🚨 Agricultural and Livestock Prices Remain Stable for 8 Consecutive Months... Some Vegetables Show Price Strength
Today Korean Economic News | 2025.04.03
📌 Agricultural and Livestock Prices Remain Stable for 8 Consecutive Months... Some Vegetables Show Price Strength
💬 According to Statistics Korea, consumer prices for agricultural and livestock products rose by 0.4% year-on-year in March, maintaining stability for 8 consecutive months. However, some vegetables such as cabbage, radish, cabbage, carrots, and onions are showing price strength due to reduced production and increased deterioration rates during storage. The Ministry of Agriculture, Food and Rural Affairs is promoting price stability through quota tariffs, release of stockpiled supplies, and discount support.
1️⃣ Easy Understanding
While agricultural and livestock prices are generally stable, some vegetable prices are rising. Let me explain why this is happening and how the government is responding.
Agricultural and livestock prices refer to price fluctuations of food products from agriculture and livestock industries such as rice, vegetables, fruits, and meat products. According to the consumer price index announced by Statistics Korea, overall agricultural and livestock prices rose only 0.4% compared to the same month last year, maintaining a relatively stable level. This stability has continued for the past 8 months.
However, not all agricultural and livestock products have stable prices. In particular, prices of major vegetables such as cabbage, radish, cabbage, carrots, and onions have risen significantly. For example, cabbage prices rose by about 35% compared to the same month last year, onions by 28%, and carrots by about 20%.
There are two main causes for these price increases. First, poor weather conditions last fall and winter reduced the production of these vegetables. In particular, drought and abnormal temperatures in some regions had a negative impact on crop growth. Second, the deterioration rate (loss rate due to quality deterioration or decay during storage) during long-term storage was higher than in previous years. This is because the storage quality of vegetables declined due to abnormal weather during the harvest season.
In response, the Ministry of Agriculture, Food and Rural Affairs is taking various measures. First, they have applied quota tariffs to lower import duties, allowing scarce vegetables to be imported more cheaply from overseas. They are also supplying government-stockpiled agricultural products to the market to curb price increases. Additionally, they are supporting discounted sales at major supermarkets and agricultural cooperative stores to reduce the burden on consumers.
Meanwhile, prices of rice, pork, apples, and pears have actually fallen compared to last year. This is a result of a combination of increased production and decreased consumption. Thus, while agricultural and livestock prices show different fluctuations by item, overall they are showing a stable trend. The government plans to continue strengthening supply management and price monitoring to minimize the burden on consumers.
2️⃣ Economic Terms
📕 Consumer Price Index
The Consumer Price Index is an indicator that measures price changes in goods and services purchased by households.
- It is announced monthly by Statistics Korea and is used to understand overall price levels and inflation in the economy.
- It indicates the current price level compared to a base year (currently 2020=100).
📕 Deterioration Rate
Deterioration rate refers to the percentage of agricultural products lost during distribution and storage after production.
- It includes losses due to decay, weight reduction, and quality deterioration.
- It can vary greatly depending on storage period, temperature and humidity management, and condition at harvest.
📕 Quota Tariff
A quota tariff is a system that lowers tariff rates for a certain quantity to promote imports of specific goods.
- It is mainly used for domestic price stabilization and supply-demand adjustment.
- For agricultural products, it is applied when domestic production is insufficient and helps suppress price increases.
📕 Stockpiled Supply
Stockpiled supply refers to quantities secured in advance by the government or public institutions for price stabilization and supply-demand adjustment.
- It performs a stabilization function by being supplied to the market during supply instability or sudden price increases.
- It targets items closely related to people's lives, such as major agricultural products, raw materials, and petroleum.
3️⃣ Principles and Economic Outlook
💡 Background and Characteristics of Stable Agricultural and Livestock Prices
Let's examine the background and characteristics of agricultural and livestock prices showing stability for 8 consecutive months.
