Domestic soybeans pile up while imported soybeans run short
Tofu industry warns Wednesday: 'Stocks will run out by early October, and factories will stop'
Domestic soybean stockpile at 120,000 tons as government pushes companies to buy more
Subsidy for paddy soybeans doubled from 1 million won per hectare in 2023 to 2 million won in 2024
Ministry moved to cut rice output, now struggles with a soybean stock burden
The government's steep cut to imported soybean supplies this year threatens to halt roughly half of the country's more than 1,000 small and medium-sized tofu factories. Industry groups call it a looming "tofu crisis." Tracing the problem back reveals that the government's own policy of scaling back rice production while promoting soybean cultivation is ultimately to blame. The mismatch in agricultural policy triggered the soybean shortage, leaving small tofu makers to bear the brunt.
In short, the government encouraged soybean cultivation to cut domestic rice output, which left it with an oversupply of homegrown soybeans. It then cut imports of soybeans to promote consumption of the domestic surplus — but that has raised the risk that tofu production could grind to a halt. Tofu factory representatives have called on the government to raise import quotas again, but officials drew a line, saying there are no such plans "for the time being."
Small tofu makers face October shutdown as import quotas shrink
On Wednesday, heads of soy food product cooperatives that mainly produce and sell tofu held a press conference at the Korea Federation of SMEs in Yeouido, Seoul. They called for an expansion of imported soybean supplies. Small food companies that make tofu and fermented soybean products such as soybean paste have less than a month's worth of imported soybean stock left, they said. "For domestic tofu factories to operate normally, they need at least 250,000 tons of imported soybeans every year, but the government's supply plan for this year covers only 220,000 tons. If this continues, imported soybeans will run short starting in early October, and factories will shut down," they said.
In a statement, the industry said, "Raw material stocks at production sites are running out, and there is a serious risk that tofu and fermented soybean product factories nationwide will begin shutting down as early as late September." They called on the government to set the industry's actual annual requirement of 250,000 tons as the minimum supply baseline.
Soybeans used for processing can be imported at a 5 percent tariff up to the volume set under the tariff-rate quota system. Any amount beyond that faces a 487 percent tariff. "Processing soybeans can only be imported through the state monopoly trading system and competitive bidding run by aT (Korea Agro-Fisheries & Food Trade Corp.), with an import profit fee added on top of the 5 percent tariff," the industry said, calling for private companies to be allowed to import directly.
The groups also said the government's push to encourage farmers to plant more soybeans, meant to ease a domestic glut, is the biggest reason behind the current tofu crisis. This oversupply also led officials to cut import volumes. The government reduced this year's import volume, mostly sourced from the US and Canada, by 30,000 tons. Meanwhile, domestic soybean stocks remain high: the Ministry of Agriculture, Food and Rural Affairs said in May that domestic soybean stockpiles stood at about 120,000 tons. The ministry acknowledged that "domestic soybeans face a heavy stock burden relative to demand."
Domestic soybeans overflow, imports run dry — the root cause is rice
Tracing the current supply mismatch — a shortage of imported soybeans alongside a domestic glut — leads back to rice policy. The Moon Jae-in administration pursued policies, including the public interest direct payment system, to reduce rice production. When oversupply persisted, it took the extreme step of isolating 200,000 tons of rice from the market at the end of 2021. The problem was that rice production kept rising even afterward.
After the change in administration, the debate over rice supply policy shifted to the Grain Management Act. The Democratic Party of Korea and other opposition parties pushed a revision to the act through the National Assembly on March 23, 2023. The revision required the government to purchase rice when output exceeds a certain threshold or prices fall sharply.
President Yoon Suk Yeol exercised his veto power over the revised Grain Management Act in April 2023, the first veto of his term. The administration's reasoning at the time was that mandatory government purchases of surplus rice could worsen the rice oversupply.
One policy the Yoon administration introduced to curb rice oversupply was the strategic crop subsidy program. Farmers who grew soybeans on rice paddies received 1 million won ($747) per hectare. The idea was to reduce rice-growing area while boosting soybean production, which relies heavily on imports. At the time, mounting instability in global grain supplies following the Russia-Ukraine war also made raising the country's food self-sufficiency rate a stated policy goal.
Support grew the following year. Starting in 2024, the subsidy for soybean cultivation doubled from 1 million won to 2 million won per hectare. The Ministry of Agriculture, Food and Rural Affairs said the program's purpose was to "raise the food self-sufficiency rate, stabilize rice supply and demand, and improve the utilization of paddy fields." More than 540 billion won has reportedly been spent on the strategic crop subsidy program over the past three years or so.
The problem is that while soybean production increased, consumption did not grow at the same pace. The Ministry of Agriculture, Food and Rural Affairs ultimately acknowledged in May that soybean stockpiles had grown too large. "In recent years, the area planted with paddy soybeans and their output have increased sharply. As production growth outpaced demand expansion, the government's stockpile also rose to a high level," the ministry said.
Not all soybeans are equal: tofu makers say domestic and imported beans cannot be mixed
With domestic soybeans piling up, the government belatedly moved to boost consumption of homegrown beans, asking tofu makers to mix domestic and imported soybeans. Tofu producers argue, however, that the two cannot be mixed because the beans differ in size.
According to the tofu industry, domestic soybeans are larger than imported ones, so soaking times differ. Soaking beans too long causes surface defects. Making tofu with beans of different sizes also affects later processes such as grinding and coagulation, and lowers yield. Small companies that have long run their production equipment based on imported soybeans would also need to readjust their process conditions if they switch raw materials. That would add costs, the industry said.
The government needs to reduce its domestic soybean stockpile, while the tofu industry needs to secure the imported soybeans it requires. The policy expanded paddy soybean cultivation over the past three years to curb rice production. This year, that same policy has turned into a problem of finding buyers for the resulting soybean surplus.
Kim Suk-won, head of the Gwangju-South Jeolla soy food products cooperative, urged the government to "lower tariffs so companies can import soybeans directly." But a Ministry of Agriculture, Food and Rural Affairs official said, "We plan to urgently import 9,000 tons of soybeans and supply them this month, and additionally supply 65,000 tons of domestic soybeans to the market, but for now, there is no plan to expand imports."
hong@heraldcorp.com
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