April 9, 2013


Declining pork prices hurt South Korean farmers


Two years after being hit with nationwide FMD, South Korean hog producers are faced with another challenge, the plummeting pork prices where 6,040 hog farms have been struggling with.


Dongam Hog Farmer Association, comprising of five operations in Pocheon, Gyeonggi, raises about 35,000 animals, which is considered large for the region.

Despite its once booming business, farmers there say they now have to worry about the cost of waste disposal, a testament to the mounting financial strain on the industry.


"It costs KRW15,000 (US$13.4) to dispose of one tonne of waste, which is now burdensome. We have no choice now but to leave the waste inside," said one farmer who requested anonymity.


Jang Young-kyu, head of the Dongam association, said they lose KRW300-400 million (US$263,100-351,000) every month due to falling pork prices. Over the past six months, the association has accumulated KRW2 billion (US$1.8 million) of losses.


"The market value for a fully grown hog to a retailer is now KRW240,000 (US$210). It costs us KRW360,000 (US$316) to feed a hog to slaughter weight of 80 kilogrammes, or 176.3 pounds," said Young-kyu. "Selling each hog results in a KRW120,000 (US$105) loss."


The worsening financial situation is shared by other hog producers elsewhere in the country. More and more hog farms are destined to go bankrupt if the current market price continues," said Jung Dong-woo, director of the livestock management team at Hongseong County Office.


Hog farmers attribute the falling prices to increased US pork imports following the Korea-US free trade agreement. They also claim the government's decision to subsidise meat importers following the foot-and-mouth disease crisis to support the market, so the consumer price would not rise, has also contributed to the current situation.


Local government officials in charge of livestock management, however, said part of the responsibility lies in farmers themselves as they indiscriminately increased the number of livestock animals after the infectious viral disease came under control two years ago, when pork prices remained high.


The total number of hogs raised for consumption increased by over two million in little more than a year, from 7.78 million in September 2011 to 9.91 million last December.


In its demand for government measures to subsidise the struggling hog industry, the Korea Pork Producers Association began a sit-in protest in Yeouido, central Seoul, Monday (Apr 8). The association says in its statement released Monday that more than eight in 10 pig farms will go bankrupt if the current situation continues for the next three months.


"On average, each farmhouse in the country has lost KRW160 million (US$140,210) over the past year, while the whole industry has suffered KRW950 billion (US$833 million) in losses over the same period," claimed the association.


Experts say the government should be more active in purchasing the over-supply of hogs to achieve a supply-demand balance. Calls have also grown for the government to take action to fix the distorted market distribution process, as the retail sale price remains unchanged despite a steep drop in the wholesale price.


"While it is necessary to improve the current distribution process, a change in consumer patterns is also required. Consumers now only shop for a particular part of the animal, such as pork belly," said Ahn Sang-don, senior researcher at the Nonghyup Economic Research Institute.

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