First, the stability of grain and livestock prices has greatly contributed to the overall stability of agricultural and livestock prices. Rice prices fell by 2.8% year-on-year due to increased supply from a good harvest last year. Rice supply stability means stable prices for a basic item in Korean diet, which positively affects overall agricultural prices. Among livestock products, pork prices fell by 1.5% due to increased breeding numbers and expanded imports, while chicken prices also fell by 0.8%. In particular, Hanwoo (Korean beef) prices have stabilized at last year's level after a price increase trend that continued until last year. The price stability of these major protein sources played a decisive role in lowering consumer perceived inflation. Additionally, major fruit prices such as apples and pears decreased by 3.2% and 5.1% respectively due to increased production. With prices of these basic table items stabilizing, overall agricultural and livestock prices recorded a low increase rate of 0.4%.
Second, the government's preemptive supply management and price stabilization measures have been effective. The government has been implementing various policies for agricultural and livestock price stabilization since last year. They precisely monitored the supply and demand situation by item and promptly implemented measures such as releasing stockpiled quantities, applying quota tariffs, and expanding contract farming for items showing signs of price increases. Especially during periods of concentrated demand such as holidays and kimchi-making season, they prevented sharp price increases through support for discount events. Direct dealings of agricultural products and efforts to reduce distribution stages also contributed to price stability. This systematic supply management by the government played an important role in maintaining stable domestic agricultural and livestock prices despite global food price increase pressures.
Third, changes in consumption patterns and increased substitute items have also contributed to price stability. Recently, consumers have become more sensitive to price fluctuations and tend to choose substitute items instead of items with increased prices. For example, they switch from cabbage to cabbage or lettuce when cabbage prices rise, or from beef to pork or chicken when beef prices rise. In addition, the increased consumption of convenience foods and home meal replacements (HMR) has the effect of dispersing direct demand pressure on fresh agricultural products. Food companies are also developing various alternative foods and processed foods to broaden consumer choices. This consumption diversification acts as a factor that mitigates the impact of price increases in specific items on overall agricultural and livestock prices.
Fourth, the stability of global food prices has also had a positive impact on domestic agricultural and livestock prices. The UN Food and Agriculture Organization (FAO) World Food Price Index has been declining since the second half of last year, which has helped stabilize domestic food and feed prices. In particular, the stability of international grain prices has contributed to livestock price stability by reducing feed cost burdens. The price stability of major imported agricultural products also has the effect of alleviating price increase pressure on similar domestic items. The easing of food protectionism around the world has also helped stabilize the global supply chain. Korea, with its low food self-sufficiency rate, is inevitably sensitive to fluctuations in the global food market, and the recent global food price stability has provided a favorable environment for domestic agricultural and livestock price stability.
The 8-month consecutive stability of agricultural and livestock prices can be seen as a result of various factors working together, including improved domestic production conditions, effective government supply management, changes in consumption patterns, and global food price stability. This stability is significant in that it alleviates the burden of price increases on consumers and contributes to overall economic stability. However, the price strength of some vegetables shows that the price volatility of agricultural products is still high, requiring continuous monitoring and management.
💡 Causes and Outlook for Vegetable Price Strength
Let's analyze the causes of continued price strength in some vegetables and prospects for the future.
First, deteriorating weather conditions and decreased cultivation area are the main causes. Poor weather conditions last summer and fall reduced the production of major vegetables. In particular, high temperatures in summer and lack of rainfall in fall had a negative impact on the growth of cabbage, radish, cabbage, etc. In the case of cabbage, the cultivation area last fall decreased by about 5% compared to the previous year, and yields per unit area also decreased by more than 10%, resulting in a 15% decrease in total production. Onions saw a 12% decrease in production due to cold damage last spring, and carrots saw about an 18% decrease in production due to weather deterioration in the Jeju region. Additionally, the trend of farmers switching to other crops that can expect stable income due to repeated vegetable price fluctuations in recent years also affected the decrease in cultivation area. These deteriorating production conditions led to supply shortages, causing price increases for these vegetables.
