Wheat, soybean supply chains remain vulnerable, Korea study finds

South Korea's supply chains for imported agricultural products such as wheat and soybeans remain vulnerable, with import source diversification, agricultural stockpiling systems and the financial stability of food companies identified as areas requiring improvement.

According to a report titled "Analysis and Development Strategies for the Agri-food Supply Chain (Years 1 and 2)" published Wednesday by the Korea Rural Economic Institute (KREI), an assessment of the domestic agri-food supply chain using the Supply Chain Operations Reference (SCOR) model yielded a composite score of 6.397 out of 10. The institute said the supply chain maintains basic stability but requires ongoing management.

Of 30 key performance indicators (KPIs) analyzed for the agri-food supply chain, 12 were classified as stable "green," 15 as "yellow" requiring management attention, and three as "red" requiring improvement. The three areas most urgently in need of improvement were agricultural storage and stockpiling, capital stability of food manufacturers, and diversification of agri-food import sources.

The institute particularly recommended that commodities with high import dependency — such as wheat, soybeans and corn — undergo gradual diversification of import sources. Switching suppliers quickly is difficult given the private-sector-led import structure, quarantine and sanitary standards, and established trust with existing trading partners, but the institute said long-term supply chain management and an institutional framework must be put in place.

Improvements to agricultural storage and stockpiling systems were also flagged. Government storage facilities alone are insufficient to respond to supply instability, so the institute said producer organizations and private storage operators must build greater stockpiling capacity, with costs and losses incurred during storage offset to encourage broader private-sector participation.

The low equity ratios of small food manufacturers were also identified as a factor undermining supply chain stability. The institute recommended supporting research and development investment and productivity improvements at small and medium-sized food companies to strengthen their raw material procurement and inventory management capabilities.

A survey of farmers, food manufacturers, wholesale and retail businesses, consumers and experts found that policy priorities varied by stakeholder. Farmers ranked climate change response and business stability policies as most important, food manufacturers prioritized support for small and medium-sized enterprises, and consumers cited agri-food price stability as their top concern. The institute said tailored supply chain policies reflecting the distinct characteristics of producers, retailers and consumers are needed.

The research team put forward eight policy tasks for building a stable agri-food supply chain: expanding contract farming between producers and food manufacturers, improving farmers' use of weather information, increasing R&D investment at small and medium-sized food manufacturers, strengthening private storage and stockpiling capacity, reinforcing livestock disease prevention systems, diversifying import sources, establishing a structural response mechanism for price volatility, and building a continuous supply chain diagnostic system.

Han Jeong-hun, an associate research fellow at KREI, said the importance of agri-food supply chains is growing amid climate change and shifting international conditions, and that the study is significant for objectively assessing the current state of the domestic agri-food supply chain and identifying its vulnerabilities. He added that establishing the Korea Agri-food Supply Chain Index (KASCI) — an annual supply chain evaluation system — would serve as an important benchmark for policy development and on-the-ground response.