[Opinion] Agflation

Celebrity anchor Sohn Seok-hee, a professor at Sungshin Women’s University, is the talk of the town after a slip of the tongue on the radio debate program he hosts. Sharing opinions with experts on the recent price hikes of agricultural products and necessities, he made an improper statement in his question, “Is the initial word ‘ag’ in “agflation’ an abbreviation of “egg?” His lapse came as he tried to explain the new term, derived from a combination of the words "agriculture" and "inflation."

The primary reason for agflation lies in demand rising faster than supply.

Population increase can also be a factor, but surging incomes in developing counties make it possible for their citizens to enjoy food they could not afford in the past. The Chinese, except certain racial minorities including Mongolians who lived on animal herding, did not drink milk. The entire Chinese population of 1.3 billion, however, has become fascinated with the taste of milk, driving up the global demand for the drink due to skyrocketing consumption. Last year, the price of milk hit new highs in China, and the dairy product accounts for the largest part of China’s expenses for raw material imports.

Interest in alternative energies also contributes to agflation. To reduce its foreign oil dependency, the United State began developing and producing biofuel such as biodiesel and ethanol. As a result, the price of maize, a major crop used for biofuel, surged and led to higher prices for flour. This happened because manufacturers replaced wheat for maize cultivation to make more profits. It is not an exaggeration to say cars deplete food for humans. Korea’s crop self-sufficiency rate stood at a mere 28 percent. The nation and people have high hopes on the pledges of the new administration, sworn in yesterday, on economic revival. The Lee administration should keep in mind that stabilizing prices is the priority of the public rather than economic growth.

Faced with higher global prices for corn and maize, Korean food manufacturers will use genetically modified versions of the two crops to balance their budgets. Genetically engineered organisms are being widely consumed in the United States, but controversy over health safety prevents Korea from doing the same. The growing demand for stabilizing consumption prices has softened the controversy. Agflation could now open a gate that has remained tightly sealed in Korea.

Editorial Writer Chung Sung-hee, shchung@donga.com