruling landlord elite. By the 1920s, the majority of peasants in Korea had been reduced to tenant farmers delivering up to 50 percent of their harvests in taxes."
South Korea, Muller writes, "has historically shown little interest in its agricultural sector throughout the post Korean War period. The rural population and agriculture was primarily regarded as a source of cheap food and cheap labor for the country's dizzying industrial development." Agricultural investment dried up as successive dictators like Park Hung Hee neglected the countryside for industrialization.
Today, the average farmer is more than 50 years old, Muller writes, "often tilling a few hectares with outdated machinery. Poverty is to be found everywhere, and because farm life has become so economically undesirable, rural Korea has become a huge market for arranged marriages with women from countries in Southeast Asia. In fact, one of three marriages in rural areas is now between Korean men and foreign women."
Today, he says, the farm sector is seen by most Koreans as backward and undesirable. Little money is to be made and land is expensive. The Samsung report advocates providing substantial assistance to farm families to reverse the trend.
Despite the import of such an enormous percentage of its food, Korea's farmers are among the most protected in the world despite the country's membership in the World Trade Organization. Attempts to liberalize trade have resulted in bloody riots, particularly over beef and rice.
It appears that although the report doesn't say so, Samsung would lioke to keep it that way.
"Once a food crisis occurs, excessive overseas dependence is greatly detrimental to food security, because it becomes very difficult to purchase food on international markets, regardless of the amount of foreign exchange reserves,"the report notes. "As securing a domestic production base is a fundamental measure to enhance food supply capability, maintenance of domestic production capacity is de facto insurance against shortages on the international market."
Currently idle farmland and reclaimed land "should be developed to raise domestic production capacity. In areas with decreasing rice farming, it is desirable to convert paddy fields to dry fields for the production of wheat, corn, or soybeans; and for farmland that lies fallow during the winter months, it is desirable to expand cultivation of food and feed crops other than rice. In particular, it is desirable to effectively exploit reclaimed land…to enhance domestic production capacity, contributing to a greater degree of food self-sufficiency."
The report advocates increasing the R&D budget for the agriculture and environment sector substantially, from the current 8.3 percent relative to the total national R&D budget to over 15 percent. New technologies that can contribute to expansion of agricultural production capacity must be urgently promoted for maximum utilization of private sector capabilities.