Livestock and Products Annual

An Expert's View about Swine, Pigs in South Korea

Last updated: 27 Sep 2011

The Korean livestock industry is gradually recovering from the foot and mouth disease (FMD) outbreaks that wreaked havoc on the nation’s livestock industry from last November through March of this year, and created an acute shortage of pork in the Korean market.

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: 9/2/2011 GAIN Report Number: KS1135 Korea - Republic of Livestock and Products Annual Annual Approved By: M. Kathryn Ting Prepared By: Yong Keun Ban / Michael G. Francom Report Highlights: The Korean livestock industry is gradually recovering from the foot and mouth disease (FMD) outbreaks that wreaked havoc on the nation?s livestock industry from last November through March of this year, and created an acute shortage of pork in the Korean market. Beef production and consumption are both forecast to continue their upward climb in 2012. Beef imports during this period are forecast to hold relatively steady at 410,000 MT, with 150,000 MT coming from the United States. Pork production in 2012 is set to rapidly expand, but will still remain slightly below pre-FMD levels. Pork imports are accordingly expected to contract to 490,000 MT, with 170,000 MT coming from the United States. Imports of U.S. pork are projected to reach 200,000 MT in 2011, about double the 2010 level. Commodities: Animal Numbers, Cattle Production: Unlike the swine sector, Korea?s cattle industry was largely spared from the widespread culling due to the foot and mouth disease (FMD) outbreaks that wreaked havoc on the nation?s livestock industry from last November through March of this year. As seen in the table below, nearly 151,000 cattle or 4.5 percent of the country?s cattle inventory was depopulated. Animals Culled by Species as of March 23, 2011 C Number of Animal Culled Total number of Animals as of Dec. 1, Percentage of total herd ategory (Species) (Heads) 2010 (Heads) (Percent) Hanwoo 110,890 2,761,576 4.0 Holstein C 3,584 160,268 2.2 attle steer Dairy cow 36,397 429,547 8.5 Sub total 150,871 3,351,391 4.5 Swine 3,317,864 9,881,000 33.6 Goats 7,535 N/A N/A Deer 3,243 N/A N/A TOTAL 3,479,513 N/A N/A Source: Ministry for Food, Agriculture, Forestry & Fisheries Korea Statistics Administration Record cattle inventories posted over the last few years have started putting considerable downward pressure on live cattle and beef prices in recent months. Live Hanwoo steer prices have dropped more than 35 percent since November of last year just before the FMD outbreaks, whereas retail prices for domestic beef have dropped around 20 percent. See live cattle price series at end of cattle section for more detail. In light of the price situation, there are early signs that some farmers are beginning to slow the pace of production. According to a June survey of local cattle growers, 94.8 percent of cattle growers were planning to maintain on-farm inventories at current levels, whereas in December only 90.9 percent of farmers were planning to hold their herd sizes steady. In addition, 1.7 percent of growers said they were planning to cut production. Meanwhile, 3.5 percent of cattle growers signaled interest in expanding numbers, which is down from 9 percent last December. Cattle Industry Survey of Intention Mar., Jun., Sep., Dec., Mar., Jun., 2010 2010 2010 2010 2011 2011 Maintain the same 94.3 95.8 95.5 90.9 95.7 94.8 level Will increase herd size 5.2 3.9 4.1 8.7 4.3 3.5 Will reduce herd size 0.4 0.3 0.5 0.4 0.0 1.7 Source: KREI Rising grain prices have not had a noticeable impact on cattle production since cattle prices, though down from record highs, still remain relatively strong. Average compound feed prices during the month of July were 536 won/kg, up about 15 percent from the 2010 