Research Reports
Analysis of World Grain Market and Operation of World Grain Market Information System (Year 3 of 3)
-
AuthorSung, Myunghwan
-
Publication Date2014.12.30
-
Original
Background of Research
As the international grain supply and demand structure changed, which caused international grain price volatility to increase after middle of the 2000s, it is showing intensified destabilization and increasingly shorter change cycle trends. This expansion of international grain volatility is likely to continue in the middle and long term. The supply side’s structural fear factors, such as frequent climate abnormality, arable land expansion slowdown and et cetera, are reacting to increase international grain prices in the medium and long term. International grain prices increase raises corporate manufacturing cost and ultimately results in consumer price increase. As international grain price volatility is highly affecting related domestic product price, there is a need to study correlation between domestic and international grain prices. Through this study, it is aimed to suggest direction for domestic grain supply and related product price stabilization, and also to utilize it as base data in case of related industry and policymaker’s business and policy establishment.
Method of Research
This study is separated into an international grain market analysis research project and a project that periodically provides related data to the foreign grain market information system. The research project will quantitatively analyze international grain price volatility affecting domestic grain price and related product price, and also through research analysis of domestic grain related industry’s current status and condition, we will explore measures for stable grain supply and related product price stabilization. Using the constructed system as the base, the foreign grain information system management project will add/enhance more detailed information, and periodically publish Foreign Grain Market Trend.
Research Results and Implications
From the position where we import most of our grains, there is a need to construct a system for stable grain security and procurement from the international market, and it is essential to ultimately expand domestic supply capacity. The International Food Policy Institute suggested virtual reserves in characteristics of actual physical reserves’ complementary goods, and there is a need to actively implement it as stable supply security measures in case of soaring grain prices. It is needed to diversify trade and import methods through utilizing long term supply contract of grain, future market, et cetera and to secure foreign grain production and distribution base facilities in the middle to long term. Because the most important factor to domestic production is effectively utilizing farmland to expand domestic production and stable offering of supply, providing winter crop income protection direct payment and other production incentives to maximize land use rate through increasing use of winter idle farmland and winter cropping on drained paddy fields is needed.
Current domestic grain related product pricing is decided autonomously by private enterprises as they consider raw material price, production and operation costs. Although milling enterprises have monopolized characteristics, there are relatively small enterprises among feed enterprises. Therefore, because there are diverse methods to the distribution system or pricing on final products, the price difference between enterprises occurs. Because there are numerous factors causing domestic grain related final consumption goods price increase, it is realistically limited for the government to directly manage enterprises just because of raw material price volatility. Therefore, if the indexed price fluctuation range is provided to consumers, it may be possible to automatically regulate grain price volatility as consumers are signaled of price fluctuation.
Coping ability towards price volatility needs to be strengthened through the foreign grain market information system’s systematic operation. There is a need to offer help to cope with fast changing international market environment by delivering forecasted results to related industries and consumers through fast delivery of accurate information regarding international grain price volatility and international grain price forecasting model system construction. To develop countermeasures on possibility of food crisis occurrence in advance, the existing information system has to be enhanced and reinforced by internationally monitoring each country’s food supply and demand, and also collecting and analyzing information on worldwide food production, stock, trade and food assistance.
Researchers: Sung Myung-hwan, Lee Dong-so, Son Eun-ae
Research Period: 2014. 1.∼2014. 12.
E-mail address: mhsung@krei.re.kr
- Next
- Factors for City People's Return to Rural Areas and its Impacts on Korean Rural Society and Economy
- Prev
- Analysis of Changes in Fruits Consumption Patterns and their Reasons: Focused on the Effects of Imported Fruits