Second, increased deterioration rates during storage have further fueled price strength. Vegetables are stored in cold storage after harvest and supplied throughout the year, but this year, deterioration rates during storage have been higher than in previous years. In the case of cabbage, which usually shows a deterioration rate of around 20%, it is approaching 30% this year, and radish and onions are in a similar situation. This is because the weather conditions at harvest time were not good, reducing the marketability and storability of vegetables. In particular, low moisture content in crops due to high temperatures and drought, and increased pest occurrence are the main causes of decreased storability. Increased deterioration rates further reduce the quantity supplied to the market, acting as price increase pressure. For example, onions saw a market supply decrease of more than 20% compared to the previous year due to increased deterioration rates in addition to decreased production, resulting in a 28% price increase.
Third, changes in consumption patterns and recovery of eating-out demand are also factors in price increases. After COVID-19, the proportion of meals at home increased, increasing the overall demand for fresh vegetables. In particular, consumption of cabbage, carrots, etc. has increased as consumption of salads and vegetable juices has grown with increased interest in health. The recovery trend in the food service industry has also increased the demand for vegetables used in restaurants. Vegetables mainly used in restaurants, such as onions and carrots, faced strong price increase pressure with added food service demand on top of household consumption. Meanwhile, for vegetables used as raw materials for processed foods, competition among food companies to secure raw materials also acted as a factor in price increases. This increased demand from various consumption channels accelerated vegetable price increases in a supply shortage situation.
Fourth, let's predict the future outlook for vegetable prices and when the market will normalize. Prices of major vegetables such as cabbage, radish, and cabbage are expected to gradually stabilize from mid-May when spring crops are shipped. Looking at the cultivation situation so far, the growth condition of spring vegetables is good, and production is expected to recover to the usual level. However, shipping times may be adjusted depending on weather conditions. Onions and garlic are expected to transition to a stable trend as new products are shipped from May, but carrots may have a high dependence on imports for the time being as it takes time to recover domestic production. The Ministry of Agriculture, Food and Rural Affairs is strengthening supply management for vegetable price stability and plans to expand the release of stockpiled quantities and application of quota tariffs, especially for high-priced items. They are also expanding contract farming quantities for stable supply of spring vegetables and preparing a supply-demand adjustment manual to prevent price drops during the harvest season.
The price strength of some vegetables is a result of various factors working together, including deteriorating weather conditions, decreased cultivation area, increased deterioration rates during storage, and changes in consumption patterns. Such price volatility is characteristic of the agricultural product market, but it is intensifying due to the increased frequency of abnormal weather due to climate change. Systematic supply management through cooperation between the government, producers, and distributors, and improvement of production systems to respond to climate change are necessary. From the consumer's perspective, the use of substitute items for high-priced vegetables and rational consumption will be necessary for the time being.
💡 Policy Tasks and Outlook for Agricultural and Livestock Price Stability
Let's explore policy tasks and future prospects for stable management of agricultural and livestock prices.
First, innovation in agricultural production systems in response to climate change is necessary. One of the main causes of recent agricultural product price fluctuations is reduced production due to weather anomalies. Abnormal weather is no longer an exceptional phenomenon but is becoming everyday, so innovation in production systems to respond to this is urgent. Adaptability to weather changes should be increased through the expansion of smart farms, development of disaster-resistant varieties, and modernization of facilities. Especially for field vegetables, which have high weather dependence and high volatility, establishing a year-round production system through expanded facility cultivation and diversified growing seasons is necessary. It is also necessary to support the maintenance of stable production bases by dispersing farm management risks due to weather anomalies through strengthened agricultural insurance. Such innovation in production systems will contribute to agricultural product supply and price stability in the long term.
