Posted August. 12, 2010 08:46,
The price of rice is expected to plummet in the second of this year amid soaring supply due to expectations of a bumper harvest for the third straight year, the Agriculture, Forest and Fisheries Ministry said Wednesday.
Rice supply this year is expected to reach 1.49 million tons, double the appropriate level of 720,000 tons. Though production volume has increased thanks to consecutive bumper harvests, consumption is dropping.
Another reason for the increased stock of rice is the suspension of rice aid to North Korea since 2008.
The glut has sent the price of rice plummeting from 162,188 won (137.21 U.S. dollars) per 80-kilogram bag in February last year to 133,500 won (112.94 dollars) last month. If the price fails to reach the target of 170,083 won (143.89 dollars), government financial assistance to farmers will exceed one trillion won (846 million dollars) this year.
A ministry source said, Though production has increased each year thanks to technological development and improved quality, consumption is falling every year. We even have rice stocks made in 2005.
Rice processing complexes, which buy and distribute rice, have more serious problems. They are losing money because the wholesale price of the rice is lower than the sale price, and have no more space for storage.
A source from a complex in northern Gyeonggi Province said, A combined 12,500 tons of new rice will be arriving soon but 10,000 tons will be left over. We have a dilemma.
The government plans to stimulate rice consumption while trying to reduce the glut through measures like using old rice in alcohol or animal feed.
One suggestion to alleviate the glut is to resume rice aid to the North, but the government is not yet considering this option. Since Pyongyang insists that the Cheonan sinking is Seouls responsibility despite the results of the international investigation into the incident, resuming rice assistance might not be an option for South Korea.