average of 468 won/kg. In addition, semen sales from Jan-Feb were almost zero because of FMD-related movement restrictions. This significant drop in sales during these two months will push 2011 production downward since very few calves will be born in November and December of this year. Taking these factors into consideration, the 2011 calf crop is expected to contract nearly 15 percent from the earlier official estimate of 1.1 million to 950 million. In 2012, production is expected to rebound to the 1 million mark. Hanwoo Semen Sales (Unit: 000 straws) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 2008 116 151 146 156 174 177 220 212 170 170 148 118 1,958 2009 119 140 138 162 177 216 238 270 207 185 143 135 2,130 2010 146 131 145 248 154 216 271 240 223 181 144 134 2,233 2011 5 0 308 216 529 Note: Semen sales jumped in March 2011 after FMD movement restrictions were lifted. Source: KREI Slaughter: The above-referenced cattle grower survey also reveals that there will not be a sudden rush to market animals in the near future. Based on these results and the number of animals sent to market during the first half of 2011, the slaughter estimate for 2011 has been lowered from 908,000 to 800,000 head. However, the number of cattle to be marketed in 2012 is forecast to climb to 900,000 for two interrelated reasons. First, there are a sizeable number of animals in the pipeline, which were born in 2010 when farmers were rushing to expand herd sizes that will be ready for slaughter. Second, record inventories will continue to exert downward pressure on live cattle prices, prompting some farmers to slaughter their animals early. In analyzing the slaughter data that follows below, it is evident that some farmers are looking at rebuilding their stocks. For example, the percentage of cows slaughtered during the first half this year was slightly less than 40 percent, compared to the average of 45 percent in 2010. Another factor behind farmers? decision to retain a higher percentage of cows is the government?s calf price stabilization program, which kicks in when calf prices drop under 1.65 million won per head. In June, female and male calves were selling slightly above this trigger. Meanwhile, many of the FMD-affected farms are waiting to restock until live cattle prices stabilize. In order to stabilize the sagging cattle market, the Ministry of Food, Agriculture, Forestry & Fisheries (MIFAFF) is encouraging farmers to reduce production and slaughter cows at an earlier age. Based on monthly slaughter data, farmers appear reluctant to market their animals earlier. Instead, they are asking for additional government compensation above and beyond the $3 billion that MIFAFF distributed during the FMD crisis. Monthly Cattle Slaughter Trend Year Month Cow Bull/steers Total Percent of Heads He Percent of Sub- Percent of ads total total total annual Jan 32,820 42.4 44,588 57.6 77,408 10.3 Feb 31,065 47.5 34,384 52.5 65,449 8.7 Mar 25,740 46.2 30,014 53.8 55,754 7.4 Apr 24,625 45.9 29,026 54.1 53,651 7.1 May 23,300 45.8 27,608 54.2 50,908 6.8 Jun 23,480 45.7 27,888 54.3 51,368 6.8 2010 Jul 25,553 48.7 26,920 51.3 52,473 7.0 Aug 30,698 45.1 37,305 54.9 68,003 9.0 Sep 41,003 47.1 45,977 52.9 86,980 11.6 Oct 26,598 46.4 30,765 53.6 57,363 7.6 Nov 29,018 44.2 36,686 55.8 65,704 8.7 Dec 27,332 40.6 39,977 59.4 67,309 8.9 Total 341,232 45.4 411,138 54.6 752,370 Jan 32,297 37.8 53,045 62.2 85,342 23.0 Feb 11,047 33.3 22,078 66.7 33,125 8.9 Mar 24,217 43.6 31,310 56.4 55,527 14.9 2011 Apr 24,752 41.4 35,090 58.6 59,842 16.1 May 26,947 40.0 40,349 60.0 67,296 18.1 Jun 28,691 40.8 41,617 59.2 70,308 18.9 Total 147,951 39.8 223,489 60.2 371,440 Stocks: In light of the anticipated trends in production and slaughter, cattle inventories are forecast to reach a record 3.45 million head in 