Korea Poultry and Products Annual Overview - August 2005

By the USDA, Foreign Agricultural Service - This article provides the poultry industry data from the USDA FAS Poultry and Products Annual 2005 report for Korea. A link to the full report is also provided. The full report includes all the tabular data which we have ommited from this article.

25 August 2005

9 minute read

Korea Poultry and Products Annual Overview - August 2005 - By the USDA, Foreign Agricultural Service - This article provides the poultry industry data from the USDA FAS Poultry and Products Annual 2005 report for Korea. A link to the full report is also provided. The full report includes all the tabular data which we have ommited from this article.

Report Highlights:

In 2006, broiler production is expected to increase slightly compared to 2005. Barring additional outbreaks of HPAI, imports in 2006 are forecast to increase 27 percent by volume to 70,000 metric tons. As prices continue to decline, it is expected that consumption will return to the level prior to the outbreaks of HPAI in the United States and Asian countries. Denmark is the main competitor for the United States in this market; however, competition from Brazil is expected in the near future as Brazil has recently entered the market.

Local Situation

In 2006, broiler production is expected to increase slightly compared to 2005. Record high farm gate prices for broilers and the low availability of imported chicken products during 2005 led to an increase in broiler chick production. Since June 2005, the resumption of U.S. chicken exports and over production of local broilers significantly reduced farm gate prices. Subsequently, there is a great deal of concern about the excessive local production of broilers.

Traders enthusiastically imported U.S. poultry as soon as the market re-opened and it now appears that there is an over supply. As a result, the prices that traders can receive for these products are relatively low. Traditionally, prices also drop in August after the peak summer consumption period. An increase in consumption is unlikely because the prices consumers are paying at retail and foodservice outlets have not been reduced. In addition, consumers perceive chicken as a snack food and, unlike red meat, poultry is considered an optional protein source.

When purchasing poultry, most consumers prefer smaller whole chickens, which are more suitable for Korean dishes. The Ministry of Agriculture & Forestry (MAF) introduced a voluntary HACCP Certification program to animal feed plants beginning January 1, 2005. This is to ensure sanitary conditions and the safety of livestock products by eliminating any potential hazard from entering into animal feed. As of July 2005, nine animal feed plants have completed and received HACCP certification.

In June 2005, MAF and the Ministry of Maritime Affairs and Fisheries (MOMAF) announced a plan to set up an agriculture, livestock, and fishery products safety information system. This project aims to make or improve 36 information systems starting from this year through 2009. In 2006, a food safety information portal service will be developed for consumers and producers providing easy access to food safety information. In 2009, a food safety alert system will be set up to minimize any damage caused by food safety related incidents. Through the above mentioned safety systems, consumers can find information about farms including a history of violations. This information will be available anywhere food products are purchased.

On July 22, 2005, MAF announced a proposed revision to the Livestock Products Processing Treatment Act. This proposal includes 1) extension of HACCP from the farm to the table (currently HACCP is mandatory for slaughter plants and voluntary for processing plants, livestock packing facilities, storages, and sellers), 2) the legal basis to require poultry meat sold in the market to be packaged (this will help consumers distinguish between domestic products and imported products), 3) an introduction of an appeal system for government rulings on inspections of livestock products including imported products, and 4) an introduction of risk assessments for livestock products. Once this proposed Act passes the National Assembly, details will be announced through decrees and ordinances. MAF aims to complete the revision process this year.

Consumer education and extensive promotional efforts by the Korean government and local poultry associations significantly reduced consumers’ concerns about the safety of chicken meat since the HPAI outbreaks.

Use of Antibiotics, Growth Hormones, Feed Additives, Etc.

Korea allows the use of veterinary drugs such as antibiotics and feed additives. However, on May 1, 2005, Korea begin enforcing a new requirement that reduced the number of feed additives permitted for use in mixed animal feed from 53 to 25 in order to improve the safety of livestock products. Veterinary drugs that are banned for use in Korea should not be detected in any meat products, including imported meat. The maximum residue levels (MRLs) of antibiotics and pesticides in poultry products are established by the Korea Food & Drug Administration (KFDA). Details can be found on KFDA’s website at www.kfda.go.kr. KFDA also provides an English translation of pesticide MRLs in poultry meat products on its English website.

