Of 12.13 million tons in domestic supply, 9.24 million tons go to animal feed — leaving livestock sector highly exposed

Rising global grain prices and a weaker won ripple through to processed food and livestock prices

Heavy reliance on Black Sea corn for food use underscores urgent need to diversify import sources

Corn [Getty Images Bank]
Corn [Getty Images Bank]

Instability in South Korea's corn supply chain — which depends on imports for more than 90 percent of domestic supply — could ripple through to consumer prices for livestock products and processed foods, according to a new research report. A 10 percent weakening of the won is estimated to push feed prices up 5.70 percent and starch and sugar prices up 5.05 percent. Researchers said the country needs to diversify its import sources and build a standing crisis-response system, as rising global grain prices and a weaker won can pass through ingredient costs to consumer prices.

The Korea Rural Economic Institute released the findings Tuesday in its report "Analysis and Challenges of the Global Food Supply Chain (Year 3): Corn."

The table below shows the estimated price increases across major agricultural and food categories if the won weakens by 10 percent, based on 2023 input-output data provided by the Ministry of Agriculture, Food and Rural Affairs.

Rank | Category | Price increase (%) 1 | Oils and fats | 6.15 2 | Raw and refined sugar | 5.98 3 | Animal feed | 5.70 4 | Flour milling | 5.22 5 | Starch and sugars | 5.05 6 | Cattle | 4.52 7 | Poultry farming | 3.77 8 | Noodles | 3.75 9 | Hog farming | 3.65 10 | Dairy farming | 3.58 11 | Processed meat | 3.57 12 | Dairy products | 3.54 13 | Slaughtered meat | 3.33 14 | Seasonings and food additives | 3.31 15 | Rice cakes, bread and confectionery | 3.25 16 | Processed seafood | 3.10 17 | Seafood | 3.06 18 | Poultry meat | 3.00 19 | Floriculture | 2.63 20 | Beverages and alcoholic drinks | 2.57

South Korea's total corn supply stood at approximately 12.13 million tons in 2023, with more than 90 percent sourced from imports. Of that total, about 9.24 million tons — or 76 percent — went to animal feed. Because corn is used not only in livestock feed but also in food processing and as an industrial raw material, disruptions to overseas supply chains could affect a broad range of domestic industries.

Global corn production and exports are concentrated in a handful of countries: the United States, Brazil, Argentina and Ukraine. The US, Brazil and Argentina alone account for roughly 70 percent of world corn exports. That concentration means extreme weather, war or conflict, or export restrictions in any major producing country can destabilize the international supply chain.

The conditions for securing import sources differ depending on how the corn will be used. Feed corn, which accounts for the bulk of domestic consumption, allows for relatively flexible switching between supplier countries; it can also be partially substituted with feed wheat or by adjusting feed formulations. However, cost pressures from international price swings and exchange rate movements remain significant.

Food-grade and processing corn, by contrast, must use non-genetically modified (non-GM) raw materials, which limits the number of countries from which it can be sourced. South Korea's heavy reliance on Black Sea producers — Ukraine, Romania and Bulgaria — leaves it vulnerable to supply disruptions in that region, the report found.

That vulnerability was on display during the Russia-Ukraine war in 2022, when disruptions to Black Sea grain supplies made it difficult for domestic starch and sugar companies to secure corn raw materials. Some companies had to adjust factory utilization rates to cope with production shortfalls.

The researchers also said the domestic procurement system for food-grade corn has structural weaknesses. While non-GM soybeans are typically secured through advance contracts arranged two to four years ahead by the Korea Agro-Fisheries and Food Trade Corporation, corn is procured individually by private companies — a setup that limits the country's ability to respond to supply risks.

Corn supply chain instability can also affect consumer prices. Using 2023 input-output tables, the researchers estimated that a 10 percent weakening of the won would push feed prices up 5.70 percent and starch and sugar prices up 5.05 percent.

In the livestock sector, the same exchange rate move was estimated to raise cattle prices by 4.52 percent, poultry farming costs by 3.77 percent, hog farming costs by 3.65 percent and dairy farming costs by 3.58 percent. Processed meat prices were estimated to rise 3.57 percent, dairy products 3.54 percent, slaughtered meat 3.33 percent and poultry meat 3.00 percent.

Processed foods would also be affected. Under the same conditions, prices for rice cakes, bread and confectionery were estimated to rise 3.25 percent, while beverages and alcoholic drinks would increase 2.57 percent. The findings illustrate how a weaker won can feed through imported raw materials and intermediate goods such as feed and starch to raise final consumer prices.

The report also analyzed the impact of rising international grain prices. A 10 percent increase in the import price of the "cereals and miscellaneous grains" category — which includes corn — was estimated to push feed prices up 2.67 percent and starch and sugar prices up 2.26 percent. If the import price increase is assumed to be 36.1 percent, feed and starch-and-sugar prices would rise by 9.36 percent and 8.14 percent, respectively.

The researchers cautioned, however, that corn is classified under "cereals and miscellaneous grains" in the input-output tables — a category that also includes wheat and other grains — so the figures should not be interpreted as reflecting the effect of corn price changes alone.

If feed prices themselves rise by 10 percent, cattle prices were estimated to increase 6.30 percent, poultry farming costs 5.71 percent, dairy farming costs 5.30 percent and hog farming costs 5.13 percent — illustrating how feed cost burdens flow through to livestock production costs and processed product prices.

To stabilize the corn supply chain, the researchers recommended maintaining a minimum domestic production base to preserve crisis-response capacity. They called for expanding corn cultivation support under the strategic crop direct payment program and securing distribution channels so that domestically grown corn can actually meet industrial demand.

Strengthening overseas procurement was also identified as a key priority. The researchers said the volume of corn brought into South Korea through the overseas agricultural resource development program remains limited relative to total imports, and called for reviewing the program's results and restructuring support around increasing domestic arrivals.

The report also called for a standing system to monitor risk factors in international grain markets and to link stockpiling, logistics and financial support into a coordinated response. Because import conditions differ between feed corn and food-grade corn, the researchers said procurement strategies should be tailored to each use.

"Corn is a core resource used across a wide range of sectors — feed, food and industrial raw materials — so supply chain disruptions can spread their effects across multiple industries and into people's daily lives," said Hwang Yun-jae, a senior research fellow at the Korea Rural Economic Institute. "We need to go beyond simply responding to short-term supply shocks and build a comprehensive supply chain response system that encompasses strengthening domestic production capacity, diversifying overseas import sources and continuously monitoring early warning signs."


adastra@heraldcorp.com