Using funding from the USDA’s Market Access Program (MAP) and the pork chec...
Using funding from the USDA’s Market Access Program (MAP) and the pork checkoff, the U.S. Meat Export Federation (USMEF) held retail promotions from April 28-May 7 and began a second series of retail promotionsat 10 outlets of LG Mart and 10 outlets of Carrefour on May 28, which will run through June 6, 2004. Another round of promotions is planned for June 18-27. USMEF chose the largest South Korean retailers for the promotions which will focus attention on the fact that U.S.pork products— especially chilled bellies — areavailable in the market. Sampling and in-store decorations are carefully designed to encourage consumers to buy — and meat section managers to promote — U.S.chilled bellies.
Although only one BSE case — in a Canadian-born animal — was found in the U.S., the December 2003 find has significantly altered the dynamics of South Korea's meat market. Consumers have switched from beef to pork in considerable numbers. In Korea’s restaurant sector the high price of remaining U.S. beef stocks in Korea and the inconsistent domestic supply has stimulated local barbeque restaurants to add pork items or substitute pork (mainly bellies) for beef.
For the last few years, U.S.pork, especially retail cuts such as single ribbed bellies, were not price competitive in Korea due to higher domestichog production levels and the low price of European bellies. As the demand for pork has increased, the price at the farm and retail level has gone up. The retail price of domestic single ribbed bellies, for example, was W950-W1,100 per kg prior to December 2003; the current price range is W1,500- 1,900 per kg ($1.00 = 1,150 won). Live hog prices have also increased as inventories have slightly decreased. High farm gate prices for hogs have pushed pork processors to decrease the number of hogs slaughtered, since margins are narrowing. This production adjustment mechanism is one of the reasons that domestic pork prices remain relatively high. High domestic prices have increased U.S.pork price competitiveness. Based on current U.S. offer prices, and factoring in duties and other import charges, it is expected that U.S. chilled single ribbed belly prices at retail stores can be set around W1,200-1,300 per kg, or up to 20 percent lower than domestic bellies.
Historically, Korean end users utilize a very limited number of pork cuts (single ribbed belly and collar butt) for Korean barbeque. This dietary preference makes the Korean pork supply for these two items susceptible to cyclical dips in production and pricing. The absence of beef in the market is exacerbating the already tight supply situation. Since the Korean barbeque season is nearing, USMEF expects that supplies ofdomestic belly and butt will be limited through the summer.
More and more retailers are trying to source meat products that can fill the hole that the U.S.beef import ban has created. Leading retailers Carrefour, LG mart and Costco are now aggressively featuring U.S.pork in partnership with USMEF. USMEF estimates these Korean retailers will collectively import an average of three containers every month.
At the outset of the first promotion, U.S.pork was so successful that two Carrefour stores sold out ofthe U.S.pork chilled bellies duringthe event. Chilled single ribbed bellies were sold for the special price of 890 won per 100 g, priced to be competitive with domestic chilled bellies selling for 1,300-1,500 won per 100 g and frozen French product at 790 won per 100 g.
The promotion made retail managers, often interested only in immediate sales, more familiar with U.S.chilled pork products. It also reassured some of them who had experienced negativeconsumers’ response toward U.S.pork products. They often regard U.S.pork belly as a temporary item to fill up the gap caused bytheabsence of U.S.beef and have indicated to USMEF that U.S.chilled belly will not be competitive when the domestic pork price is stabilized. Consumers are not generally aware that pork is also imported.
The U.S. Meat Export Federation is the trade association responsible for developing international markets for the U.S.red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn, sorghum and soybean checkoff programs.
—USMEF—