Poultry and Products Annual 2012

An Expert's View about Agriculture and Animal Husbandry in South Korea

Posted on: 18 Sep 2012

Post forecasts broiler meat production will reach 740,000 tons in 2013, up 2 percent from 2012 production.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 9/4/2012 GAIN Report Number: KS1242 Korea - Republic of Poultry and Products Annual Annual Approved By: M. Kathryn Ting Prepared By: Sun Young Choi / Mark Myers Report Highlights: Post forecasts broiler meat production will reach 740,000 tons in 2013, up 2 percent from 2012 production. The reduced growth rate in 2013 compared to 2012 (6 percent) is largely attributed to an expected domestic feed price hike resulting from the current surge in world grain price and increased ending stocks resulting from an oversupply of domestic broiler meat production since 2010. Meanwhile, the import of frozen broiler meat is forecast to decrease to 110,000 tons, down 4 percent from the previous year at 115,000 tons due to an expected continued weakness of the Korean won and reduced broiler production in exporting countries like the United States and Brazil. Production: Broiler production is forecast to reach 740,000 tons in 2013, up 2 percent from the previous year. The reduced growth rate in 2013 compared to 2012 (6 percent) is largely attributed to the expected domestic feed price hike resulting from surging world grain prices from 2012 and an increased ending stock as a result of the oversupply of domestic broiler meat production since 2010. In 2012, broiler meat production is estimated at 726,000 tons, up 6 percent from year 2011 because of greater demand for fast food chicken delivery in Korea during the Olympic Games. The broiler inventories in June 2012 actually decreased to 97.7 million birds, down 11.2 percent from the previous year. However, inventories in July 2012 rose again to 126 million birds, up 5.2 percent from the previous year because of the expected demand during the Olympic Games in July and August. Korea: Broiler Inventories as of June (Unit: 1,000 birds) Year Farms Birds 2009 2,249 99,983 2010 2,238 101,690 2011 2,266 110,122 2012 2,058 97,750 Source: National Agriculture Quality Service, Ministry of Agriculture & Forestry In general, the Korean broiler industry prepares enough inventories in June for the peak season in July and August (the hottest period of summer – from mid July to mid August). The inventory of grand parental stock (GPS) has been increased as well since 2010 and it led a significant increase of PS inventories, chick production and broiler inventories accordingly. In 2012, many integrated broiler companies are increasing production capacity through renovation and establishment of new facilities, spurring the increase of domestic broiler production for the next couple of years. Frozen broiler meat stock increased since 2010 resulting from ample domestic production. The average grow-out period decreased from 32.2 days in 2011 to 31.8 days in 2012. Conversely, the average weight of the bird when marketed increased from 1.52kg in 2011 to 1.54kg in 2012. Consumption: In 2013, broiler meat consumption is forecast at 840,000 tons, up 3 percent from 2012 due to ample supply and competitive pricing compared to red meat products. With the growing number of franchise chicken chain stores over the past 4 to 5 years, the consumption pattern for chicken meat, which used to be most intensive during the hottest period in summer (7/20 - 8/20), is shifting to all year-round consumption. Broiler meat consumption in 2012 is expected to be 818,000 tons, up 3 percent from the previous year because of the increased demand in the fast food