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[Press Release] Ministerial meeting on prices (June 29, 2012)
2012.07.02 15:39:31 | 2012.07.02 16:20:57

At this week’s Ministerial Meeting on Prices held on June 29, the ministers mainly discussed securing sufficient agricultural supply, measures to encourage local governments to keep their prices low, and the international commodity price outlook for the 2nd half of 2012.

Facing the worst drought in 104 years, the government has been working on easing the difficulties the drought has caused by operating an emergency center to deal with the natural disaster. Financial support of 68.7 billion won has been provided for the development of fresh water sources and the supply of water pumps and water wagons.

The government will help balance supply and demand by increasing the imports, stock and contract farming of the agricultural products that we are likely to experience shortage, in particular onions, green onions and highland cabbages. Onion imports will be increased from the originally planned 21,000 tons to 110,000 tons, with the imports of the vegetable diversified away from China to the US and Spain. As shortage of highland cabbages is expected from July through September, the government will increase its stock, if necessary, in addition to 2,500 tons it will prepare for an immediate use. Contract farming of highland cabbages will also be increased from 56,000 tons to 80,000 tons. As for green onions, whose price has soared lately as of lately, the government will supply the vegetable with a discounted rate through the Korea Agricultural Cooperative Marketing, while trying to adopt a quota tariff for the product.

In the mid- and long term, the government plans to invest in water supply facilities and building reservoirs to stabilize vegetable harvests, along with providing technical training for improved productivity.

The government has monitored the price stabilization efforts of local governments and granted exemplary local governments incentives through competition. The amount of grants given to local governments is planned to be raised to 228.3 billion won in 2013. The government has designated shops offering proper prices as ‘good price stores’ and so far 7,100 stores have been designated. The ‘good price store’ program will be continued, as local governments will introduce various incentives. A website providing information on such stores will be opened, and public institutions will designate a day to visit those stores.

High pressure from international commodity prices is not expected due to the global economic recovery being negatively affected by the European crisis. However, international grain prices, particularly wheat and corn, could be affected by unfavorable weather conditions, and there are worries that China will transfer from a grain exporter to an importer, putting pressure on grain prices. The government will closely watch changes in the international grain prices and try to minimize the effect of the price volatility on the domestic market by cooperating with international institutions such as the Food and Agriculture Organization (FAO) in the areas of weather observation, stock preparation and adoption of flexible quota tariffs.

[Source: Ministry of Strategy and Finance]

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