March 3, 2011

South Korea aims to enhance overseas grain farming

South Korea, the world's fourth-largest grain importer, seeks to widen overseas grain production to ensure supply and reduce inflation as it faces record high grain prices.

The finance ministry said on Wednesday (Mar 2) that it would form a task force team with the ministries of agriculture and foreign affairs to prepare measures by the end of the month to expand overseas and domestic production and increase public grain stocks.

"We are hoping more private firms will enter more countries to boost production," said an official at the agriculture ministry who declined to be identified as he was not authorised to speak to the media.

He said so far about 18 South Korean firms had invested in farms in seven countries, including Russia, Brazil, Cambodia and Laos, although production and imports remained limited.

The agriculture ministry said last month that South Korea was looking to build a strategic reserve for non-rice grains such as corn and wheat at 12% of annual consumption, joining similar efforts by other Asian nations worried about high food prices and social unrest.

Prices of US corn, soy and wheat have soared since last year because of bad weather damaging crops and rising demand from China and India. This has created problems for South Korea, the world's third-largest corn buyer.

President Lee Myung-bak in South Korea said earlier in February that the government should set up a national body to secure food resources and mitigate the impact of global food price volatility.

The government said in January it would establish its own grain-trading company in Chicago in the first half of 2011, while planning to purchase a grain elevator at a US production site and acquire a stake in an elevator for grain exports this year.