The government will play a role in cushioning risks from a possible failure to purchase sufficient grain products in the face of concerns that rising international crop prices could increase food costs and overall inflationary pressure here, the finance minister said Thursday.

“As international crop prices are recently spiking in the wake of droughts that hit the United States and South America, fears are rising over agflation,” Finance Minister Bahk Jae-wan told a price stabilization meeting.

“We will principally leave it to the private sector to secure a stable amount of grains from the international market but the government will play a role in sharing risks and serving as a cushion to brace for a possible market failure,” he added.

Agflation refers to a phenomenon in which high food prices exert upward pressure on inflation. Droughts and other severe weather conditions in major farmlands has resulted in reduced harvests, especially of corn and wheat, sending prices higher in recent weeks.

South Korea depends on imports for almost all of its corn and wheat, which is raising concerns that global agflation could cause food prices here to spiral out of control.

The renewed agflation fears come as South Korea’s food prices remain high despite the overall stabilization of consumer prices.

Domestic food costs were driven higher by a prolonged drought this spring.

In a bid to help stabilize the price of products made from such raw materials, Bahk said the government will expand its financial support for crop importers, while keeping tariff quotas in place on major grain imports.

Bahk added that the government will closely monitor local processed food manufacturers and animal feed producers to see if they are intentionally raising their product prices, encouraged by the recent price hikes of raw materials in international markets.(Yonhap News)