2012. It will probably take two to three years before total inventories start coming down since farmers were busy trying to expand production through most of 2010 in order to capture record profits. In addition to the various market factors at play, implementation of a livestock licensing system in 2012 will put downward pressure on annual production and year-end inventories. Please refer to KS1128 for more details. Korea: Live Beef Cattle Prices (000 won/head) Month Hanwoo calf Hanwoo cow Hanwoo steer Female Male Jan., 2009 1,370 1,514 4,602 3,659 Feb., 2009 1,482 1,618 4,584 3,694 Mar., 2009 1,509 1,669 4,597 3,699 Apr., 2009 1,629 1,852 4,670 3,688 May, 2009 1,718 1,989 4,698 3,702 Jun., 2009 1,869 2,121 4,751 3,808 Jul., 2009 1,930 2,176 4,831 3,949 Aug., 2009 2,032 2,312 5,089 4,870 Sept., 2009 2,125 2,411 5,405 5,167 Oct., 2009 2,054 2,324 5,510 5,405 Nov., 2009 2,048 2,302 5,754 5,729 Dec., 2009 2,081 2,292 5,904 5,789 Jan., 2010 2,080 2,344 5,911 5,846 Feb., 2010 N/A N/A N/A N/A Mar., 2010 2,272 2,434 5,714 5,495 Apr., 2010 2,331 2,598 5,659 5,433 May, 2010 N/A N/A N/A N/A Jun., 2010 2,337 2,554 5,326 5,081 Jul., 2010 2,259 2,475 5,066 4,942 Aug., 2010 2,151 2,391 5,012 5,044 Sep., 2010 2,074 2,387 4,850 5,069 Oct., 2010 2,092 2,327 4,877 5,073 Nov., 2010 1,939 2,041 4,824 4,889 Dec., 2010 N/A N/A N/A N/A Jan., 2011 N/A N/A N/A N/A Feb., 2011 N/A N/A N/A N/A Mar., 2011 N/A N/A N/A N/A Apr., 2011 1,956 1,924 4.383 3,668 May, 2011 1,796 1,817 4,106 3,804 Jun., 2011 1,643 1,743 3,774 3,203 Source: National Agricultural Cooperative Federation, NACF (Exchange rate: US$1 = 1,077.7 won) Note: Markets were closed from Dec 2010~Mar 2011 due to the FMD outbreak. Production, Supply and Demand Data Statistics: 2010 2011 2012 Animal Numbers, Cattle Korea, Republic of Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Total Cattle Beg. Stks 3,079 3,079 3,278 3,278 3,356 Dairy Cows Beg. Stocks 304 304 278 278 295 Beef Cows Beg. Stocks 1,085 1,085 1,147 1,147 1,250 Production (Calf Crop) 1,026 1,026 1,100 950 1,000 Intra-EU Imports 0 0 0 0 0 Other Imports 0 0 1 10 1 Total Imports 0 0 1 10 1 Total Supply 4,105 4,105 4,379 4,238 4,357 Intra EU Exports 0 0 0 0 0 Other Exports 0 0 0 0 0 Total Exports 0 0 0 0 0 Cow Slaughter 342 342 400 350 405 Calf Slaughter 0 0 0 0 0 Other Slaughter 411 411 508 450 495 Total Slaughter 753 753 908 800 900 Loss 74 74 151 82 10 Ending Inventories 3,278 3,278 3,320 3,356 3,447 Total Distribution 4,105 4,105 4,379 4,238 4,357 CY Imp. from U.S. 0 0 0 0 0 CY. Exp. to U.S. 0 0 0 0 0 Commodities: Meat, Beef and Veal Production: The Korean government and local think tanks hold competing views on the outlook for beef production over the next couple years. GS&J, a local think-tank that closely tracks the domestic livestock industry, is predicting that the market will see a soft landing as live cattle and beef prices begin to stabilize as consumers eat more beef. Meanwhile, the Korean government is bracing against further price drops and is urging farmers to gradually begin reducing their herd sizes by slaughtering more cows. Post?s estimates are largely based on the idea that the market will experience a soft landing. Cattle prices are expected to continue their gradual downward descent, spurring increased production and consumption of domestic beef. As consumption begins to increase, cattle prices are in turn expected to stabilize. As noted in the cattle section, slaughter estimate for 2011 was cut since there was no mad dash to market animals in response to falling cattle prices. Domestic beef production is therefore lowered 36,000 MT, or 12 percent, to 262,000 MT. In 2012, beef production is set to increase to its highest point in more than a decade at 295,000 MT as 900,000 cattle are forecast to be slaughtered. This projection, however, is liable to