Food Crisis Looming Over Korea S.Korea's Grain Self-Sufficiency Remains Low Food Makers Hit by Soaring Commodities Prices

The New York Times said Tuesday, "The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries -- first Japan and Korea, then China, and now increasingly places like Vietnam and India." This report suggests rising rice prices have caused both wages and export prices in Asia to rise.

William Pesek in his Monday column on Bloomberg writes, "Forget Bear Stearns. Ignore what Ben Bernanke and Henry Paulson are up to. Take your attention away from which hedge fund is about to blow up. Think about rice." The column suggests the rise in rice prices has more serious effects on the economy than those of oil or wheat.

A store attendant sits behind commercial rice for sale inside a public market on April 3 in Manila with price tags at P43 and P34 a kilo or US$1.04 and US$0.83 respectively. With the present increases in rice price, people find it hard to afford the commercial rice, thus they wait in lines to buy government subsidize imported rice. /AP

Taiwanese Vice President Hsiu-lien Annette Lu agrees. "We can get along by reducing oil consumption, but can't do without rice,” she said. Soaring rice prices are “far more serious” than skyrocketing oil prices.

Rising rice prices stimulate wage increases in developing Asian countries that have a high Engel's coefficient -- the proportion of income that goes into food. In the wake of the increases in rice prices, the year-on-year consumer price increase rate for March in the Philippines, a country that strictly limits the amount of rice each person can buy, was 6.4 percent, a 20-month high. The average wage of urban workers in China, which suffered price rise in foodstuffs last year, has increased as high as 18.7 percent.

Asia's concern over rising prices is never an Asian issue. In its Global Economic Prospects report last year, the International Monetary Fund expressed concern that wage increases in Asia may cause price rises in other regions that have so far enjoyed affluence thanks to cheap goods imported from Asia. Asia accounts for a large portion of global production.

As of late 2006, China and Southeast Asia took up 58 percent of the world's total production of electronic goods, except IT products. India accounts for 65 percent of the world's call-center market and more than half of the global software outsourcing market. Depending on product types, some 30 to 60 percent of the world's stuffed goods and clothing are being produced in Southeast Asia.

Now there is widespread concern that Asia-wide wage increases caused by soaring rice prices will spread to the entire world via trade routes and eventually cause worldwide inflation.

If this concern turns into a reality, the South Korean economy will not escape. Park Chun-il, chief of the price statistics team at the Bank of Korea, said, "The rise in the prices of goods imported from China and Southeast Asia will largely stimulate consumer prices in this country."

(englishnews@chosun.com )