September 15, 2003


Australia Beef Exports to South Korea

Tight supply of Australian beef will limit potential for growth in exports to South Korea, according to marketing concern Meat & Livestock Australia Ltd.


The tight supply of beef reflects the ongoing impact of a savage drought in Australia that extended in many areas well into 2003, it said.


Beef production rose last year as producers sold beasts in the face of withering pastures, but production now is falling as producers retain beasts on properties to take advantage of rejuvenated pastures, curbing beef output.


The tight supply comes just as demand for beef in South Korea is set to improve, on the back of an expected recovery in private spending, it said in an update of the South Korean beef market.


Australia is a major global supplier of beef and South Korea is its third largest export market. In calendar 2002 Australian beef exports to South Korea totaled 80,153 metric tons valued at A$340 million.


South Korea imported 315,836 metric tons of beef valued at US$848 million in 2002, up 75% by volume and 74% by value from 2001, MLA said.


The U.S., the main source of South Korean beef imports, accounts for almost three-quarters of the total, it said.


A major reason for the strong market share of the U.S. is its production advantage for cuts that are in high demand in South Korea, particularly grainfed short ribs, which accounted for 50% of total imports last year, it said.


Australian beef exports to South Korea rose sharply in 2001 and 2002 following liberalization of South Korea's beef import regime.


But demand began to moderate in May in the face of South Korean economic slowdown, reportedly higher export offer prices and high inventory levels at South Korean importers and wholesalers, it said.


Australian exports in August of 4,102 tons were down almost a quarter from 5,249 tons in July and barely half the level of August 2002, official figures show.


In the eight months ended Aug. 31, Australian beef exports to South Korea of 43,471 tons were down 8.3% from 47,394 tons in the year-earlier period.


MLA said beef production in South Korea has been declining since the late 1990s with the national cattle herd down to 1.4 million beasts in June 2003 from 2.9 million in June 1997.


The decline in domestic production has led to tight supply and high prices, encouraging a shift to imported beef, which costs only between a third and a half of domestic product, it said.


At the same time, South Korean beef demand has grown steadily over the past 20 years, in parallel with economic growth. Total consumption rose to 402,700 tons in 2002 from a little over 100,000 tons n 1985.
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