change if the cattle prices plunge downward during the second half of 2011. Consumption: The daily press reports with disturbing footage during the FMD crisis initially caused some consumers to shy away from beef (and pork). However, thanks in large part to local producer groups? promotional activities, total beef consumption in 2011 is forecast to hold at 660,000 MT, an 8 percent year-over-year increase. The recent promotional activities, which are briefly described below, are aimed at stabilizing live cattle prices by generating more demand for local beef. For the last two months (Jun-Aug), the National Agricultural Cooperative Federation (NACF) has sold Hanwoo Bulgogi cuts, made-up of mostly Chuck roll, at a 50 percent discount. Meanwhile, the National Hanwoo Association sold Hanwoo beef at a 20 percent discount in July. In addition to these activities, the Korean government has announced plans to sell 30,000 Hanwoo carcasses at discounted prices later this year depending on the local market situation. The longer and heavier than usual rainy season had a bit of a dampening effect on beef (and pork) consumption. However, this downward impact will be offset by increased demand during the upcoming Chuseok holiday season (Sep 11-13, 2011) since there are few alternative traditional gift items from which to choose. Local fruit is in short supply because of the poor weather during the growing season and customers are wary of eating imported Japanese fishery products because of radiation fears. In consideration of the above-mentioned factors along with increased domestic production, beef consumption is forecast to grow from 660,000 MT in 2011 to 690,000 MT in 2012. Beyond 2012, consumption is expected to flatten as more domestic pork returns to the market. Retail prices (2009 ? 2011) Unit: Won per 500 gram Hanwoo beef Loin Australian Beef Loin Australian Beef Loin Domestic Month (Top grade) (Chilled) (Frozen) Pork Jan., 32,614 22,106 6,300 8,533 2009 Feb., 32,109 20,484 6,263 8,503 2009 Mar., 32,434 20,345 6,167 9,041 2009 Apr., 31,732 20,233 6,167 10,064 2009 May, 33,354 19,735 6,167 8,991 2009 Jun., 33,754 14,960 6,167 9,146 2009 Jul., 34,497 17,781 6,167 9,461 2009 Aug., 35,620 18,389 6,167 9,831 2009 Sept., 36,685 18,836 6,250 9,565 2009 Oct., 38,181 21,386 6,333 8,944 2009 Nov., 38,393 20,967 6,333 8,444 2009 Dec., 37,902 18,511 6,333 8,704 2009 Jan., 36,116 N/A 6,333 7,947 2010 Feb., 38,102 N/A 6,333 7,609 2010 Mar., 36,548 N/A 6,333 7,317 2010 Apr., 37,325 16,117 6,462 8,207 2010 May, 37,389 N/A 6,500 8,566 2010 Jun., 35,727 N/A 6,500 8,385 2010 Jul., 34,836 20,416 6,606 8,794 2010 Aug., 35,282 21,313 6,833 9,132 2010 Sept., 38,603 21,892 6,640 8,943 2010 Oct., 39,273 21,104 6,500 8,599 2010 Nov., 36,335 19,903 6,401 8,311 2010 Dec., 35,850 20,328 6,333 8,038 2010 Jan., 34,062 22,794 6,333 8,902 2011 Feb., 31,460 21,939 6,333 10,658 2011 Mar., 31,632 19,629 6.220 9,499 2011 Apr., 28,573 18,940 6,167 9,794 2011 May, 27,532 18,525 6,396 10,691 2011 Jun., 28,209 16,083 6,429 12,300 2011 Jul., 28,360 16,587 5,976 11,798 2011 Source: National Agricultural Cooperative Federation, NACF (Exchange rate: US$1 = 1,077.7 won) Retail Prices for Beef Short Ribs (2010 ? 2011) Unit: Won per 500 gram M Domestic Hanwoo (chilled) U.S. A. Australia onth #1 Grade #3 Grade Chilled Frozen Chilled Frozen Jan., 2010 36,881 19,210 N/A N/A 9,991 8,080 Feb., 2010 37,450 20,911 N/A N/A 10,993 8,488 Mar., 2010 37,450 21,030 N/A N/A 9,611 8,315 Apr., 2010 36,911 21,057 N/A N/A 9,032 8,849 May, 2010 36,032 21,230 N/A N/A 8,504 9,025 Jun., 2010 34,138 21,230 N/A N/A 8,647 8,828 Jul., 2010 34,819 21,230 13,455 9,617 8,321 8,414 Aug., 2010 34,337 21,230 13,762 9,814 7,834 8,779 Sept., 2010 35,027 21,462 12,979 9,699 10,654 8,614 Oct., 2010 35,000 21,630 12,724 9,500 9,982 8,500 Nov., 2010 35,000 