Korea’s Pork Producers Face Continued Market Uncertainty in 2008
South Korea
Korea’s Pork Producers Face Continued Market Uncertainty in 2008
2007 was a year of hurdles for South Korea’s 10,200 pork producers to overcome. The cost of feed, which accounts for over 45 percent of the total cost of raising a hog for market in Korea, climbed throughout the year, and producers are expecting further price increases in the first half of 2008. Disease outbreaks, especially the incidence of post-weaning multisystemic wasting syndrome (PWMS), increased in severity and economic impact in 2007. The full force of increased disease mortality rates, however, has been difficult to quantify because of the uncertainty surrounding the size of Korea’s hog herd. It is generally assumed that producers misstate inventory numbers for fiscal reasons, leading to estimates of the herd size ranging from the official 9.46 million head to 11 million head. High piglet prices have encouraged hog raisers to expand sow numbers, leading to what some experts view as overcrowded farms and deteriorating animal health conditions. Lagging productivity is proven by the continuous decline in Korean hog slaughter since 2003, although the demand for piglets is strong and total hog slaughter in 2007 is expected to be equal to or slightly above 2006. As of the second week of December, Korean market hog prices were W1,770/kilogram or $85.60/cwt.
Pork imports, which surged following the ban on U.S. beef imports in late 2003, look poised to set another record in 2007. Korea’s customs-cleared fresh/frozen pork imports totaling 285,497 tons for the first ten months of 2007 were up 12 percent from last year’s record pace. USMEF-Korea estimates that 2007 imports will reach 320,000 tons. U.S. imports, mostly of Boston butts and picnics, account for 26 percent of total trade, and the U.S. is now the largest pork supplier to Korea. Prior to the ban on U.S. beef, Korea’s pork imports mainly consisted of European single ribbed bellies, but the absence of U.S. beef has seen traditional Korean BBQ restaurants increasingly feature U.S. pork on menus. USMEF-Korea estimates that 70 percent of U.S. pork imports are utilized by the foodservice industry, 20 percent by the processing industry, and 10 percent sold by retailers. U.S. competitiveness has been further aided by its depreciating currency vis-à-vis the Euro. The Euro has appreciated 12 percent against the won since January.
After a slight decline last year, pork imports from Chile increased by 40 percent through October. Duties on Chilean pork are between 15 and 17 percent compared to 22.5 to 25 percent for U.S. exports. If implemented, the U.S.-Korea FTA would phase duties to zero on most U.S. pork products by 2014—the same year duties on Chilean pork will be eliminated through the already implemented Chile-Korea FTA.
USMEF is building on the competitive advantage of U.S. pork in Korea to continue growing market share and establish long-term purchasing loyalty. USMEF-Korea is finishing 2007 with a flurry of U.S. pork promotions including a U.S. pork barbecue festival at a popular ski resort, and an unprecedented U.S. pork cooking day for Korean housewife “power bloggers,” who are viewed as trendsetters among their online peers. These activities reinforce a positive image based on quality, consistency and value for U.S. pork among targeted consumers.
South Korea
Korea’s Pork Producers Face Continued Market Uncertainty in 2008
2007 was a year of hurdles for South Korea’s 10,200 pork producers to overcome. The cost of feed, which accounts for over 45 percent of the total cost of raising a hog for market in Korea, climbed throughout the year, and producers are expecting further price increases in the first half of 2008. Disease outbreaks, especially the incidence of post-weaning multisystemic wasting syndrome (PWMS), increased in severity and economic impact in 2007. The full force of increased disease mortality rates, however, has been difficult to quantify because of the uncertainty surrounding the size of Korea’s hog herd. It is generally assumed that producers misstate inventory numbers for fiscal reasons, leading to estimates of the herd size ranging from the official 9.46 million head to 11 million head. High piglet prices have encouraged hog raisers to expand sow numbers, leading to what some experts view as overcrowded farms and deteriorating animal health conditions. Lagging productivity is proven by the continuous decline in Korean hog slaughter since 2003, although the demand for piglets is strong and total hog slaughter in 2007 is expected to be equal to or slightly above 2006. As of the second week of December, Korean market hog prices were W1,770/kilogram or $85.60/cwt.
Pork imports, which surged following the ban on U.S. beef imports in late 2003, look poised to set another record in 2007. Korea’s customs-cleared fresh/frozen pork imports totaling 285,497 tons for the first ten months of 2007 were up 12 percent from last year’s record pace. USMEF-Korea estimates that 2007 imports will reach 320,000 tons. U.S. imports, mostly of Boston butts and picnics, account for 26 percent of total trade, and the U.S. is now the largest pork supplier to Korea. Prior to the ban on U.S. beef, Korea’s pork imports mainly consisted of European single ribbed bellies, but the absence of U.S. beef has seen traditional Korean BBQ restaurants increasingly feature U.S. pork on menus. USMEF-Korea estimates that 70 percent of U.S. pork imports are utilized by the foodservice industry, 20 percent by the processing industry, and 10 percent sold by retailers. U.S. competitiveness has been further aided by its depreciating currency vis-à-vis the Euro. The Euro has appreciated 12 percent against the won since January.
After a slight decline last year, pork imports from Chile increased by 40 percent through October. Duties on Chilean pork are between 15 and 17 percent compared to 22.5 to 25 percent for U.S. exports. If implemented, the U.S.-Korea FTA would phase duties to zero on most U.S. pork products by 2014—the same year duties on Chilean pork will be eliminated through the already implemented Chile-Korea FTA.
USMEF is building on the competitive advantage of U.S. pork in Korea to continue growing market share and establish long-term purchasing loyalty. USMEF-Korea is finishing 2007 with a flurry of U.S. pork promotions including a U.S. pork barbecue festival at a popular ski resort, and an unprecedented U.S. pork cooking day for Korean housewife “power bloggers,” who are viewed as trendsetters among their online peers. These activities reinforce a positive image based on quality, consistency and value for U.S. pork among targeted consumers.