Exports

After regaining HPAI-free country status, Korea now can export poultry products. However, the total export volume is not significant (around 736 MT in 2004 and 1,024 MT through June 2005). Japan lifted the import ban imposed on Korean poultry products due to the HPAI on March 24, 2005. It is expected that Korean poultry exports will slightly increase to Japan and to other Asian countries while exports from Thailand and China continue to be blocked due HPAI.

Imports & Competitors

Barring additional outbreaks of HPAI, imports in 2006 are forecast to increase 27 percent by volume to 70 thousand metric tons. As the price continues to decline, it is expected that consumption will return to the level prior to the outbreaks in the U.S. and Asia. The European Union is the main competitor for the United States in this market; however, it is likely that Brazil become a competitor in the Korean market in the near future. On April 2, 2005, Korea approved four Brazilian poultry plants eligible to export to Korean. According to traders, a few containers of Brazilian chicken wings and boneless meat arrived in Korea as a trial shipment in August 2005. This shipment is currently under quarantine inspection. If these products receive a positive response from the market, traders expect that Brazilian chicken meat will replace well trimmed boneless chicken meat imports from Thailand and China as both countries are not expected to return to the Korean market in the near future due to sporadic outbreaks of HPAI. Despite the entrance of Brazil, the United States is expected to remain a leading supplier of bone-in leg products.

Denmark is expected to continue to supply wing parts to Korean fried chicken restaurants because of its price competitiveness despite the fact that many importers switched to the United States as soon as they could due to irregular quality and the high prices of EU poultry meat. Imported chicken cuts will continue to be competitive with domestic chicken cuts because of high domestic production costs. Price comparisons and production cost tables are included in this report for additional detail.

Quality concerns raised by traders and end users regarding U.S. products are increasing. According to traders, the quality of U.S. products is not as good as it was prior to the outbreak of HPAI. Losses caused during the course of thawing have increased and the quality of U.S. thigh products does not seem to meet the Korean demand. If such problems continue, it could erode the image of quality of U.S. products.

Distribution

Almost all imported chicken meat is frozen meat (predominantly leg and wing parts). Korea consumes imported chicken cuts mainly in the food service sector (e.g. seasoned chicken dishes, chicken nuggets, seasoned wings, patties, etc.) and in the processed food sector producing further processed products for retail distribution. Local chicken is usually marketed as chilled whole birds and cuts for the food service sectors (e.g. fried chicken) and to retail markets for home use. Chicken meat derived from layers is mostly used as raw ingredients in further processed products such as sausages, hams, etc. According to the local poultry association, 20 million layers are used for further processed products annually. The domestic chicken industry also uses imported chicken cuts for further processed products taking advantage of the lower prices for imported product and constant supply compared to domestic cuts.

Sanitary and Phytosanitary Issues

As of April 14, 2005, Korea removed an import ban placed on U.S. chilled and frozen poultry products in place since February 24, 2004 after confirmation of an outbreak of HPAI in Texas. Prior to this, Korea lifted import bans on U.S. live poultry birds, pet birds, wild birds, ostriches, etc. on September 3, 2004. To date, all U.S. live poultry and poultry meat products (both chilled and frozen) are allowed for imports from 49 states. Due to a recent outbreak of Low Pathogenic Avian Influenza (LPAI) in the state of New York, beginning June 10, 2005, a temporary import suspension on poultry and poultry products (including articles such as meat, pet birds, eggs for consumption, etc.) is still in place. This suspension also affects products that have been transshipped through the state of New York, unless shipped in sealed and/or airtight containers.

Export Health Certification

All U.S. origin poultry products are required to be accompanied by an export health certificate issued by the Food Safety Inspection Service of the U.S. Department of Agriculture. For Korean exports, FSIS Form 9060-5 and 9305-2A shall be completed and submitted to the Korean authority for quarantine inspection. Details about the FSIS Export Health Certificate Form, etc. can be found on the USDA website at http://www.fsis.usda.gov/Frame/FrameRedirect.asp?main=http://www.fsis.usda.gov/OFO/ex port/KOREASO.htm). This website also provides guidance on other requirements for poultry product shipments destined to Korea.

The heat treatment requirements (heat treatment statement on the export health certificate) imposed on U.S. heat-treated poultry products after the outbreak of HPAI in the United States has been removed.

For U.S. live poultry, U.S. origin health certificates issued by the Animal Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture are required accompanied. For details, please contact Veterinary Service (VS) officers at APHIS regional offices stationed in each state.