Koasa's seaweed processing plant in Changwon, South Gyeongsang Province / Captured from Koasa's promotional video clip

Japan's Koasa Group is currently facing inquiries from the Korean government for allegedly stockpiling seaweed, which is thought to be causing significant price increases for one of Korea's favorite side dishes, according to the Ministry of Oceans and Fisheries, Thursday.

The ministry said its officials will meet the representatives of the world's largest seaweed exporter later this month.

The decision comes as Korean seaweed exporters claim that the Japanese firm has been stockpiling high-quality seaweed here since December, when it completed building its factory in Changwon, South Gyeongsang Province.

"We have tried to arrange a meeting with Koasa," said Kang Hee-jung, head of the ministry's export and processing promotion division.

In response to a news report claiming that the company has refused to meet with ministry officials, Kang said, "We received a call from Koasa yesterday, and we are currently working out the details of the meeting."

Kang added that the ministry will discuss possible countermeasures with the Fair Trade Commission and other relevant ministries, if the hoarding allegation turns out to be true. However, she denied a news report that the government estimates Koasa's purchase of seaweed in Korea to account for around 10 percent of the entire domestic seaweed production.

A Koasa Korea official declined to comment on the matter.

A consumer shops for seaweed at a supermarket in Seoul in this June 5 photo. Yonhap

When Koasa established its Korean operation in 2018 after the Moon Jae-in administration announced plans to boost seaweed exports, Korean exporters expressed concerns about the Japanese firm's potential domination of the market.

Despite their request for the government to prevent Koasa's entry into the Korean market, the Japanese firm signed partnerships in 2019 with South Gyeongsang Province, Changwon and the Busan-Jinhae Free Economic Zone Authority to construct its seaweed processing plant in the southeastern coastal area.

Korean seaweed exporters viewed Koasa's expansion as part of its efforts to overcome the deterioration in Japan's seaweed industry, caused by rising water temperatures and labor shortages.

"Since Koasa built its factory here, many Korean exporters have failed to continue trading with foreign buyers," said an official at the seaweed exporters' association. "Koasa's hoarding of seaweed here is one of the reasons for domestic price hikes."

After Korea's seaweed product exports surpassed 1 trillion won ($725 million) for the first time last year, Korean consumers have faced a seaweed shortage, which has prompted hikes in prices of gimbap (seaweed rice roll) and seasoned dried seaweed.

In response, the government vowed to increase expenditures to secure domestic seaweed supply, with plans to grant new licenses to aquaculturists in July and to lower tariffs until October on imported seaweed products, which can be used for seaweed flakes.

"The government will take measures to stabilize supply as planned and will enable the Korean public to consume seaweed without passing the financial burden on to them," Oceans Minister Kang Do-hyung said in April.

However, domestic seaweed prices have not stabilized since then.

The wholesale price of 100 sheets of dried seaweed reached 10,700 won on average last month, up 55.4 percent from a year earlier.

Costco Wholesale even raised the price of a package of Kirkland Signature Roasted Seaweed by 26.3 percent this month to 12,490 won, following KwangcheonKim, Sung Gyung Food, Dae Chun Foods, Dongwon F&B and CJ CheilJedang, all of which hiked their seasoned dried seaweed prices earlier this year.

GS25 rolled out a range of flavored rice balls this month by removing seaweed from its triangular gimbap.