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Drought, “Agflation” & Food Shortages

While the worst drought in a century has come to an end (but not the heat and there are problems with electricity too) in Korea, over half the counties in the United States has now been declared a disaster zone due to drought.  Though the problem of watering crops is still a concern here, there is now also the worry over food prices that could cause “agflation”, due to the drought in America, since this drought will affect the price of grains and other foods, which some believe to be of greater concern than deflation in Korea.  There are fears that the shortage could be as bad as the food shortages of 2008, which were due mainly to demands from China and India.  Current “agflation” could cause more stress and strain on low-income households here, thus there are plans to address this from the Ministry of Strategy and Finance.  There are 73 South Korean companies farming on a little over 23,000 hectares of land in 18 countries, however almost none of this produce is sold in South Korea due to the high tariffs (up to 500 percent!)  (cite)  Currently more Korean money is being used to buy farm land in places like Australia, using shell companies, trusts and other arrangements to hide foreign ownership.  Korean ownership in Australian farmland has reportedly more than doubled within the last twelve months.

As noted before, South Korea and other countries will continue to look for farm land overseas to directly meet their food needs, however, as global warming takes effect and more instances of drought occur that lead to localized food shortages, the future could easily see the advent of “food wars and political upheaval”. As one investment specialist puts it, “The droughts afflicting farmers in the US and the subsequent spike in food commodity prices are just forerunners to the climate-change fallout that will see many food-importing developing countries struggle to feed their populations” (cite).

About the author: Psst, want to buy some used marble cheap?

  • DLBarch

    Careful, R.E., mention “global warming” and before you know it all kinds of flat-Earther nuts will start crawling out of the woodwork.

    On the other hand, since Korea doesn’t apparently have any decent restaurants, a looming ag-shortage shouldn’t be a problem.

    http://www.thedailybeast.com/newsweek/2012/08/05/101-best-places-to-eat-asia-pacific.html

    The good news in that David Chang’s Momofuku made the list for North America, which should please at least a few folks here on MH (and anger at least one MHer I can think of!).

    DLB

  • R. Elgin

    Global warming is a pretty obvious fact. Even the quoted analyst mentions it as a foregone event.

    I really think that there is going to be a synergistic effect from all of the ongoing events that will lead to a full load of trouble.

  • Richard Hankin

    Its now called “climate change”.
    Maybe the Mayans were right…

  • DLBarch

    R.E.,

    I predict that the same fly-over state types that today deny global warming will be the FIRST in line to demand redistributive ag-relief from Washington tomorrow…paid for by those of us in non-fly-over country, of course.

    Anyway, sorry to hijack your thread. Carry on.

    DLB

  • Richard Hankin

    Just as an aside. Mike Wallace interviewed Gore Vidal for 60 minutes in 1975…he predicted the demise of the US etc etc.
    After all, he said(paraphrase) ALL the economic “experts” predict the US will collapse etc etc.
    Chris Hedges must have listened.

  • bballi

    In the first part it says almost none of the produce from overseas farming is sold in Korea, then in the second part it says Koreans are looking at overseas farming to meet food demand….could you explain that, i’m confused…..

  • SalarymaninSeoul

    bbali,

    that would probably be explained, partly, by government working at crosspurposes. Some part of government and private sector perhaps see the need for securing food resources overseas, while others are engaging in protectionist policies at the behalf of local farmers.

  • cm

    And they’re talking about expanding the birth rate and increasing the population each year in an never ending growth pattern.

  • Wedge

    That Madagascar land grab worked out real well for Korea, dinnit? What the government and “experts” don’t get is that buying foreign land at a premium (it always is) won’t solve anything. The free market will continue to work pretty well–and far better than bureaucrats–at food distribution. The only thing the Korean government should be doing is eliminating food tariffs and expanding the ROK Navy to help ensure freedom of navigation in conjunction with the 7th Fleet and JMSDF.

  • Wedge

    Let me add: Korea should also be lobbying the U.S. to eliminate its ridiculous ethanol subsidies and mandates.

  • Celebith

    I’m in the middle of An Economist Gets Lunch, by Tyler Cowen – pretty accessible look at the economics of food distribution, locavore-ism, ‘green’ initiatives and how to find good restaurants at decent problems. He’s pro environment, but anti ‘things that make us feel good about ourselves but don’t really work’.

  • Celebith

    er, good restaurants at decent *prices*.

  • R. Elgin

    Other small factoids include:
    - as of March 15th, duty or tariffs on American wheat fell to zero.
    - wheat imports for Korea are expected to reach 5.4 million tons, about half of that is for feed, the other half for milling, (flour, pasta)
    - a great portion of imported American corn ends up as pig feed

    A pdf report of current grain and feed imports

  • brier

    It will be interesting to see prices of traditional food stuffs this comng chusuk holiday period. With drought then life giving rains followed by firery heat just what will the prices be? Me thinks that with Korea’s excellent agro-cultural infrastructure they should be near normal or will there be a flash of misinformation for consumer gouging?

  • R. Elgin

    Also this article on a science paper that states that much of the earth is now hotter and that it is because of global warming.

    http://www.nytimes.com/2012/08/07/science/earth/extreme-heat-is-covering-more-of-the-earth-a-study-says.html

  • iMe

    two possible solutions to end this “food” problem:

    1. nuke china
    2. nuke china

    problem solved!

  • George Pietrzykowski

    Traditionally agriculural land has been a very poor investment. If these people wish to pay over inflated prices then good luck to them. My guess is 10 years down the track, they’ll be selling it back to the locals at a loss. Korea has a very poor track record when it comes to overseas investment. As for the gobal warming arguement. In the past there have been droughts and in the future there will be droughts. Been going on for millions of years. Its not indicative of global warming.

  • R. Elgin

    “George” there is no proof in your observation. perhaps you believe in Spontaneous generation too?