June 11, 2011


South Korea will double tax-free pork imports this year



South Korea, struggling to recover from its worst FMD outbreak, will double this year's tariff-free pork imports to 260,000 tonnes and sell 150,000 tonnes of rice at below market prices to limit price increases, it said Friday (Jun 10).


Like other Asian countries, South Korea, heavily dependent on commodities and energy imports, has been striving to contain inflation as global prices march to record highs.


Asia's fourth-largest economy also has been grappling with FMD since late last year, which led to a third of the country's hog population being culled to contain the disease and a jump in meat prices.


South Korea, saying the outbreak had been contained, lowered the country's alert level for FMD in April. The government had estimated that outbreak cost it nearly KRW3 trillion (US$2.78 billion). But even after that, a few cases of the disease were detected.


"The government will strengthen its measures to cope with (price) instability of rice, pork and mackerel," according to the ministry of strategy and finance, adding that an additional 130,000 tonnes of pork would be imported at a "quota tariff" in the second half of this year.


An agriculture ministry official said the quota tariff means a zero tariff, and this will bring South Korea's total pork imports at zero tariff this year to 260,000 tonnes from current 130,000 tonnes.

South Korea charges a 25% import tariff on frozen pork and 22.5% on chilled pork, he noted, adding that of the additional 130,000 tonnes, how much should be frozen and chilled pork was not specified.


South Korea last month expanded tariff-free pork imports by 20,000 tonnes to 130,000 tonnes through the end of June, while later saying that it was considering extending tariff-free pork imports beyond the end of the first half of this year.


Domestic retail prices of pork belly, a favourite meat cut of South Koreans, have risen 37% to KRW12,212 Korean (US$11.3) per 500 grammes as of Thursday from KRW8,902 (US$8.2) in January of this year, the agriculture ministry noted on Friday.


They added that the government will buy imported chilled pork belly from importers via tenders to supply to retailers until the pork price stabilise, while replacing pork with home-bred beef, of which prices are dropping recently, in the military cafeteria to help farmers.


South Korea's higher tariff-free pork import measure had helped buoy US pork futures on the Chicago Mercantile Exchange, which earlier this year rallied to record highs on expectation of more meat imports by South Korea on top of already active buying. The US is the biggest pork exporter to South Korea.


A US export source said on Wednesday that South Korea increased the pace of buying this week and talk of new pork export sales this week helped guide Chicago hog futures to a two-week high on Wednesday.


At the Chicago Mercantile Exchange, actively traded July hog futures was up US$0.01625, or 1.78%, at US$0.92975 per lb as of 0521 GMT.


To help stabilise rice prices, the Korean government plans to sell 150,000 tonnes produced in 2009 at 26,180 won per 40 kilogrammes, or a half-price level of those produced in 2010. Previously it had planned to sell only 50,000 tonnes at such price level.


South Korea's consumer price inflation has remained stubbornly above the top end of the central bank's 4% target, and although it eased marginally to 4.1% year on-year in May, core inflation jumped to 3.5% from 3.2% in the prior month.


The central bank hiked interest rates on Friday in a surprise move after standing pat last month.

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