21,630 13,863 9,500 9,193 8,500 Dec., 2010 35,000 21,143 13,674 9,500 8,711 8,210 Jan., 2011 34,475 20,830 13,281 9,500 10,424 8,167 Feb., 2011 33,547 20,830 13,803 9,500 12,386 8,167 Mar., 2011 31,336 21,130 13,431 10,455 10,770 8,053 Apr., 2011 28,811 21,430 13,388 10,500 9,002 8,167 May, 2011 23,439 20,295 13,150 9,818 8,739 7,834 Jun., 2011 23,212 18,333 14,352 9,234 9,108 7,667 Jul., 2011 23,566 18,333 14,515 8,412 8,819 7,238 Source: National Agricultural Cooperative Federation, NACF (Exchange rate: US$1 = 1,077.7 won) Trade: Beef imports surged during the first half of 2011 as traders anticipated a shortage of domestic pork resulting from the wide scale FMD-related culling and the rising consumer confidence in U.S. beef. Importers, however, have since slowed down making contracts for the remainder of 2011 as the market tries to absorb the influx of imported beef. The earlier prediction that imported beef would substitute the bulk of the domestic pork shortage turned out to be only partially true as poultry meat consumption took off. Beef imports are therefore forecast to hold steady at the previous estimate of 400,000 MT (CWE) in 2011. The U.S. beef import forecast is raised to 140,000 MT based on strong sales to date. U.S. beef is expected to account for 35 percent of total imports in 2011. Given the anticipated increase in domestic beef production in 2012, imports are forecast to rise slightly to 410,000 MT. Imports of U.S. beef are likewise forecast to grow marginally to 150,000 MT, representing 37 percent of total imports. In August 2011, a major television network carried a story about how imported U.S. beef was being mislabeled as Australian beef. Restaurant and butcher shop owners who were interviewed claimed that they were labeling U.S. beef as Australian, which is against the law, in order to sell the meat at a higher margin since Aussie beef was said to be more expensive. They also said they were putting on the wrong labels so as avoid scaring off any consumers who might still be reluctant to eat U.S. beef. However, the price argument is weak since many U.S. beef cuts are more expensive than the same Aussie cuts. For example, chilled U.S. beef short ribs, which are the most popular beef cut in Korea, were selling for around 29,000 won/kg at retail outlets in July, while the same Aussie cut was going for roughly 17,600 won/kg. Instead, the fear that some consumers will not purchase U.S. beef seems to be the main driver behind some proprietors? decision to mislabel the product as Australian. It should be noted here that this activity is mainly limited to the mom-and-pop style operations since the Korean government has a number of overlapping mechanisms to prevent this type of mislabeling from occurring. One of the most recently-implemented systems was the beef traceability system, which in the case of imports tracks the shipment from arrival to retail. More details on beef traceability are available in KS1033. On June 27, 2011, Korea announced that it had finished technical negotiations with Canada to resume imports of Canadian beef. The protocol is currently in the National Assembly and is pending deliberation. The first shipments could begin as early as December. Korea: Beef Imports ($000 and Metric Tons) Annual 2010 Jan-Jun, 2010 Jan-Jun, 2011 Country Value Volume Value Volume Value Volume Australia 571,648 138,524 256,433 65,002 368,136 72,645 United States 395,025 84,821 164,570 37,592 283,592 54,262 New Zealand 106,701 34,256 61,334 20,556 76,549 18,520 Mexico 7,364 3,574 2,661 1,520 5,976 2,163 Others 499 104 0 0 0 0 Total 1,081,237 261,279 484,998 124,670 734,253 147,590 Source: KITA Product Weight Equivalent basis Includes HS 0201 (fresh/chilled), HS 0202 (frozen), HS 021020 and 160250 (processed beef products) Production, Supply and Demand Data