Beef farms cope with oversupply

An employee at E-Mart in Yongsan, Seoul, arranges hanwoo beef (high-quality Korean beef) on Sunday. Cattle farms are struggling as beef prices fall while cattle feed costs go up. By Kang Jeong-hyun

Kwon Heon-jin, who raises 20 Korean cattle in Yeongju, North Gyeongsang, joined in a group feed purchasing program with fellow farmer at the beginning of this year.

The price of feed can drop 12 to 15 percent if a farmer goes in on a larger order with his neighbors.

Kwon, 50, has been in the livestock industry for a long time, but he took a break to run another business five years ago. He returned last year and was surprised at the changes he saw.

“In 2008, a 25-kilogram sack of feed was 6,800 won to 7,000 won, but this year it surged to 11,000 won,” said Kwon. In few years, the environment of the livestock industry completely changed,”

Cattle farmers across Korea are grumbling as the price of meat falls while the price of feed steadily rises.

According to Statistics Korea, the number of cattle being raised nationwide, 2.96 million as of March, surpasses the optimum number of 2.5 million.

As a result, the wholesale price of Korean beef fell 15 percent in a year to 11,990 won per kilogram.

The domestic cattle population peaked last September at 3.14, but the price continues to decline.

The cost of feed, the largest cost in cattle breeding, rose more than 10 percent in a year because international grain prices climbed.

An adult cow eats 150,000 won worth of feed monthly.

Farmers get the highest price for Korean beef when they butcher a 30-month-old steer or cow. That’s when the marbling of the meat is at its best.

However, when there’s an oversupply of cattle, farmers don’t get good prices and can sell at a loss.

Farmers are trying everything possible to reduce their production costs.

The Gyeongju branch of the Hanwoo Association has been operating its own plant for fermented feed ingredients since 2011.

It jumped into fermented feed production after establishing a corporation with investments from farmers.

Local farmers purchase the fermented feed ingredients and mix it with barley and corn.

“The feed cost can be reduced by 30 percent if the farmers use the fermented feed ingredients, mixing it with barley and corn at home,” said Jang Sang-gyu, the 52-year-old president of the association’s Gyeongju branch. “Although it requires more work, it counters the rising prices for feed.”

Farmers even make shipment appointments directly with slaughterhouses. The Yeongju branch of the Hanwoo Association is organizing transportation of cattle to slaughterhouses in Gimhae and Bukyeong, South Gyeongsang.

“We established a reservation system because when the number of cattle waiting to be slaughtered increases, small farmers can miss out,” said Song Moo-chan, 50, president of the Yeongju branch.

Large discount stores have also directly gone to local cattle farmers to sell their beef.

The Mujinjang Livestock Cooperative in North Jeolla opened a Jangsoo Hanwoo store at the nation’s largest discount store, E-Mart, involving 350 local farmers. The cooperative manages everything from castration to slaughter and supplies the beef to discount stores when the meat quality is at its highest.

Currently, E-Mart sells 10 local beef brands such as Sanggam Hanwoo from Sangju, North Gyeongsang and Hwangto Hanwoo from Hapcheon, South Gyeongsang at its 122 stores.

Lotte Mart is selling Korean beef from 11 regions under the brand Ansim Hanwoo.

“Although livestock farmers are making efforts by themselves, there is a limit to what they can do,” said a spokesman for the Hanwoo Association. “There should be long-term measures to maintain the optimum number of cattle in order to fundamentally solve the problem.”

Meanwhile, approximately 2,500 members of the Hanwoo Association held a rally calling for a restoration of good cattle price on Tuesday in front of the Eumseong Joint Market for Livestock Products in Samseong-myeon, Eumseong-gun, North Chungcheong.

The association said cattle prices have been plunging since two years ago, and the government and the National Agricultural Cooperative Federation (Nonghyup) must come up with measures to reduce feed prices and stabilize meat prices.

“Nonghyup ignores the needs of cattle farmers and is maintaining its vested interests by selling feed to the members of the association and the government watchdog is also completely ignoring the situation,” said a spokesperson for the Hanwoo Association.

BY PARK TAE-HEE, KiM JUNG-YOON [kjy@joongang.co.kr]