chicken delivery sector during the Olympic Games and many sunny days during July and August. Although the domestic consumption increased in 2012, the growth rate will be lower than the 7 percent growth in 2011 mainly due to the low demand as a result of the economic downturn throughout 2012, and the resumption of domestic pork production. The import of frozen broiler meat and the demand of broiler meat surged in 2011 in the wake of food and mouth disease (FMD) outbreak in December 2010 and the fear of seafood following the radioactivity crisis in Japan in spring 2011. However, there was no additional substitute demand following reports of the 4th case of BSE in the U.S. in April 2012. Korea: Per Capita Consumption of Livestock Products (Unit: Kilogram, boneless basis) Year Total Meat Beef Pork Chicken Egg 2010 38.7 8.8 19.2 10.7 11.8 2011 41.1 10.7 19.2 11.2 11.7 2012 1/ 42 11.4 19.3 11.3 12.1 1/ Preliminary forecast by the Korea Rural Economic Institute Source: Ministry of Agriculture & Forestry For the past 4 to 5 years, the chicken consumption pattern showed changes from a typical diet of soup and stew menus (ginseng chicken soup or spicy chicken stew) to various snack menus for school students. The “Chicken Gangjeong” is one example of a popular snack for students. The chicken gangjeong is deep fried and coated with sweet and spicy sauces and shaped bigger than chicken popcorn, which was popular several years ago. Price: Recently, the imported broiler meat sector is growing consistently as a result of various inexpensive menu options at restaurants. Although Korea has implemented country of origin labeling for chicken on menus since December 2008, many restaurants and delivery services are increasing demand for imported frozen broiler meat due to competitive prices. Domestic broiler prices are still about 3 times more expensive than imported. In 2012, farm, wholesale, and consumer prices for broiler meat were lower. Due to the oversupply of domestic broiler meat, the average farm price during January – June 2012 was 1,740 won/kg, 12 percent lower than the same period in 2011 (1,971 won/kg). The significant farm price decline in 2012 is attributed to the growing shares of imported chicken meat in the franchise chicken business and the increased production capacity of domestic broiler integrated companies. However, prices in 2013 are expected to increase marginally due to an expected increased domestic feed price resulting from increased world grain prices. Trade: In 2013, broiler meat imports are forecast to decrease marginally to 110,000 tons, about 4 percent down from 2012 due to an expected reduction in broiler production and higher prices in the United States and Brazil in the wake of increasing world grain prices. The United States and Brazil are the first and second largest chicken meat exporters to the Korean market. In 2011, Korea imported a record high of 130,950 tons; up 24 percent from 2010 (105,803 tons) in the wake of an FMD outbreak in December 2010 and the fear of seafood consumption resulted from the radioactivity crisis in Japan. Among the total import of 130,950 tons, 50,000 tons were imported with zero duty under the ROKG’s policy on consumer price stabilization measurement throughout 2011. In 2011, imported frozen broiler meat covered about 16.5 percent of 795,000 tons of total domestic consumption However, 2012 imports are estimated to decrease by 12 percent to 115,000 tons from the previous year due to increased import price and less favorable exchange rate. The average import price for frozen chicken leg quarter from the U.S. during January – June period increased from 1,488won/kg to 1,922won/kg, up 