Statistics: Meat, Beef and Veal Korea, Republic 2010 2011 2012 of Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Slaughter (Reference) 753 753 908 800 900 Beginning Stocks 47 47 49 49 50 Production 247 247 298 262 295 Intra-EU Imports 0 0 0 0 0 Other Imports 366 366 400 400 410 Total Imports 366 366 400 400 410 Total Supply 660 660 747 711 755 Intra EU Exports 0 0 0 0 0 Other Exports 2 2 1 1 1 Total Exports 2 2 1 1 1 Human Dom. Consumption 609 609 660 660 690 Other Use, Losses 0 0 0 0 0 Total Dom. Consumption 609 609 660 660 690 Ending Stocks 49 49 86 50 64 Total Distribution 660 660 747 711 755 CY Imp. from U.S. 110 110 0 140 150 CY. Exp. to U.S. 0 0 0 0 0 Commodities: Animal Numbers, Swine Production: The swine and pork sector were hit the hardest by the FMD outbreaks with over 3.4 million pigs, or one-third of total inventories, culled. The industry is steadily rebuilding, encouraged by record high domestic pork prices. As seen from the following table, sow inventories have increased 61,000 in just three months, from Mar-Jun. At this same rate, the industry will be able to add another 120,000 sows by the end of 2011. An additional 31,000 sows could be added to this figure under the duty free tariff rate quota (TRQ). Number of sows and swine over 6 months of age (000 heads) Age Dec. 1, 2010 2/ Mar. 1, 2011 (A) June 1, 2011 (B) Increase Mar ?May (B) ? (A) 6-8 months 108 85 115 30 Over 8 months 911 688 724 36 Total Sows 1/ 976 732 793 61 1/ Females over 8 months. 2/ These Dec 1 numbers do not match the year-end PS&D figures. As explained in the cattle section, compound feed prices as of July are up roughly 15 percent from last year?s annual average. Higher-priced feed, however, has not discouraged farmers from re-building their herds since swine and pork prices are at record levels. Given the rapid increase in sow inventories, the 2011 production estimate has been raised to 12.1 million. The recovery is expected to carry on into 2012 with production estimated at 14.6 million, just slightly below pre-FMD levels. However, as explained in more detail below, production beyond 2012 will likely flatten because of disease management and livestock waste disposal requirements, as well as greater volumes of imported pork resulting from the EU-ROK FTA and the pending US-ROK FTA. Slaughter: Slaughter numbers for 2011 are adjusted upwards to 11 million in order to reflect increased piglet production. Likewise in 2012, increased production will result in more pigs going to market. Pig slaughter is forecast at 13.3 million in 2012, up more than 2 million from the previous year. Stocks: In 2012, swine farmers will continue to increase herd sizes. However, it is unlikely that total inventories will reach levels prior to the FMD outbreak for the following four reasons: 1. In the wake of the FMD crisis, the Korean government established minimum barn space requirements in order to prevent the rapid spread of livestock diseases. The minimum space for sows and porkers is 1.4 square meters and 0.8 square meters, respectively. For more details, please refer to KS1128. 2. After the FMD clean-up was finished, many regional governments imposed a minimum distance requirement for swine farms located in proximity to residential areas. Farms in operation prior to this law went into effect are exempt until they re-populate. Residents want these nearby farms to shut-down. 3. Disposal of livestock manure in the open sea will be prohibited starting in January 1, 2012. Farms without access to manure treatment facilities will be prohibited from raising livestock. 