[Why&Next] "Mix Imported Soybeans?"... Domestic Soybean Overproduction Triggers 'Tofu Crisis'

Pulmuone to Blend Imported and Domestic Soybeans in Production Starting on the 13th
Unusual Decision Given Challenges of Blended Production
Reduced Imported Soybean Supply due to Government Push for Domestic Consumption
"Paddy Soybean Cultivation Area Shrinks This Year... Next Year's Supply to Be Finalized in December"

"Pulmuone would like to inform you that its tofu, soymilk noodles, and tofu noodles made from imported soybeans are all produced using 100% foreign soybeans, as indicated on the packaging. However, in accordance with the government's policy aimed at encouraging the consumption of domestic soybeans, from the 13th some domestic soybeans have been blended into production."

Pulmuone, a tofu manufacturer, has begun mixing domestic soybeans into tofu that was previously made solely with imported beans. In the domestic market, where products are typically made using either 100% imported or 100% domestic soybeans, this decision to blend both sources is considered unusual within the industry. Pulmuone explained that, facing the risk of having to halt production of relevant products as early as next month due to the shortage of imported soybeans, it made this decision in order to extend the availability of raw ingredients as much as possible.

Imported Soybean Tofu is Cheaper... What Is Happening in This Year’s Tofu Market?

Pulmuone’s move follows mounting concern over a so-called “tofu crisis,” as companies producing tofu—a staple food for working-class consumers—are struggling to secure supplies of imported soybeans, a key raw material.

On the 9th, representatives from six regional Yeonsik Food Cooperatives nationwide held a press conference, stating that domestic small- and medium-sized tofu manufacturers are on the verge of shutting down because they have no soybeans available for production as soon as the next day. Soybeans are a government-controlled import commodity; their supply is strictly managed by the government. Imported beans can only be purchased via a state-run monopoly trade and public auction through the Korea Agro-Fisheries & Food Trade Corporation (aT). The cooperatives purchase the beans supplied by the government and then distribute them to tofu manufacturers as raw materials.

According to cooperative representatives at the press conference, a minimum of 250,000 tons of domestic processing soybeans is required annually for factory production, but this year’s government supply plan allocates only 223,899 tons—about 30,000 tons short. They emphasized that around 80% of domestic tofu is produced with imported soybeans, and have sustained a blow from this sudden decrease in supply. They added that if the situation does not change, factories are highly likely to halt operations as early as this month or at the latest by next month.

On the 9th, representatives of six regional processed food cooperatives nationwide spoke at a press conference urging the resolution of imported soybean supply shortages held at the Korea Federation of SMEs in Yeouido, Seoul. Photo provided by the Korea Federation of SMEs

Pulmuone’s decision is considered unusual because it is not easy to blend imported and domestic soybeans. The industry notes that the two types of beans differ in particle size and soaking time, making simultaneous processing extremely challenging. Because each raw material has different characteristics, pre-soaking and blending both increases the number of production steps, raises costs, and presents technical difficulties. For these reasons, manufacturers have primarily produced and sold tofu products made with either 100% imported or 100% domestic soybeans, rather than mixing the two.

Accordingly, the industry explains that products made from imported and domestic soybeans have essentially formed separate markets. According to aT’s Agricultural Products Distribution Information (KAMIS), this year the average price of 1 kg of imported medium-grade white soybeans was KRW 3,525, about 70% of the KRW 5,000 average for domestic ones. Tofu products made with domestic soybeans are therefore 3 to 4 times as expensive as those made with imported beans. This significant price gap has created a market structure in which the main consumer groups and corresponding product markets are essentially distinct.

An industry official stated, "Demand for cheap imported-soybean products is far higher, so it is difficult to replace production volume simply by increasing domestic soybean use. Blended production can also lead to quality deterioration and lower yields."

Pulmuone plans to maintain the price of its imported-soybean products, even as it absorbs some extra costs by blending in domestic beans for production to meet demand. A Pulmuone representative explained, "There are currently no plans to raise product prices."

