International Egg and Poultry Review
By the USDA's Agricultural Marketing Service - This is a weekly report looking at international developments concerning the poultry industry, this week looking at South Korea.
South Korea
In the first part of the last century chicken meat consumption was slow
to grow in South Korea due in part to a relative lack of recipes using
chicken in the diet. As a result, because beef was in short supply and
expensive, pork became the leading meat. The introduction of fast
food and fried chicken franchises in 1980s and 1990s brought about
increased broiler consumption. On July 1, 1997 imports of poultry
were liberalized. Tariffs, the only formal barrier on poultry, were
gradually reduced until reaching 20 percent in 2004. Chilled poultry
meat was already free from quotas and has a lower tariff rate, 18
percent.
Poultry is produced intensively in South Korea primarily using imported
feed stuffs with production concentrated in the province surrounding
Seoul. Even though the broiler industry has not seen the wild swings
in price and production as other livestock industries have, there has
been a steady growth in flock size due to cost advantages. Broiler
production is now mostly on farms with 10,000 or more birds. Along
with the increase in flock size, slaughter weights have also increased.
All imported chicken meat is frozen meat (predominantly leg and wing
parts). Korea consumes imported chicken cuts in the food service
sector (e.g. seasoned chicken dishes, chicken nuggets, patties, etc.)
and in the processed food sector producing further processed products
for retail distribution. Domestic chicken is usually marketed as chilled
whole birds and cuts for the food service sectors (e.g. fried chicken)
and retail markets for home use. Chicken meat derived from layers is
mostly used as a raw ingredient in further processed products such
as sausages, hams, etc. According to the 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.
In late 2003 and 2004 South Korea’s livestock and poultry markets
went through some major changes. South Korea, a major United
States (U.S) beef importer, banned imports of beef in late 2003 due to
the discovery of BSE in the U.S. U.S. beef had accounted for almost
half of South Korea’s beef consumption and two thirds of South Korea’s
beef imports. South Korea than banned poultry imports from the U.S.
after the discovery of bird flu at chicken farm in Delaware and also
from 12 other countries due to confirmed bird flu out breaks. The ban
was partially lifted in October, 2004 when the Food Safety and
Inspection Service (FSIS) released requirements for the import of
cooked poultry. Technical discussions continue to reopen the market
to uncooked, mainly frozen, U.S. poultry meat. In 2003 U.S. poultry
meat exports (mainly leg quarters) to South Korea had grown 26%
and South Korea was the sixth largest market for U.S. broilers.
Meanwhile, South Korea had discovered in December, 2003 a nonlethal
strain of avian influenza. Between December, 2003 and March,
2004 outbreaks were confirmed at 19 farms or cases and nearly 5
million poultry were destroyed. In December, 2004 bird flu was
discovered for the first time in a duck hatchery and 9,000 ducks were
destroyed as a result. Poultry exports to Japan had been stopped due
to the bird flu out breaks and are expected to resume in March, 2005.
South Korea in 2004 was estimated to have total poultry stocks of 108
The slow economy, the discovery of mad cow disease in the U.S. and
outbreaks of avian flu in the U.S., South Korea and other parts of Asia
changed consumers’ purchasing patterns. The slow economy has
stagnated the growth of fast food restaurants. Consumers also
became increasing health conscious and than concerns developed
about BSE and bird flu which also negatively affected fast food
restaurants. Fast food restaurants had previously been credited with
increasing chicken consumption in South Korea. Meanwhile, demand
for pork, seafood and vegetarian items increased.
Due to concerns about bird flu chicken meat prices fell almost 40%
611 won ($.522) per kg but recovered to 1,669 won per kg due to tight
supplies as a result of mass poultry slaughter and import bans.
Predictions for 2004 were that chicken demand would fall 11.1% due
to bird flu concerns and beef around 10% due to mad cow. However,
as the year progressed the government and the poultry industry
conducted an educational and promotion campaign which resulted in
restored confidence in chicken meat consumption.
With Thailand, China and the U.S. out of the market, importers switched
to European poultry meat suppliers. The primary suppliers from
Europe were Denmark, France and the United Kingdom. However,
traders criticized the irregular quality and high prices of poultry meat
from Europe. On August 4, 2004, the Ministry of Agriculture and Forestry
(MAF) announced health requirements for importation of poultry meat
from Brazil. The new requirements mandate MAFF visit and designate
poultry plants that will be allowed to export poultry meat Korea. It is
expected 2-3 Brazilian plants will be approved for export to South
Korea and exports would begin in October or November, 2004 at the
earliest. It is anticipated the Brazilian meat will replace product from
China and Thailand since they supplied South Korea with well-trimmed
boneless-meat products. When U.S. exports resume to South Korea
it is expected they will reclaim the spot of preferred provider of bone-in
leg and wing parts. Of interest, South Korea recently approved the
import of 100 tons chicken and duck meat from North Korea to be
used by food processing companies before being sold for retail.
In 2005 it is expected the economy will slowly recover and the fear of
avian influenza will decline resulting in increased consumption of
poultry. Also of note is that an increasing number of sandwich shops
are serving turkey meat in turkey sandwiches, some expect more
restaurants to switch to processed egg products from shell egg
products in the near future and prepared processed food such as fully
cooked chicken meat is gradually improving as more restaurants
understand the benefit and quality of prepared products.
The South Korean government recently announced new packaging
and licensing policies as well as Expanded HACCP Guidelines.
Beginning in 2007 for slaughterhouses capable of processing more
than 80,000 birds and in 2008 for smaller processors (including street
markets and small meat shops). All uncooked poultry sold in South
Korea will have to be wrapped to prevent contamination by germs and
bacteria and labeled with point of origin to distinguish imported meat
from local produce. Antibiotics in feed will be strictly controlled and
traces of medicine in meat will incur fines and penalties on the
producer.
Sources: USDA/FAS, USDA/ERS, various new
To view the full report, including tables please click here
Source: USDA's Agricultural Marketing Service - 1st March 2005