By Richard Smith
DTN Japan Correspondent
TOKYO (DTN) -- South Korea's imports of U.S. beef increased by 25.7% to 61,602 tons from January to May this year, compared to the same period last year, according to a report by the National Agriculture Cooperative Federation, better known as NongHyup.
Average June prices for hanwoo beef stood at 19,142 won ($16.89) per kilogram, an increase of 20.8% from the previous year. Hanwoo is a local breed that may be a hybrid of cattle and zebu. Hanwoo prices are about 2.5 times more than U.S. beef, according to The Korea Herald.
Industry insiders credit rising distribution costs and fewer hanwoo cattle with part of the soaring price tag. "The situation has worsened due to abolished tariffs, as a result of the Korea-U.S. free trade agreement, and the declining number of hanwoo cattle," NongHyup head Myung-Chul Hwang told The Korea Herald.
Korea Rural Economic Institute research associate Hyung-Woo Lee told DTN that just as there is a beef cycle in the U.S., there is also one in his country, and South Korea's hanwoo beef cycle is in a reduction phase. A number of factors have caused the breeding reduction, including reduced income for farmers and the South Korea-U.S. and South Korea-Australia free trade agreements, Lee said.
"Strictly speaking, the cause of declining number of hanwoo cattle had been the (government's) 2012-2013 artificial (cattle number) reduction policy," Lee said.
South Korea's cattle population had risen to 3,060,000 head in 2012 from 1,405,000 in 2001. With the increased number of cattle going to slaughter, beef prices went drastically down from 2011, Seung-Chul Choi, who teaches agribusiness management and agricultural product marketing at Konkuk University in Seoul, told DTN.
"For this reason, the government tried to decrease cattle numbers to balance supply and demand through the slaughter of 100,000 cows with government support," Choi said.
Many small cattle farmers quit because of declining profitability. Consequently, the cattle numbers started to decrease and hanwoo beef prices went up. Cattle and slaughter numbers are expected to not increase until 2017 and 2019, respectively. "Therefore, beef prices are expected to be high until 2019," Choi said.
Without much knowledge of the cattle cycle, the government encouraged cattle growers to cull female cattle through such programs as cow culling subsidization and abolishment of calf production stabilization funding, said Amos Hwang-Kyu Kim, managing director of AMS Food Consulting, a food trade and market consulting company.
Kim had previously been director of a South Korean trading company, handling the imports of beef and pork. Before that, he was South Korea representative for Canada Beef Inc., formally known as the Canadian Beef Export Federation.
Despite its plausible intention, the government should have encouraged cattle growers to increase the female cattle inventory, Kim said. "The end result is the serious shortage of domestic cattle for slaughter three to four years later," he said.
(GH/CZ\SK)
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