With Subsidies, a Soaring Rise in Paddy Soybean Acreage... Could Another Crisis Hit Next Year?

The industry points out that the current shortage of imported soybeans stems from the government’s recent push to boost domestic soybean consumption. In February 2023, the government introduced a strategic crop direct payment system to solve the problem of rice oversupply and to promote domestically produced strategic crops with low food self-sufficiency rates. Soybeans were designated as a strategic crop, and subsidies were granted to encourage soybean planting in rice paddies instead of rice. As a result of this policy, domestic paddy soybean acreage surged. According to the Agricultural Outlook Center of the Korea Rural Economic Institute (KREI), the area of domestic paddy soybean cultivation, which was 10,658 hectares in 2021, surpassed 20,000 hectares in 2024 and increased to 26,242 hectares last year. In just four years, the acreage more than doubled.

The government recognized the risk of a domestic soybean oversupply as early as last year. In December, the Ministry of Agriculture, Food and Rural Affairs announced it would expand its government stockpile of soybeans to 60,000 tons, taking into account the risk of overproduction caused by increased paddy soybean acreage due to this policy. The ministry also stated, "When implementing the strategic crop direct payment program, we considered concerns about soybean overproduction stemming from increased acreage, and we are working to stabilize the soybean supply." In January, the ministry further commented, "When the cultivation area of substitute crops expands rapidly, it inevitably leads to oversupply, and there are limits to how much the acreage can be increased."

In fact, as the government began offering benefits such as large-scale discount sales of domestic soybeans based on this awareness, companies began to take advantage of these measures. For example, in July, Maeil Dairy Industries announced plans to start using domestic soybeans in its soymilk products, which had previously used only foreign beans.

The government explained that, on the day after the cooperatives’ press conference (the 10th), it reduced the volume of imported soybeans supplied to the market by 30,000 tons for the year. To boost domestic soybean demand, it began offering discounts, keeping total soybean supply at normal levels. The government also noted that it is supplying 21,000 tons of domestic soybeans from its reserve stock at prices comparable to those of imported beans. At the same time, it announced it is working to supply an additional 13,000 tons of imported soybeans from government reserves, taking industry challenges into account.

However, the tofu manufacturing industry has strongly criticized these decisions as being out of touch with reality. Representatives from the Yeonsik Food Cooperatives argued that blending imported and domestic soybeans to produce tofu at the factory level is extremely difficult, and that it is inappropriate for the government to offer domestic bean subsidies on the premise that mixing is feasible. They are calling for a transition from aT’s monopoly state trade and public auction system to a system that allows private direct imports by organizations with real demand, as well as for setting 250,000 tons as the minimum supply baseline according to actual needs.

For now, the government is planning to supply an additional 13,000 tons of imported soybeans to the market next week. Based on this, it believes the immediate crisis can be contained. However, the market sees a high likelihood that a similar crisis will recur next year as long as the overproduction of domestic soybeans is left unaddressed and the current import framework remains in place.

The government stated that it would set up a consultative body involving the processing industry, farming organizations, and other stakeholders to discuss next year’s imported bean quantity and find a compromise soon. The annual supply of imported soybeans is finalized each December in consultation with the Ministry of Economy and Finance, and next year's volume will be determined based on these discussions. A Ministry of Agriculture, Food and Rural Affairs official noted, "This year, the volume was a bit lower as we reduced imports in response to high domestic production. There is a possibility next year's volume could increase."

This year, for the first time since 2021, the paddy soybean cultivation area has actually decreased from the previous year, totaling 22,498 hectares, leading the government to expect that oversupply concerns will also ease slightly. A ministry official explained, "In recognition of the need to manage supply and demand, we sought cooperation from producer organizations prior to planting, and many farmers switched back to rice or other crops last year, which reduced the paddy soybean acreage. In line with plans to cut stockpiles, we believe it would be best to further reduce the acreage as well."

This content was produced with the assistance of AI translation services.