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Inflation's new ally: How climate change is making your wallet thinner

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Apples are on a display at Mapo Agricultural and Marine Products Market in Seoul's Mapo District, April 10. Yonhap

Apples are on a display at Mapo Agricultural and Marine Products Market in Seoul's Mapo District, April 10. Yonhap

Korea may lose apple farms equivalent to 4,000 football fields due to rising temperatures
By Yi Whan-woo

A recent surge in the price of apples and other popular fruit is heightening concerns over the adverse effects of climate change on inflation, which is on an upward trajectory again after easing toward the government's 2 percent target goal.

According to the Ministry of Agriculture, Food and Rural Affairs, apples topped the list in March among fruit marking a steep price increase from a year earlier.

The year-on-year price hike of apples was 88.2 percent, a record high since 1980 when the government started compiling the relevant data.

Prices of pears also surged year-on-year by an all-time high 87.8 percent, while those of tangerines went up 68.4 percent and peaches ticked up at 64.7 percent.

These were among 18 popular fruits which collectively saw a 40.3 percent year-on-year increase in their prices.

Against this backdrop, prices of agricultural products advanced 20.5 percent year-on-year in March, and accounted for a 0.79 percentage point increase in the overall inflation that remained unchanged at 3.1 percent for the second month straight.

The overall inflation bounced back after it was measured at 2.8 percent in January and fell below 3 percent for the first time since July 2023.

"A noteworthy trait of these popular fruits is that they have been native to the climate in the Korean Peninsula," said Yoon Tae-myung, a horticulture professor at Kyungpook National University.

"Adverse weather conditions in recent years are dealing a blow to those native fruits, and in return, pulling up their prices as well as overall inflation."

The professor noted 69 percent of apple farms in North Gyeongsang Province suffered from climate change in 2023, stemming from colder-than-usual temperature in spring, heavy rainfall in summer and hail in fall. The province is the country's top apple farming spot.

In a separate study, Rural Development Administration (RDA) predicted the total size of apple farms will diminish by 8.57 percent to 39,000 hectares between 2024 and 2033.

"The total size of these farms is equivalent to 4,000 football fields," the RDA said, noting the amount of apples produced will decrease to 485,000 tons from 502,000 tons over the cited period.

Beltfish are on display at a supermarket in Seoul, April 4. Yonhap

Beltfish are on display at a supermarket in Seoul, April 4. Yonhap

Fruit is not the only example of aggravating inflation due to climate change.

Maritime experts point out a rise in sea surface temperatures resulted in insufficient supplies of pollack and mackerel that are categorized as cold water fish and led to a hike in their prices for years.

Squid output from deep-sea fishing and freshwater fishing in Korea also declined by more than 100,000 tons between 2014 and 2022, according to the Ministry of Oceans and Fisheries. Squid used to be abundant in the East Sea, but the creature has moved further north due to the rising water temperature, according to experts.

In a quarterly economic outlook report in August 2023, the Bank of Korea (BOK) said international food prices went up by between 5 percent and 7 percent on average in the year or two after sea surface temperatures rise by 1 degree Celsius from the previous year.

The BOK said the increase in international food prices became noticeable due to El Nino, a warming of the ocean surface, or above-average sea surface temperatures, in the central and eastern tropical Pacific Ocean.

Published by science journal Nature in March, an article titled "Global warming and heat extremes to enhance inflationary pressures" said higher temperatures will increase food and headline inflation persistently over 12 months in both higher- and lower-income countries.

The article was co-authored by Maximilian Kotz, Friderike Kuik, Eliza Lis and Christiane Nickel and was based on 27,000 observations of monthly consumer price indexes worldwide.

It predicted that a rise in temperatures throughout 2035 can result in persistent upward pressure on annual food inflation ranging from 1 percentage point to 3 percentage points per year.

It also predicted that headline inflation could rise by 0.32 percentage points to 1.18 percentage points on average across the world each year due to climate change.

"With the intensity of hot extremes and their impacts on inflation being amplified with continuing climatic change, while being unpredictable in the medium to longer term, this relationship is set to increase inflation volatility," it said.

"This in turn may pose challenges to inflation forecasting and monetary policy, likely increasing the difficulty of identifying temporary supply shocks and disentangling them from more persistent drivers."

To ensure sufficient supply of fresh produce against climate change, Yoon suggested advancing harvest technology aimed at lower production costs and higher production volume.

The RDA cited a need to capitalize on plans for a satellite next year to monitor growth of agricultural products, expressing hope that it could "help famers regarding when to plant seeds or harvest."

Kim Kwang-soo, a professor at Seoul National University's Department of Plant Science, called for "higher accuracy in weather forecast and climate change."

Yi Whan-woo yistory@koreatimes.co.kr


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