4. In the next two to three years as Korea rebuilds its swine herd, the EU-ROK FTA, which was implemented on July 1, 2011, and the pending US-ROK FTA are expected to put downward pressure on local production and inventories. Production, Supply and Demand Data Statistics: Animal Numbers, Swine Korea, Republic 2010 2011 2012 of Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Total Beginning Stocks 8,721 8,721 8,449 8,449 6,807 Sow Beginning Stocks 966 966 920 920 945 Production (Pig Crop) 14,923 14,923 11,127 12,127 14,600 Intra-EU Imports 0 0 0 0 0 Other Imports 2 2 12 31 5 Total Imports 2 2 12 31 5 Total Supply 23,646 23,646 19,588 20,607 21,412 Intra EU Exports 0 0 0 0 0 Other Exports 0 0 0 0 0 Total Exports 0 0 0 0 0 Sow Slaughter 0 0 0 0 0 Other Slaughter 14,629 14,629 10,000 11,000 13,302 Total Slaughter 14,629 14,629 10,000 11,000 13,302 Loss 568 568 2,800 2,800 510 Ending Inventories 8,449 8,449 6,788 6,807 7,600 Total Distribution 23,646 23,646 19,588 20,607 21,412 CY Imp. from U.S. 0 0 0 21 3 CY. Exp. to U.S. 0 0 0 0 0 Commodities: Meat, Swine Production: The 2011 pork production forecast has been revised upward to 835,000 MT to reflect the industry?s fast- paced recovery. Similarly, domestic pork production in 2012 is projected to increase to 1.0 million MT, which is just slightly below pre-FMD levels. The shortage of domestic pork has caused prices to skyrocket, breaking all past records. Average retail pork prices have jumped 40 percent since November with prices hovering 24,000 won/kg as of July. Meanwhile, average carcass prices have climbed more than 65 percent during this period with prices in July above 6,500 won/kg. According to the Korea Rural Economic Institute (KREI), a local agricultural think-tank, carcass prices will gradually start coming down after the summer picnic season, but will remain around 5,000~5,300 won/kg until the end of 2011. Although down, the predicted price level is still above historical averages, which will be an important factor in driving future domestic pork production. Swine Carcass Prices Carcass price 2009 2010 2011 Month Won per Kilogram January 4487 3859 6342 February 4225 3920 6372 March 5031 3989 6565 April 4955 4325 5786 May 4245 4272 7200 June 4531 4647 7675 July 4826 4663 6572 August 4967 4802 September 4475 4535 October 3672 3817 November 4021 3963 December 4128 4344 Source: NACF (Exchange rate: US$1 = 1,077.7 won) Consumption: As domestic production increases, pork consumption is forecast to recover slightly to 1.43 million MT in 2011. Consumption is expected to continue its upward advance in 2012 with consumption climbing to 1.55 million MT, which is on par with consumption levels prior to the FMD crisis. The current shortage in domestic pork, coupled with high pork prices, is pushing consumers to other meat proteins such as poultry, fish and imported red meats. The top alternatives were chicken (36 percent) followed by Hanwoo beef (17.9 percent), according to a KREI survey done in July. Consumers? preferred substitute for domestic pork Unit: Percent Survey Period Chicken Hanwoo beef Duck Imported beef Imported pork Eggs Fish May, 2011 21.3 11.0 15.5 10.0 10.2 16.3 15.7 July, 2011 36.0 17.9 16.0 15.1 11.9 3.1 N/A Source: KREI Note: KREI did not provide ?fish? as an alternative to domestic pork in its survey conducted in July 2011. KREI also conducts a regular survey to see where consumers are eating pork. Although more recent survey results are unavailable, the survey shows that 59 percent of pork consumption occurred at restaurants, which would be a mix of both domestic and imported pork. Home consumption, which is made-up of more than 70 percent domestic pork, is gradually trending downward in part because of the time consuming clean-up. This growing trend towards restaurant consumption will keep demand strong for imported pork. U.S. pork is set to account for 14 percent of consumption in 2011. In 2012, this percentage is forecast to slacken to 11 percent, but will still be above the pre-FMD level of 6 percent. In order to build