SEOUL, SOUTH KOREA — With less than a quarter of its land used for agriculture, South Korea relies heavily on imports, particularly wheat and corn, while producing a significant amount of rice.

Two-thirds of the nation is mountains and hills, so production agriculture is characterized by small family farms cultivating rice, with barley as the second most important crop. Agriculture makes a small contribution to the country’s gross domestic product at 1.8% and employs only 4.8% of the active population, according to the World Bank. 

Production of rice, South Korea’s dominant crop, is estimated at 3.76 million tonnes for 2022-23, a slight decrease from the previous year due to government incentives to reduce planted acreage. The nation is expected to import 4.2 million tonnes of wheat, a slight decrease from the previous year, while corn imports are forecast to increase to 11.9 million tonnes.

Because of its limited size and insufficient natural resources, the nation has focused on technology development and innovation to promote growth. As a result, it experienced one of the largest economic transformations in the last 60 years, moving from a mostly rural, agricultural nation into an urban, industrialized country. 

The primary industries include textile, steel, car manufacturing, shipbuilding and electronics. It is also the world’s largest producer of semiconductors. With the COVID-19 pandemic, the economy dropped 0.9% in 2020 before rebounding to growth of 4.1% in 2021 and 2.6% in 2022. GDP growth is expected to reach 2% in 2023, according to the International Monetary Fund. 

Disposable incomes are growing and with it the demand for products that offer convenience. South Korea is one of the largest net agro-food importers in the world, with more half of those imports destined for further processing within the country. 

Trade represented 80% of GDP in 2022, according to the World Bank, and South Korea is the world’s seventh largest exporter of goods and tenth largest importer. South Korea has free trade agreements with at least 57 countries, representing more than 70% of the global economy. 

Wheat imports

South Korea produces a small amount of wheat and is dependent on imports. Since 2000, its self-sufficiency rate for wheat has been less than 1%. Wheat was the first grain to be influenced by market opening, and eliminating the wheat procurement program in 1984 caused a significant fall in production. 

Production has fluctuated from less than 10,000 tonnes in 1990 to about 30,000 tonnes in the late 2000s. In 2022-23, production is estimated at 30,000 tonnes, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, up slightly from 2021-22 but significantly improved from 2020-21. 

The government provides incentives to domestic wheat growers, including purchasing, breeding and marketing programs. The target for self-sufficiency in milling wheat consumption is 5% by 2025, the FAS said, increasing to 10% by 2030.

Imports for 2022-23 (including flour and pasta imports on a wheat equivalent basis) are forecast at 4.2 million tonnes, down from the estimated 4.8 million tonnes in 2021-22. Feed wheat imports are expected to move toward the previous five-year average to 1.4 million tonnes while milling wheat imports are expected to increase slightly to 2.8 million tonnes. This increase is due to stepped-up demand for food processing, such as instant noodles. 

Feed wheat import estimates will depend on the availability and price of feed wheat compared with feed corn. 

Flour imports for 2021-22 are estimated at 21,000 tonnes (wheat equivalent), an increase of 31% from the previous year, the FAS said, due to increased demand for imported flour in the bakery sector. France is the leading supplier, followed by Italy, the United States and Turkey. Pasta imports are expected to increase 2% to 181,000 tonnes, reflecting consumer demand. 

Flour exports are expected to hold steady at around 60,000 tonnes while pasta exports are expected to continue expanding to 361,000 tonnes due to the growing popularity of Korean instant noodles. 

The website of the Korea Flour Millers Industry Association (KOFMIA) names seven large milling companies. They are Deahan Flour Mills, Daesan Flour Mills, Samyang Corp., Korea Flour Mills, CJ CheilJedang, Samhwa Flour Mills and Young Nam Flour Mills.

Rice production

Rice production in 2022-23 is estimated at 3.76 million tonnes (milled basis), down from 3.85 million tonnes in the previous marketing year, the FAS said. The government is encouraging a 5.1% reduction in planted rice acreage to reduce over-production and support domestic prices. 

“Given the continuously aging population in agricultural production areas, lower mechanization rates for alternative crops like wheat and soybeans, and the prevalence of specialized rice production equipment, it will be difficult to significantly increase the production of alternative crops to replace rice production,” the FAS said.  

Consumption estimates for 2021-22 are 6.1% lower than the previous year as table rice consumption continues to drop. However, the forecast for processing consumption increased 1.6% in 2022-23, mainly driven by the cooked rice category.

“Due to the changing composition of household types in Korea, there is an increasing demand for processing rice used in ready-to-eat products, particularly from single-person and dual-income households with a preference for convenient homestyle meals,” the FAS said. 

Domestic rice prices dropped substantially in 2022 following a high level of production and flat consumption. The wholesale price of rice in calendar year 2022 was 15% lower compared to the previous year, the FAS said, the lowest since October 2019. The government purchased a record-high 820,000 tonnes of the 2022 crop after public pressure from farmer groups demanding the purchases to support market prices. 

Ending stocks for 2022-23 are estimated at 1.45 million tonnes, up 16.4% from the previous year. This is the highest level since 2016-17 when stocks reached 2 million tonnes. That year the government also made significant purchases to reduce stock levels. 

Corn imports

Like wheat, corn production in South Korea is also minimal, accounting for less than 1% of total consumption. Planted area for 2022-23 is expected to remain unchanged, with production forecast at 79,000 tonnes. 

Consumption is expected to increase slightly to 12 million tonnes, with 9.6 million tonnes for feed purposes and 2.4 million tonnes for food, seed and industrial purposes. Feed corn consumption is expected to increase due to anticipated recovery of availability from Ukraine, the FAS said. 

“Compound feed production is forecast to reach 21.3 million tonnes in 2022-23 as livestock inventories expand to meet increased consumer demand for meat products,” the FAS said. 

Imports for 2022-23 are estimated at 11.9 million tonnes, up slightly from an estimate of 11.3 million tonnes in the previous year. While feed corn imports are forecast to increase 7% to 9.6 million tonnes, the war in Ukraine will have a negative impact, the FAS said, since Ukraine has been a leading supplier to South Korea.