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Gov`t to Buy Excess Rice to Keep Price From Falling

Posted September. 01, 2010 11:38,   


The government said Tuesday that it will purchase excess rice harvested this year to stop the price of the crop from falling due to the decline of rice consumption and rise in oversupply.

In October last year, the price of 80 kilograms of rice was around 144,000 won (120 U.S. dollars) but declined to 132,000 won (110 dollars) in August this year.

An official of the Food, Agriculture, Forestry and Fisheries Ministry said, “The announcement of the measure before the harvest season is to show the government’s strong commitment to stabilizing the price of rice,” adding, “The measure will also create a psychological effect.”

The government will purchase 550,000 to 810,000 tons of rice. The ministry said, “The glut will be bought by the government to relieve the anxiety of rice farmers,” adding, “The purchased rice will be stored at warehouses belonging to the government, the National Agricultural Cooperative Federation and logistics companies. The government will pay storage costs.”

The storage of 100,000 tons of rice requires 15.5 billion won (13 million dollars) per year.

“A kilogram of rice power harvested in 2005 will be provided at 280 won (23 cents) and that harvested in 2006 to 2008 at 355 won (30 cents),” the ministry said. “This will raise rice consumption since the price of rice will grow similar to that of wheat flour (786 won or 66 cents per kilogram) despite the addition of processing costs (500 won or 42 cents per kilogram).

The government will also take steps to reduce rice production, such as purchasing rice fields for use in growing other crops.

Sending excess rice as aid to North Korea was excluded from the measures, however, despite members of the ruling Grand National Party proposing such assistance. The resumption of rice aid to the North was reportedly mentioned at a meeting between the government and the ruling party Monday.

The Agriculture Ministry official said, “The issue was brought up at the meeting, but I understand that there were conflicting opinions inside the party,” adding, “In this situation, the ministry had no choice but to exclude the matter from the measures.”