March 29, 2021
South Korea's sow numbers fell to 1,010,000 head last December
A decline in wholesale pork prices following a May 2020 peak has caused South Korean farmers to voluntarily reduce their sow inventory in the second half of the year, according to the United States Department of Agriculture (USDA).
Sow numbers fell from 1,041,000 head in March 2020 to 1,010,000 in December 2020. However, the wholesale price plunged below production costs for small-scale farms in October 2020. The average production cost per head of swine was ₩3,698 (US$3.27) per kilogramme with wholesale prices valuing ₩3,335 (US$2.94) per kilogramme before recovering in November 2020.
2021 wholesale prices are expected to range between ₩4,200–4,300 (US$3.71-3.80). Although this figure is below the average production cost for farms raising under 1,000 head, these facilities account for around 15% of the swine operations in South Korea. Most farms are expected to turn a profit at the anticipated price point as well as increase herd size in 2021.
The pig crop per sow increased in 2020 due to environmental conditions and lower porcine disease outbreaks. Although African swine fever (ASF) continues to be detected in wild boars, South Korea had only two cases of ASF outbreaks in commercial farms last year. Depopulated farms along the country's northern military border have now begun to restock their operations.
Total hog inventory in December 2020 dropped to 11.08 million head, down from 11.37 million head in September 2020. The largest drop was in piglets under two months old, followed by hogs aged four to six months. This will cause the overall slaughter number to drop during the first half of 2021.
As pork wholesale prices are projected to increase due to low slaughter (₩4,200–4,300 per kilogramme, or US$3.71-3.80 per kilogramme), farmers will increase inventory during the second half of 2021. However, total pork production in 2021 is projected to drop due to low slaughter caused by the low hog inventory during the second half of 2020.
South Korea's sudden decline in pork consumption in 2020 was caused by COVID-19 restrictions affecting restaurants and schools, and over 70% of the country's total meat consumption venues suffered a drop in demand due to the pandemic. While pork demand for in-home dining has increased, overall pork consumption dropped in 2020. South Korea's pork consumption is expected to rebound modestly in 2021.
As imported pork is generally consumed more in restaurants than at home, increased home dining in 2020 has had a negative impact on imported pork consumption. As more consumers increased their pork consumption for home dining, domestic pork consumption increased 6.2% in 2020 over the 2019 level. Conversely, the consumption of imported pork dropped 14.6% during this period. As domestic production slows in 2021 due to lower slaughter, pork imports are projected to rebound in 2021 to offset the supply gap.
Pork imports that largely went for processing purposes soared in 2018, but somewhat stabilised in 2019. This trend continued into 2020 due to high inventory of domestic ham and the high inventory of pork in storage due to the lack of demand.
Some industry reports indicate that South Korea's warehouse inventory was used as a hedge by speculators in anticipation of an ASF outbreak in the country — an event that has not transpired.
In addition to the high inventory in picnic ham, import prices have begun to increase in 2020 as China resumed pork imports to meet its demand.
A September 2020 ASF outbreak in Germany, the second largest pork exporter to South Korea, had minimal repercussions in the country as most of these imports were for institutional and restaurant use, where the demand has dropped considerably due to the pandemic.