Harim sees FTA as blessing not curse
Harim, a household name in the domestic chicken and pork industry, said it will rise to the challenge presented by the trade deal - due to take effect from Thursday - by operating a new pig farm next month to ramp up production of its pork products.
Furthermore, Harim Group Chairman Kim Hong-kuk said the trade pact will enhance rather than undermine the nation’s agricultural competitiveness, contrary to the belief shared by thousands of local farmers that it will “kill Korea’s farming industry.”
Harim, the nation’s No.1 processed and fresh food provider, has gained a reputation for its chicken products and claims 34 percent of the local market for packaged chickens at supermarkets.
Having grown from a small chicken farm into the top player in the local chicken industry, Harim already commands the respect of most of its rivals here. Now, its new challenge to the pork industry is grabbing considerable attention.
Kim said the Korean pig farming industry can compensate for its size disadvantage compared to the U.S. by running farms more efficiently to increase production and price competitiveness.
“The reason why people think the Korus FTA will pose a threat to the Korean pork industry is simple: We produce much less pork than the U.S. does,” Kim said.
The company said it has completed construction of a high-tech farm named Bongdong in Nonsan, South Chungcheong. The farm claims to be free of three things: odor, wastewater and pollution. A three-stage deodorization system keeps stale odors at bay, while a recycling system has been installed that can turn 40 tons of excrement into usable resources each day. The 20 billion won ($18 million) farm has 11 pigsties, which will house 3,600 pigs from next month.
Kim said the Bongdong farm is based on 20 years of his personal research efforts. Since the early 1990s, he has traveled to various countries to inspect and learn from their advanced farming industries, he said, citing the Netherlands and Denmark as rich sources of ideas for how to upgrade Korea’s cattle industry. He said he found two key ideas on which to base new solutions: productivity and environmental friendliness.
According to Kim’s calculations, a pig reared in Korea produces 15 offspring each year. However, in the U.S. and Europe, the corresponding numbers stand at 19 and 26, respectively.
He said that in light of such findings, it soon became apparent to him that the domestic pork industry stood little chance of being able to compete with products from the two vastly larger and more advanced markets when the FTAs with them take effect. The Korea-EU FTA was implemented last summer.
After the trade deal with the U.S. is activated next week, tariffs on frozen pork will be lifted from 2016, with those for refrigerated pork to be removed 10 years from now. The Korea Rural Economic Institute estimates that domestic pork production will drop 1.41 trillion won over the next 10 years due to the stepped-up competition from overseas.
“To overcome such worries, the Korean agricultural sector should be restructured,” Kim said, stating his belief that the economic feasibility of the industry has been neglected for years. “The local agricultural sector has been unbalanced by political considerations,” he added.
Harim has been preparing for the Korus FTA as it is confident it can remain competitive in the global food market. The company also acquired Allen Family Foods, an ailing U.S. food company that filed for bankruptcy last August. This was the first time a Korean food company has taken over one in the U.S.
“We believe it is crucial to make inroads into the U.S. market as it is the center of the global food market, and the chicken business accounts for a significant portion of the U.S. market,” an executive at the company said.
The U.S. company has been renamed Allen Harim Foods and is currently under the process of being normalized. Harim aims to get the company back on track around May by targeting Asian populations in the U.S. as its main customers while also exporting to Southeast Asian countries, it said.
By Kim Young-hoon, Song Su-hyun [firstname.lastname@example.org]
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