29 percent from the previous year. Additionally, the average exchange rate also increased by 39 won/USD during the same period. The frozen broiler meat imports during January – June 2012 period was down by 11.6 percent at 65,762 tons from the previous year (73,380 tons). Price Comparison (Unit: Korean Won per Kilogram) 4/ C Domestic Imports 2/ uts 1/ U.S. Brazil 3/ Denmark Leg 6,015 1,922 2,339 1,871 Wing 7,079 - 3,228 3,026 Breast 6,809 3,784 3,334 - 1/ Chilled products, average retail price for January 1 – June 30, 2012 period 2/ Average CIF prices for January 1 - June 30, 2012 period 3/ Frozen Trimmed bone-less products (Mostly) 4/ Average exchange rate (1$=1141.7 Korean won) for January – June 2012 period Source: Korea Chicken Council & Korea Customs Service The recent increase of frozen broiler meat imports for 2010 and 2011 were attributed to the growing number of chicken franchise chains since 2 to 3 years ago and the various chicken menu options for the young generation. Particularly, “chicken gangjeong”, which is deep fried and smaller pieces than regular fried chicken but bigger than chicken popcorn, coated with sweet and spicy sauce is very popular among school students since last year. Most of the “chicken gangjeong” stores mainly use imported frozen chicken meat to reduce the cost. Korea’s chicken exports in 2012 are forecast to increase to 18,000 tons helped by the increase of chicken ginseng soup exports to Japan, Hong Kong, and spent hen meat exports to Vietnam as a result of an increased natural replacement rate. However, the 2013 export volume is forecast to decrease slightly to 16,000 tons due to the normal ratio of replacement for spent hens. Tariff Phase-Out Schedule under KORUS FTA: Korea’s 20-percent tariff on imports in the dominant frozen leg quarter category will be phased out by 2021, while tariffs on frozen breasts and wings will be eliminated by 2023. The 18- percent tariff on frozen turkey cuts will be eliminated by 2018. HSK 10 Description Base Rate Current Rate 2013 2014 2015 0207141010 Frozen Chicken Legs 20% 18% 16% 14% 12% 0207141020 Frozen Chicken Breast 20% 18.3.% 16.6% 15% 13.3% 0207141030 Frozen Chicken Wing 20% 18.3% 16.6% 15% 13.3% 0207141090 Other Frozen Chicken 20% 18% 16% 14% 12% 0207271000 Frozen Turkey Cuts 18% 15.4% 12.8% 10.2% 7.7% Commodities: Poultry, Meat, Broiler Production, Supply and Demand Data Statistics: Poultry, Meat, Broiler Korea, Republic of 2011 2012 2013 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 Market Year Begin: Jan 2013 USDA Official New Post USDA Official New Post USDA Official New Post Inventory (Reference) 80 79 84 81 83 Slaughter (Reference) 750 760 780 798 814 Beginning Stocks 9 9 9 15 20 Production 686 685 706 726 740 Total Imports 131 131 115 115 110 Total Supply 826 825 830 856 870 Total Exports 15 15 15 18 16 Human Consumption 802 795 805 818 840 Other Use, Losses 0 0 0 0 0 Total Dom. Consumption 802 795 805 818 840 Total Use 817 810 820 836 856 Ending Stocks 9 15 10 20 14 Total Distribution 826 825 830 856 870 MIL HEAD, 1000 MT, PERCENT, PEOPLE, KG Countries that are currently allowed to export to Korea are as follows: Approved Suppliers Items United Kingdom, Australia, New Zealand, Denmark, France, Spain, Poultry birds (include pet Germany, Netherlands, Canada, Hungary, Poland, Sweden, or wild bird), hatching Philippines(only for pet bird), Japan(only for pet bird), and United States eggs, day old chicks United Kingdom, France, Chile, Denmark, Sweden, Australia, Brazil, Fresh, chilled, or frozen Netherlands, Hungary, Canada, Poland and United States poultry meat United Kingdom, France, Chile, Denmark, Sweden, Australia, Brazil, Heat-treated