Korean cows sell for less, but beef prices remain unmooved

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Korean cows sell for less, but beef prices remain unmooved

Cows in a cattle farm in Anseong, Gyeonggi [YONHAP]

Cows in a cattle farm in Anseong, Gyeonggi [YONHAP]

 
As the price of cattle goes down, the livestock industry is struggling — but consumers are none the wiser, as the price of hanwoo, or Korean beef, remains unwaveringly expensive.
 
Sixty-five-year-old farmer Jung Yoon-seop raises 160 cattle in Gunsan, North Jeolla, and faces the irony of taking on more debt each time he sells a cow. Around 10 million won ($8,000) goes into raising each cow, which nowadays only sell for around 6 million won.
 
“Everything, even the price of fodders, has risen by 40 to 50 percent compared to two years ago, but the price of the cattle went down,” he said. “Currently, it’s a structure in which debts pile up despite the effort that goes into raising the animals.”
 
A cow weighing 600 kilograms (1,300 pounds) could be sold for 5.13 million won on average on Jan. 18, according to data from the Korea Institute for Animal Products Quality Evaluation.
 
On the same date in 2022, the average price was 6.61 million won, and in 2021, 7.09 million won, each a decrease of 22.4 percent and 26.7 percent compared to this year.
 
Production costs, however, shot up. The rise in expense derives from the rise in global grain prices due to the Russia-Ukraine war. The Cereal Price Index announced by the Food and Agriculture Organization of the United Nations hit a new record high with 154.7 points on average. In 2021, it was 131.2, and in 2020, 103.1. Farmers are also taking a hit from the rise in utility fees.
 
When Jung tallied up the total cost of raising just one cow for 30 months, it totaled over 10 million won, excluding the human labor costs. A calf six to seven months old was bought for 4.2 million won based on the price from two years ago. The calf needs to be raised for two years until it turns 30 months old in order to be sold, and the fodder price alone for that period is 4.97 million won per cattle. The remaining costs stems from utility bills such as electricity and water, pest control, medical expenses, farm machines and sawdust.
 
A person passes by a meat store in Seongdong District, eastern Seoul, on Thursday. [NEWS1]

A person passes by a meat store in Seongdong District, eastern Seoul, on Thursday. [NEWS1]

 
However, the downfall of cattle prices was already forecasted by experts, who warned of a long-term excess supply. There was total of 3.54 million livestock in the third quarter of last year. This is the first time that the cattle population surpassed 3.5 million since the Hanwoo Association begun compiling the data in 2014.
 
Consumer sentiment is also weakening due to the economic slowdown.
 
“Although the cattle population is larger, its supply is not large enough to have made the price fall this much,” said a spokesperson from the association. “There is a lack of demand as consumer prices still remain high. The government needs to step up and come up with a solution to stimulate demand and improve distribution channels.”
 
Consumers, on the other hand, are scratching their heads over the hardship of livestock farmers, because the market price of hanwoo has not gone down at all. The average price of Grade 1 quality tenderloin per 100 grams was 12,821 won on Jan. 18, which is a decrease of 1,057 won, or 7.6 percent, compared to the year before. Grade 1+ quality tenderloin, on the other hand, has become more expensive on year.
 
Analysts say the cause lies in the distribution system.
 
When a farmer sells cattle to the market, a wholesaler buys them, butchers them and then sells them to retailers. And although the price of cattle went down, the cost of butchering, labor and distribution went up 20 percent. Moreover, as many consumers want only specific parts of the cattle such as tenderloin or sirloin, it’s difficult to lower the meat price.
 
“Although we are adjusting the price of hanwoo by the week, it’s difficult to promptly change the price due to the meat supply we’d planned to acquire,” said a spokesperson from Lotte Mart.
 
“Consumers only want 4.4 percent of the entire cow we butcher — the meat such as tenderloin or sirloin, from which all the bones and intestines have been removed,” said an Emart spokesperson. “Retailers cannot feel the decline in the cattle prices due to the rise in other costs.”
 
“We — the Hanwoo Association, livestock farmers and experts — are frequently gathering to come up with a solution,” said a spokesperson from the Ministry of Agriculture, Food and Rural Affairs. “As the consumer prices do not reflect the wholesale price, we may offer huge discounts [on hanwoo] to promote consumption. We will also encourage meat exports.”

BY JEONG JIN-HO, BAEK IL-HYUN [lee.jaelim@joongang.co.kr]
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