Government Intervention: South Korea's New Tactics to Ensure Fresh Apple Affordability

To address rising fruit prices, notably apples and pears, the South Korean government is aggressively examining the idea of importing apples for the first time, holding conversations with the United States (US) and New Zealand. This strategic action is consistent with the government's broad price stabilization policy, and it is a response to the recent spike in fruit prices, which was caused by exceptional weather circumstances that reduced local production.

While debates on the import of foreign agricultural products are ongoing, the Ministry of Agriculture and Forestry (MAFRA) has unequivocally declared that there are no new initiatives linked to apple importation at this time. Nonetheless, domestic agricultural producers have expressed concern about the potential negative consequences on their productivity and income.

Figure 1:Prices of Fresh Apple in South Korea

Source: Tridge

The rising prices of fruits, widely exhibited in major department shops and massive marts around South Korea, have raised worries about affordability for the typical customer. According to Tridge data, the wholesale price of fresh apples-Fuji variety has reached historic highs. In W3 of Nov-23, Fuji apple price reached USD 8.56 per kilogram (kg), a staggering 174.35% year-on-year (YoY) increase. The high price trend remained up until recently, when it reached USD 5.52/kg in W3 of Jan-24, driven by government announcement of increased imports and supply improvements. This action demonstrates the government's commitment to lowering inflationary pressures on essential food goods over the holiday season.

Simultaneously, Korean fruit suppliers have taken aggressive measures to stabilize the consumer market before the impending Lunar New Year break. From January 22 toFebruary 8, these vendors will launch a unique incentive program, offering 0.6% of the transaction amount for domestically grown fruits transported to Korea. This is the most extended duration of support to date, and the incentive amount is 33.3% larger than the preceding initiative. The primary purpose is to improve market stability by assuring a steady produce flow into the wholesale market, hence reducing the burden on consumers.

The government's examination of apple imports represents a delicate balance between international trade dynamics and protecting domestic agriculture interests. As the country deals with the implications of unusual weather patterns affecting local fruit production, these measures seek to strike a balance by ensuring the availability and affordability of fresh food for South Korean consumers. The current debate between the US and New Zealand highlights the complexities of handling global trade partnerships while protecting the interests of local farmers. The success of these initiatives depends on a careful balance of domestic and foreign issues, underscoring the complexities of current economic policymaking.