The weather seems flaky in 2012 so far. Many believe that global warming is real and expected to bring some extreme climate changes. The unprecedented global climate change these days, which causes the record rate of drought and flood everywhere in the world, seems devastating and helpless. Lands for producing basic grains, such as corn and soybean, are being dried up without any luck of rain for days. According to USDA (U.S. Department of Agriculture), Midwest and southern states are suffering the extreme level of drought this year.
Evidently, the grain production is expected to collapse, which will cause food prices to surge worldwide. So we call this phenomenon, simply ‘Agflation’, which is the combined term of ‘agriculture’ and ‘inflation’. Agflation means the rises in consumer price inflated by the agricultural commodity price rise.
Recently, United Nations’ monthly food price index shows that food prices jumped by 6% after the three months of declining trend. What’s worse is that the price is forecasted to keep its uprising trend. The main cause of the current food price hike is derived from the grain price surge. Particularly, corn price has surged up to $8.4 per bushel, hitting the all-time-high record price this month. Prices of other grains, such as soybeans and wheat, are also moving higher than ever.
As prices of corn and soybeans keep climbing, Korean government is to implement every possible measure to mitigate this sudden food price hike: obtaining sizable amount of soybean in advance, increasing local wheat production, and providing special loan for domestic stock farmers. We hope that these measures are effective enough to help stabilize inflationary pressures in Korea, while maintaining a sustainable size of agricultural stocks.