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Opinion pieces on business & economic issues

DONG Yong-Sueng

Let Us Pay Attention to Food Security

DONG Yong-Sueng

June 20, 2008

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"Agflation" is a new economic term being coined to describe the effect of record agricultural prices on inflation rates worldwide. Indeed, rice prices in Asia have doubled this year while the prices of wheat, corn and soybeans have maintained a relentless upward pace. In response, scores of nations have imposed restrictions on agricultural exports and lifted import tariffs to stockpile food.

Obviously the situation is disquieting for Korea. Though the nation is self-sufficient in rice, it is almost wholly dependent on imports of other commodities, including corn and wheat. Worse yet, global use of corn and beans as alternative energy sources forces South Korea to bear the burden of demand-related price spikes for basic food supply. This makes “food security” a new addition to a growing list of post-Cold War concerns.

In the past, the concept of security evoked thoughts of military capability. But now, it includes energy and raw material supply, environmental protection and even labor. Korea is almost wholly dependent on imports for oil and raw metals. Its sky is polluted with yellow dust from China. And the nation must rely on foreign migrant workers to fill low-paying jobs that Koreans no longer accept. As such, Korea needs to be prepared to recognize a new meaning for national security.

With rapid globalization, food chains and prices transcend borders. For example, when corn production in the US is expected to decrease, those companies choose other nations to secure corn in advance. Meanwhile, corn and soybeans are being channeled into biofuels, which constrains supplies to feed livestock. Naturally, farmers, ranchers and meat packers pass on the higher cost of feed grain to consumers, adding to the food price spiral. Agflation is further fueled by speculative investors who attempt to cash in on new quotas by commodity exporters and hoarding by importers. Thus, Korea is forced to import food inflation while facing uncertainties about food supplies.

Unfortunately, Korea has not prepared for a time when food is no longer cheap and readily available. It did not follow the path of Japan, which is comparable in lack of natural resources and limited farm land. Since the 1960s, the Japanese have secured overseas that is three times larger than Japan itself to grow crops.

This makes food supply more stable because the nation brings food produced overseas by themselves, rather than depending on imports. It also established a system that facilitates stable delivery. General trading companies are doing this job. That is why Japan has few reasons to worry about food prices or supply. There are many vast pastures in Australia. Much of the beef produced there ? called “Wagyu” ? is distributed by Japanese companies. Some of it winds up in Korea.

Just as Korea already has secured ownership rights for overseas oilfield exploration to enhance energy self-sufficiency, and mining exploration rights to develop underground resources, it should look establish its own outside food production bases. Korea needs to establish a structure where it doesn't rely on imports but keeps food safety for itself. In fact, President Lee Myung Bak has taken note already. On his way to the US last month, he suggested that Korea should do more in setting up overseas food sources of its own.

Some companies have been already producing beans in the huge Maritime Province of Siberia. Let us imagine producing multi-purpose corn the US, China, and Africa. Also, let us imagine securing some parts of Australia to raise cow and grow wheat and rice in Southeast Asia.

Perhaps the biggest opportunity also lies in North Korea. The north has relatively large clean area. It is possible to sign a contract with cooperative farms in North Korea so that agricultural products can be transacted in both Korean markets. To this end, maybe the South could transfer its organic farming techniques to its northern neighbor. If this arrangement develops, it would achieve success on two fronts: the North's own food supply would become more stable and Pyongyang authorities would be able to avoid the humiliation of seeking aid from the South. This would be a win-win in inter-Korea relations.

While the idea of using North Korea as a food production base for South Koreans may seem farfetched. Both sides need to remember that limitless competition lies in the future. They can afford to get bogged down in disputes while countries around the world position themselves to cement their own security.

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