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Fruit Prices Soar, Now as Expensive as Gold
  • By Shin Min-joo, reporter
  • 승인 2024.03.31 14:38
  • 호수 330
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▲ An apple, which is being sold for 6,000 won due to the increase in fruit prices

Agricultural products are typically classified as goods with low price elasticity, as their demand tends to remain relatively constant regardless of price fluctuations. For example, even when the price of cabbage rises due to a poor harvest, people continue to make kimchi, and the demand for seasonal fruits remains stable despite price increases. Conversely, an increase in agricultural production leading to lower prices does not necessarily result in a significant increase in demand for vegetables or fruits. However, in recent years, there has been a significant change in the consumption patterns of agricultural products in South Korea. There is a growing tendency for consumers to forgo making kimchi due to rising cabbage prices, seek alternatives in response to price hikes of specific fruits, or reduce consumption altogether. This has raised doubts about whether agricultural products can still be unequivocally classified as goods with low price elasticity. Furthermore, concerns have emerged about the occurrence of 'agflation,' where rising agricultural prices contribute to overall inflation.

According to the consumer price trend released by Statistics Korea on the 6th, the overall inflation rate in February was recorded at 3.1%. After rebounding from 2.4% in July last year to 3.4% in August, the inflation rate remained above 3% for the past five months, only to drop to 2.8% in January this year before returning to the 3% range. The resurgence to 3% in overall inflation rate within just one month is largely attributed to the continued surge in fruit prices. Apple prices surged by 56.8% in January and further increased by 71% in February, while tangerine prices skyrocketed by 39.8% in January and jumped to 78.1% in February. Vegetable prices also saw an upward trend, with green onion prices increasing by 50.1% and overall vegetable prices rising by 12.3%. This marks the largest increase in 32 years and 5 months. Various factors are contributing to this phenomenon.

Firstly, a decrease in fruit yield occurred due to abnormal temperatures. Cold damage during spring led to reduced fruit set, but with many people needing fruits for both the Lunar New Year holiday and daily consumption, the shortage naturally drove prices up. Another factor was the concentrated summer rains. Excessive rainfall, especially during the summer, had a detrimental effect on fruit production. Flooding of fruit roots and fruit rot due to excessive moisture reduced yields and compromised fruit quality. Additionally, anthrax outbreaks during the harvesting season also contributed to the decrease in fruit yield. Anthrax, a bacterial disease that infects fruit trees, primarily affects the leaves, fruits, and branches of apple trees. This not only resulted in reduced fruit production but also led to an increase in fruit prices due to additional costs for treatment, thereby increasing the cost of fruit production.

In response, the government implemented discount support policies to stabilize fruit prices. Adopting a method of directly contracting with farms for cultivation, the government executed a 590 billion won discount support program, including 78,000 tons of apples and pears. Additionally, it announced plans to allocate 23 billion won each in discount support budgets from the Ministry of Agriculture, Food and Rural Affairs for March and April. Furthermore, it disclosed intentions to reduce delivery prices or supply irregular fruits for a total of 13 types of fruits and vegetables, including apples, pears, and tangerines, which experienced significant price increases. However, despite these government efforts, there has been no clear effect on consumer- perceived price reductions. As fruits are primarily produced on an annual cycle, supply cannot be increased readily. Moreover, there are concerns that lowering prices may actually increase demand, potentially leading to further inflation. Despite government support, there has been no distinct improvement in stabilizing fruit prices, continuing to burden consumers. Experts are calling for urgent alternative measures to stabilize prices of agricultural products and emphasize the need for supportive policies for stable production and supply in the agricultural sector.

By Shin Min-joo, reporter  pinky3167@naver.com

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