Rice Supplies Fall Short despite Rising Gov’t Stocks

A significant shortage has been reported in the rice market even as the government is considering using its rice stocks as animal feeds. The Ministry of Agriculture and Forestry (MOAF), which has additional supplies at its disposal, is having hard times delivering rice to the market due to its earlier pledge to farmers – that the government will not sell its batches until next year.

According to MOAF, rice mill operators and traders on August 27, most of rice inventories stored in rice-mill factories in Chungchung and Honam areas are expected to be all gone at the end of this month. Some operators, therefore, have ceased supplying to whole and retail dealers, while the rest also cutting supply volumes.

“We are going to Gyeongbuk to get rice, unable to find any here,” said Ji In-joo, Jeonnam branch head of the Korea Grain Association, an interest group representing rice processors nationwide. “Even the supplies from Gyeongbuk will soon grind to a halt,” he added.

As operators reduce volumes of supplies, prices for a 20kg bag offered to traders in Seoul area have increased by 1,000 to 3,000 won, and are expected to continue rising. Prices in the consumer market will also likely go up beginning next month, according to the rice-mill industry. It added that unless the government puts out its stocks in the market, short supplies will continue through October.

The areas suffering from short supplies harvest most of their grains in October. Although Gyeonggi and Gangwon areas are set to reap some early-maturing grains at the end of this month, much more are required to meet demands.

The current shortage on the rice market came after the government stopped selling additional supplies to adjust prices. MOAF had sold 13,37 million and 8.71 million soms of rice in 2000 and 2001 respectively. A som is equivalent to 5.12 U.S. bushels.

Kwang-Am Cheon iam@donga.com