market share, USMEF started to aggressively promote U.S. pork on a radio program that started August 1, 2011. However, it is still too early to tell how this outreach might boost U.S. pork sales and market share. Ratio of Pork Consumption at Home vs Restaurants Dining place Jan., 2009 Jan., 2010 Aug., 2010 Feb., 2011 Restaurants 56.5 57.0 58.3 59.0 Home 43.5 43.0 41.7 41.0 Source: KREI Trade: In attempts to curb rising pork prices, the Korean government has announced a number of special zero duty tariff-rate-quotas (TRQ) for selected pork imports for 2011. Most of the TRQ for processing cuts has been filled. However, the quota for chilled pork bellies is far from being filled since the trade reports that international supplies of this particular cut are limited. The following table provides a summary of all of the TRQ announcements to date. Duty Free Quota Announcements on Imported Pork Date Product HS Number Quota Must be Quota Cumulative imported by allocated quota Frozen pork bellies 0203.29.1000 10,000 10,000 Jan. Frozen pork for 28 0203.29.9000 50,000 60,000 processing Mar Jun. 30, 2011 . 7 Frozen pork bellies 0203.29.1000 50,000 a/ 110,000 May Other chilled pork 0203.19.0000 20,000 130,000 11 Jun. Pork 0203 130,000 260,000 Dec. 31, 2011 27 Aug. Chilled pork for 0203.19 unlimited Sep. 30, 2011 11 processing a/ The combined quota for frozen pork bellies was 60,000 MT from January to June. As domestic production picks up steam, pork imports during the second half of 2011 are projected to soften. The 2011 import estimate has accordingly been trimmed back to 580,000 MT. Imports of U.S. pork during this period are forecast to double from the previous year (2010), reaching 200,000 MT. In 2012, imports are expected to decline to 490,000 MT with imports of U.S. pork slipping to 170,000 MT. Korea: Pork Imports ($1000 and Metric Tons) Annual 2010 Jan. ? Jun., 2010 Jan. ? Jun., 2011 Country Value Volume Value Volume Value Volume $000 MT $000 MT $000 MT United States 172,198 77,335 90,737 43,054 263,622 87,316 Canada 94,102 54,715 51,025 29,711 111,605 43,967 Chile 111,477 43,443 55,636 21,618 55,515 20,403 Austria 45,961 14,394 23,698 7,427 44,616 12,935 France 46,518 14,007 24,393 7,546 35,518 10,525 Netherlands 44,663 13,382 21,799 6,451 74,632 10,889 Spain 32,422 18,557 16,223 9,352 34,896 15,193 Belgium 42,230 13,813 22,804 7,477 30,125 9,301 Denmark 20,197 11,452 10,037 5,161 31,033 12,086 Hungary 13,399 5,541 5,931 2,486 17,038 5,831 Poland 10,425 5,841 4,890 2,829 15,779 6,968 Mexico 18,947 8,145 10,482 4,632 14,818 4,732 Others 31,347 12,919 9,241 4,349 45,385 16,773 Total 683,886 293,544 346,896 152,093 774,582 256,919 Source: KITA Product Weight Equivalent basis Includes: HS 020311, 020312, 020319 (fresh/chilled), HS 020321, 020322, 020329 (frozen), 021011, 021012, 021019, 160241, 160242, and 160249 (processed pork products) Production, Supply and Demand Data Statistics: Meat, Swine Korea, Republic 2010 2011 2012 of Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2010 2011 2012 USDA Official New Post USDA Official New Post USDA Official New Post Slaughter (Reference) 14,629 14,629 10,000 11,000 13,302 Beginning Stocks 107 107 60 60 50 Production 1,110 1,110 760 835 1,010 Intra-EU Imports 0 0 0 0 0 Other Imports 382 382 600 580 490 Total Imports 382 382 600 580 490 Total Supply 1,599 1,599 1,420 1,475 1,550 Intra EU Exports 0 0 0 0 0 Other Exports 0 0 0 0 0 Total Exports 0 0 0 0 0 Human Dom. Consumption 1,539 1,539 1,370 1,425 1,500 Other Use, Losses 0 0 0 0 0 Total Dom. Consumption 1,539 1,539 1,370 1,425 1,500 Ending Stocks 60 60 50 50 50 Total Distribution 1,599 1,599 1,420 1,475 1,550 CY Imp. from U.S. 105 105 0 200 170 CY. Exp. to U.S. 0 0 0 0 0
Posted: 27 September 2011, last updated 27 September 2011

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