Decline in South Korean Rice Production and Wheat Industry Development
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Loading... - BANYU SAPUTRA
- 11 Nov 2024
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South Korea is experiencing a continued decline in domestic rice production as the government encourages farmers to shift towards planting alternative crops and develops its domestic wheat industry. According to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, milled rice production for the marketing year 2024-25 is projected at 3.6 million tonnes, which is a 1.2% decrease from the 2023-24 estimate of 3.7 million tonnes. This forecast is based on a nationwide survey conducted by Statistics Korea (KOSTAT).
The area dedicated to rice planting is expected to decrease by 1.5% to 698,000 hectares, although there may be a slight increase in yield due to favorable weather conditions and uncertain impacts from a late-season pest infestation. Total rice consumption for 2024-25 is anticipated to be 3.95 million tonnes, down from 4.18 million tonnes the previous year, with ending stocks projected at 1.24 million tonnes. The FAS noted that this marks the third consecutive year of reduced rice production, reflecting government policies aimed at replacing rice acreage with other crops to address the chronic oversupply of rice in the country.
In line with its long-term strategy to bolster the domestic wheat industry, the South Korean government has invested in a new milling facility in Gumi, North Gyeongsang Province, at a cost of 4.9 billion Korean won (approximately $3.7 million). This facility has a production capacity of 60 tonnes of wheat flour per day and includes drying and cold storage capabilities. Despite these efforts, South Korea is expected to rely on imports for 98% of its milling wheat, with domestic production projected to be only 36,000 tonnes in 2024-25. The government aims to increase domestic wheat production to 120,000 tonnes by 2025, targeting a food wheat self-sufficiency rate of 5%, up from the current 2%. Wheat imports are forecasted to reach 4.6 million tonnes in 2024-25, a decrease from just under 5 million tonnes the previous year.
Total wheat consumption is expected to decline by 9% to 4.2 million tonnes in 2024-25, primarily due to reduced demand for feed wheat. Feed wheat consumption is projected at 1.7 million tonnes, which is 19% lower than in 2023-24, as competitive corn prices lead to a shift away from feed wheat. However, steady demand for milling wheat, driven by the increasing global popularity of Korean ramen noodles, is expected to mitigate the overall impact on wheat consumption.
Corn production in South Korea is estimated at 90,000 tonnes for 2024-25, accounting for less than 1% of total consumption, which is projected at 11.6 million tonnes. Feed corn is expected to make up about 80% of total usage, as corn is primarily consumed in the feed industry, unlike wheat. The FAS has revised corn import estimates for 2024-25 and 2023-24 upward to 11.6 million and 11.5 million tonnes, respectively. The interchangeability of feed corn and feed wheat means that imports fluctuate based on the price differences between the two commodities.
With competitive international prices for feed corn, particularly due to increased exportable supplies from the United States, the US market share of corn reached 20% in 2023-24, recovering from a significant decline. Looking ahead to 2024-25, the FAS anticipates that the United States will maintain or even grow its market share back to pre-2020 levels, which typically ranged from 20% to 40%, depending on global prices.
