Beef prices might drop 23 percent with imports

Korean consumers could enjoy beef as much as 23 percent cheaper when the import of U.S. beef, including that with bone, is allowed, according to a report by the Korea Rural Economic Institute.
Beef livestock farmers, however, would be seriously impacted by the price drop. Jeong Min-kuk is the author of the report.
Technical consultation between Korea and the United States on U.S. beef import inspection procedures and a decision by the World Organization for Animal Health on whether to classify the United States as a controlled mad cow disease area may result in almost unrestricted imports of U.S. beef. If that happens, the impact on the domestic beef market will be great, Mr. Jeong claimed.
The Agriculture Ministry is strengthening its inspections by replacing private contractors with government inspectors, but Mr. Jeong urged the Korean government to prepare other means since it will be impossible to block all U.S. beef.
Mr. Jeong anticipated four scenarios, depending on how fast the Korean beef market opens.
In the first, beef imports would recover to the level right before the government banned U.S. beef in 2003, or 300,000 tons. That is 70 percent more than last year’s total beef imports of 179,000 tons.
This would lead to a price drop, which would be beneficial for the consumers. But to the farmers it would have an opposite effect.
The problem, however, is not only the predicted increase in imports. Because of the ban on U.S. beef, domestic prices have remained high, and that caused farmers to raise more cows.
In 2003, 1.5 million cows were being raised, which increased to 2 million last year, a 37-percent rise. “With the increased imports, the increased number of cows will double the impact the market, causing beef prices to plummet,” said Mr. Jeong.
Quality could be a selling point, since “most U.S. beef imported to Korea is choice [second] class,” he said.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]