S. Korea to increase overseas farming on record food costs

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“The government will give companies as much support as possible,” the Ministry said

Bloomberg | 10 March 2011

By Sungwoo Park

South Korea, the world’s third- biggest corn buyer, may increase grain production overseas as the country seeks to boost food security amid record global prices, the government said.

“The need to develop overseas agricultural resources has never been felt more because global grain prices are rising rapidly,” the Ministry for Food, Agriculture, Forestry and Fisheries said in an e-mailed statement today. “The government will give companies as much support as possible,” it said, without elaborating.

South Korea, which relies on imports for almost all its corn and wheat, is attempting to boost supplies as surging global food costs helped drive inflation above the central bank’s target for the past two months. Record prices may be sustained because of high oil costs and smaller crops, the United Nations Food & Agriculture Organization said on March 9.

South Korea is looking to overseas farming to ensure stable supplies because its grain self-sufficiency is very low and there’s limited room to boost production at home,” said Kim Wha Nyeon, a research fellow at Samsung Economic Research Institute in Seoul.

About 60 companies were involved in farming in 16 countries by the end of 2010, harvesting about 87,000 metric tons of grain from 24,000 hectares of farmland, the ministry today, without naming the firms.

Ruined Crops

Global food costs advanced to an all-time high in February, according to an index compiled by the FAO. Prices surged as bad weather ruined crops from Canada to Australia and Russia banned grain exports after its worst drought in a half-century. The increase help spur riots across North Africa and the Middle East that toppled leaders in Egypt and Tunisia.

South Korea has assisted companies to farm abroad since 2009 under a 10-year plan after prices surged to records in 2008, the ministry’s statement said. Korean companies are engaged in farming mostly in Russia and Southeast Asian countries, according to the ministry.

South Korea, Asia’s second-biggest grain importer after Japan, is forecast to import 8.5 million tons of corn this year, or 99 percent of its needs, beating Mexico as the world’s second-largest buyer of the grain used in animal feed, according to the U.S. Department of Agriculture. The country is also Asia’s third-biggest buyer of wheat, set to import 95 percent of its needs this year, the USDA data shows.

Corn prices have gained 91 percent in the past year and soybeans gained 40 percent. Corn for May delivery was 0.4 percent lower at $6.98 a bushel at 3:33 p.m. Seoul time on the Chicago Board of Trade.

Original source: Bloomberg
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