October 10, 2007

 

South Korean beef farmers casts for ways to stay competitive

 

 

South Korea's beef farmers, threatened by low-cost competition, are brewing herbal tonics for their animals and offering discounts to consumers in a bid to hold onto their share of the market.

 

The farmers are looking for ways to differentiate themselves from cheaper imports from the US and Australia, the International Herald Tribune reported. South Korea currently imports half its beef supplies.

 

South Korea, with 200,000 beef growers, has the most expensive beef in the world.

 

Last year, consumers in Seoul paid US$31 a pound on average for locally produced chuck beef, compared with US$21 in Japan and US$3.16 in the US, the newspaper, citing statistics from the US Meat Export Federation and the US Bureau of Labor Statistics reported.

 

Australian beef has been dominating the South Korean market after US beef was banned in 2003. US supplies have not yet made a full return despite months of negotiations between the two countries due to problematic shipments and intermittent bans when South Korean authorities discover banned materials like spinal columns and bone fragments. 

 

While Australian beef is cheaper than South Korean beef, US beef is 20 percent cheaper than Australian beef, making competition even tougher should US beef be allowed into the market.

 

Cheap imports will shrink Korea's US$3.2 billion in annual beef sales by 10 percent, estimates Song Joo Ho, an agricultural economist at the Korea Rural Economic Institute in Seoul, the paper reported. A 10-percent drop meant many farmers going out of business, he added.

 

The free-trade agreement awaiting approval in both countries would eliminate a 40-percent tariff, giving American beef even more power to grab marketshare.

 

Korean farmers cannot match foreign prices as they import almost all their feed, farmers said.

 

Besides going herbal, in one town, farmers have started bypassing distribution channels two years ago to offer half-priced beef.

 

Farmers are also shifting to emulate Japanese cattle farmers by going high-end.

 

Like the Wagyu breeds in Japan, Hanwoo produce more fat-marbling which would  keep cooked meat juicy, the paper reported.

 

South Korea currently restricts US imports to boneless cuts from animals 30 months or younger, citing concerns over mad-cow disease. US senators have threatened to block the FTA unless South Korea eases the restrictions.