poultry meat United States, Thailand, Netherlands, Hungary, China, Poland and Canada Source: The Ministry for Food, Agriculture, Forestry and Fisheries (MIFAFF) Frozen Chicken Cut Imports by Country Country CY 2011 CY 2012 (January- June) Volume Value (US$1,000) Volume Value (US$1,000) (MT) (MT) U.S. 85,629 124,571 32,223 54,246 Brazil 15,046 47,099 20,886 54,456 Denmark 241 406 87 142 Chile 574 1,853 176 495 Hungary 100 81 0 0 Sub Total 101,590 174,010 53,372 109,339 U.S. 96 199 0 0 Brazil 3,817 10,884 282 798 Denmark 2,202 5,639 532 1,410 Hungary 211 475 140 284 Sub Total 6,326 17,197 954 2,492 U.S. 398 1,401 424 1,405 Brazil 6,041 18,450 3,135 9,154 Denmark 0 2 0 2 Sub Total 6,439 19,853 3,559 10,561 U.S. 86,123 126,171 32,647 55,651 Brazil 24,904 76,433 24,303 64,408 Denmark 2,443 6,047 619 1,554 Chile 574 1,853 176 495 Hungary 311 556 140 284 Total 114,355 211,060 57,885 122,392 Source: Korea Customs Service (KCS) Processed Chicken Imports by Country Country CY 2011 CY 2012 (January- June) Volume Value (US$1,000) Volume Value (US$1,000) (MT) (MT) China 3,255 10,593 1,186 4,257 Thailand 11,338 43,272 5,535 21,110 United States 213 1,008 1,001 475 Total 14,806 54,873 7,722 25,842 Source: Korea Customs Service (KCS) PRODUCTION AND CONSUMPTION Korea: Broiler Inventories 1/ (Unit: 1,000 birds) Year Farms Birds 2003 2,226 66,756 2004 2,237 68,526 2005 2,678 88,137 2006 2,016 84,279 2007 2,028 87,359 2008 1,807 77,853 2009 2,249 99,983 2010 2,238 101,690 2011 2,266 110,122 2012 2,058 97,750 1/ June Inventories Source: National Agriculture Quality Service, Ministry of Agriculture & Forestry Korea: Production Costs of Broilers 1/ (Korean Won per Kilogram in Live Weight) Year Operating Cost Production Cost Farm Price 2003 943 1,003 938 2004 1,026 1,085 1,415 2005 953 1,008 1,440 2006 954 1,001 1,195 2007 881 930 1,118 2008 1,049 1,097 1,567 2009 1,255 1,311 1,936 2010 1,292 1,342 1,913 2011 1,317 1,377 1,860 Source: National Agriculture Quality Service, Ministry of Agriculture & Forestry Korea: Production Cost of Broilers (Korean Won per Kilogram in Live Weight) CY 2010 CY 2011 Item Average Cost Component Ratio (%) Average Cost Component Ratio (%) Feed 796 62 830 63 Chicks 334 26 300 23 Family Labor 39 3 49 4 Vet & Medicine 28 2 32 2 Water, Power, etc. 31 2 55 4 Other 63 5 50 4 Total 1,291 100 1,316 100 By Product 1 - 1 - Cost Total 1,292 - 1,317 - Source: National Agriculture Quality Service, Ministry of Agriculture & Forestry Korea: Per Capita Consumption of Livestock Products (Unit: Kilogram, boneless basis) Year Total Meat Beef Pork Chicken Egg 2002 33.5 8.5 17.0 8.0 11.3 2003 33.4 8.1 17.4 7.9 10.5 2004 31.3 6.8 17.9 6.6 10.6 2005 31.7 6.7 17.4 7.6 10.8 2006 33.5 6.8 18.1 8.6 11.2 2007 35.7 7.6 19.2 8.9 11.3 2008 35.6 7.5 19.1 9.0 11.2 2009 36.8 8.1 19.1 9.6 11.9 2010 38.7 8.8 19.2 10.7 11.8 2011 41.1 10.7 19.2 11.2 11.7 2012 1/ 42 11.4 19.3 11.3 12.1 1/ Preliminary forecast by the Korea Rural Economic Institute Source: Ministry of Agriculture & Forestry PRICE TABLES Korea: Year Average Broiler Prices (Korean Won/Kg, boneless basis) Year 2008 2009 2010 2011 2012 1/ Farm Price 1,567 1,936 1,913 1,860 1,740 Wholesale Price 2,739 3,431 3,529 3,461 3,311 Consumer Price 4,259 5,335 5,708 6,048 5,669 1/ Average price, January through June 2012 Source: National Agricultural Cooperative Federation Korea: Farm Price for Chicken Meat C Chicken Meat, Farm Price ommodity Unit: Korean Won per Kilogram Year Mont 2010 2011 2012 % Change comparing to previous year h Jan. 2,305 1,874 1,466 -22 Feb. 2,213 2,128 1,759 -17 Mar. 2,355 2,414 2,223 -8 Apr. 2,167 2,478 1,759 -29 May 1,703 1,544 1,562 1 Jun. 1,933 1,389 1,668 20 Jul. 2,043 1,910 