Second, efficiency of agricultural product distribution systems and improvement of logistics infrastructure are important. Currently, agricultural products tend to have increased costs and expanded price volatility as they go through several stages of distribution channels in the process of being delivered from producers to consumers. It is necessary to increase distribution efficiency and enhance price stability through reducing distribution stages, activating direct transactions, and expanding online distribution. In particular, strengthening the cold chain system plays an important role in maintaining the freshness of agricultural products and reducing deterioration rates. It is also important to expand logistics infrastructure and standardization that effectively connects production and consumption areas. The government is promoting various policies to reduce agricultural product logistics costs, and for these efforts to achieve visible results, cooperation among stakeholders such as producer organizations, distributors, and consumer organizations is essential.
Third, the advancement of data-based supply-demand prediction and management systems is necessary. Accurate supply-demand prediction and prompt response are important for agricultural and livestock price stability. The government currently operates a supply-demand monitoring system for major agricultural products, but system advancement for more precise prediction and preemptive response is needed. It is necessary to establish a system that can detect and respond to supply-demand imbalances in advance through production volume prediction, consumption trend analysis, and price fluctuation simulation using advanced technologies such as big data and AI. It is also necessary to promote the development of innovative private-sector supply management solutions through the expansion of agricultural food sector statistical infrastructure and public data disclosure. Such data-based supply management will contribute to mitigating the volatility of agricultural and livestock prices and increasing market predictability.
Fourth, strategies for diversifying agricultural food supply and demand and consumption structures are important. For items where stable supply of agricultural and livestock products is difficult with domestic production alone, diversification of import sources and expansion of strategic stockpiling are necessary. A food security approach is particularly important in a situation where the uncertainty of global food production is increasing due to climate change. It is necessary to establish a flexible import management system to respond to seasonal and item-specific supply-demand imbalances and maintain a balance between protecting domestic production bases and stabilizing consumer prices. From the consumer side, it is necessary to ensure that price fluctuations in specific items do not lead to an overall food cost burden through dietary diversification and support for the development of alternative foods. Diversification of food consumption, such as plant-based proteins and alternative meats, can contribute to agricultural and livestock supply and price stability in the long term.
Stable management of agricultural and livestock prices requires a comprehensive approach, including not only short-term supply-demand adjustment but also production system innovation, distribution structure improvement, data-based management, and diversification of supply and demand and consumption. In particular, as the environment surrounding the agricultural food sector is rapidly changing, including climate change, demographic changes, and dietary changes, it is important to implement proactive and flexible policies in response. While agricultural and livestock prices may show temporary volatility in the future, it is expected that they can maintain an overall stability trend if systematic supply management and structural improvements are made.
4️⃣ In Conclusion
In March, consumer prices for agricultural and livestock products recorded a very low increase rate of 0.4% year-on-year, continuing the stability trend for 8 consecutive months. This is a result of various factors working together, including price decreases in major agricultural and livestock products such as rice, pork, apples, and pears, effective government supply management, and changes in consumption patterns.
However, some vegetables such as cabbage, radish, cabbage, carrots, and onions are showing price strength due to decreased production and increased deterioration rates during storage. The main causes are deteriorating weather conditions and decreased cultivation area, with cabbage prices rising by 35%, onions by 28%, and carrots by about 20% compared to the previous year.
The government is pursuing various measures to stabilize these vegetable prices. These include expanded imports through quota tariff application, supply of government stockpiled quantities, and support for discounted sales. With these measures, vegetable prices are expected to gradually stabilize from mid-May when spring crops are shipped.
For long-term agricultural and livestock price stability, innovation in agricultural production systems in response to climate change, efficiency of agricultural product distribution systems and improvement of logistics infrastructure, advancement of data-based supply-demand prediction and management systems, and diversification of agricultural food supply and demand and consumption structures are necessary.
In conclusion, while agricultural and livestock prices maintain an overall stability trend, the price strength of some vegetables is unavoidable due to the characteristics of agricultural products. It is important for the government, producers, distributors, and consumers to cooperate to stably manage agricultural and livestock prices through systematic supply management and rational consumption. In particular, innovation in agricultural production and distribution systems in response to the climate change era will be the key to long-term price stability.