1,757 -8 Aug. 1,783 1,870 - 5 Sep. 1,637 1,645 - 0 Oct. 1,647 1,770 - 7 Nov. 1,608 1,685 - 5 Dec. 1,564 1,586 - 1 Source: National Agricultural Cooperative Federation (NACF) and Agricultural & Fishery Marketing Corporation Korea: Wholesale Price for Chicken Meat C Chicken Meat, Wholesale Price ommodity Unit: Korean Won per Kilogram Year Mont 2010 2011 2012 % Change comparing to previous year h Jan. 4,066 3,444 2,973 -14 Feb. 3,905 3,764 3,288 -13 Mar. 4,171 4,092 3,888 -5 Apr. 3,879 4,127 3,410 -17 May 3,260 3,268 3,124 -4 Jun. 3,610 3,061 3,185 4 Jul. 3,644 3,425 3,326 -3 Aug. 3,329 3,542 - 6 Sep. 3,144 3,229 - 3 Oct. 3,106 3,334 - 7 Nov. 3,144 3,225 - 3 Dec. 3,088 3,108 - 1 Source: National Agricultural Cooperative Federation (NACF) and Agricultural & Fishery Marketing Corporation Korea: Consumer Price for Chicken Meat C Chicken Meat, Consumer Price ommodity Unit: Korean Won per Kilogram Year Mont 2010 2011 2012 % Change comparing to previous year h Jan. 5,550 5,518 5,160 -6 Feb. 5,594 6,612 5,606 -15 Mar. 5,915 6,983 6,317 -10 Apr. 6,246 6,911 5,949 -14 May 5,984 6,004 5,480 -9 Jun. 5,811 5,242 5,502 5 Jul. 6,210 5,972 5,925 -1 Aug. 5,909 6,314 - 6 Sep. 5,681 5,890 - 4 Oct. 5,263 5,751 - 8 Nov. 5,080 6,046 - 16 Dec. 5,250 5,357 - 2 Source: National Agricultural Cooperative Federation and Agricultural & Fishery Marketing Corporation Korea: Monthly Average Foreign Exchange Rate (Unit: Korean Won / 1U$) Month 2010 2011 2012 Jan. 1138.82 1120.07 1145.85 Feb. 1157.08 1118.14 1123.35 Mar. 1137.64 1122.45 1125.90 Apr. 1117.11 1086.84 1135.55 May 1163.11 1083.54 1154.27 Jun. 1212.33 1081.27 1165.51 Jul. 1207.30 1059.50 - Aug. 1179.92 1073.17 - Sep. 1167.01 1118.61 - Oct. 1123.45 1155.45 - Nov. 1126.20 1132.31 - Dec. 1147.55 1147.45 - Source: Industrial Bank of Korea TRADE MATRIX Korea: Import Matrix for Chicken Meat 1/ Import Trade Matrix Country: Korea Commodity: Chicken Meat Unit: MT & U$1,000, RTC Basis Jan.-Jun. Jan.-Jun. 2011 Imports fo CY 2010 CY r 2011 2012 Country Vol Val Vol Val Vol Val Vol Val U.S. 54,745 69,539 86,395 127,318 49,958 67,876 32,784 56,168 Others Thailand 8,829 32,022 11,338 43,272 5,175 19,342 5,535 21,110 P.R.C. 4,246 14,170 3,255 10,593 1,985 6,481 1,186 4,257 Canada 0 0 0 0 0 0 0 0 Denmark 3,339 6,755 3,871 8,022 2,461 5,442 1,405 2,650 France 0 0 0 0 0 0 0 0 U.K. 0 0 0 0 0 0 0 0 Chile 176 478 574 1,853 134 450 176 495 Japan 26 28 0 0 11 12 0 0 Brazil 34,025 83,179 24,904 76,433 13,423 38,748 24,326 64,441 Australia 0 0 0 0 0 0 0 0 Other 417 493 613 999 234 493 350 428 Total for Other 51,058 137,125 44,555 141,172 23,423 70,968 32,978 93,381 s Grand Total 105,803 206,664 130,950 268,490 73,381 138,844 65,762 149,549 1/ HS 0207.1X.XXXX plus HS 1602.32.XXXX Source: Korea Customs Service Korea: Export Matrix for Chicken Meat 1/ Export Trade Matrix Country: Korea Commodity: Chicken Meat Unit: MT & U$1,000, RTC Basis Jan.-Jun. Jan.-Jun. 1 Imports fo CY 2010 CY 201r 2011 2012 Country Vol Val Vol Val Vol Val Vol Val U.S. 0 1 0 0 0 0 0 0 Others Hong Kong 946 1,445 290 729 130 340 717 1,487 Japan 1,350 6,920 2,272 12,237 857 4,392 1,144 6,046 P.R.C. 4 44 0 0 0 0 14 63 Taiwan 394 1,373 415 1,665 153 597 131 549 Thailand 1 3 25 7 0 0 0 0 Vietnam 13,261 16,714 12,254 18,356 5,239 7,816 7,988 11,520 Iraq 0 0 0 0 0 0 0 0 Turkey 0 0 0 0 0 0 0 0 Australia 13 61 31 115 11 58 7 42 Russia 0 0 0 0 0 0 0 0 Other 22 110 59 323 46 105 36 234 Total for Others 15,991 26,670 15,346 33,432 6,436 13,308 10,037 19,941 Grand Total 15,991 26,671 15,346 33,432 6,436 13,308 10,037 19,941 1/ HS 0207.1X.XXXX plus HS 1602.32.XXXX Source: Korea Customs Service
Posted: 18 September 2012

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