South Korea's Chicken Production Expected to Increase

SOUTH KOREA - Chicken production in South Korea is increasing as producers compete for market share, according to a report from the USDA's Foreign Agricultural Service.
calendar icon 9 September 2015
clock icon 5 minute read

In Marketing Year (MY) 2016, chicken production is forecast to increase slightly by two per cent to 848,000 MT from 832,000 MT in MY 2015, due to higher parent stock and broiler inventories throughout MY 2015.

Expected substitute demand for imported chicken from the avian influenza-hit US caused the increase in parent stock inventory and chicken supply by Korean producers during the first six months of MY 2015. However, most of the import volume eventually shifted directly to Brazilian chicken, rather than to domestically-produced meat.

In addition, increased competition among existing and new chicken producers resulted in an 8.1 per cent increase of slaughtered chickens during the first six months of MY 2015.

Demand for chicken meat is expected to increase during the 2016 summer Olympic Games in August as Korean consumers tend to eat more fried chicken during international sporting events. This prediction fed into the projected increased production in 2016, as past events have shown this trend.

For example, in MY 2014, Korean chicken producers increased production to prepare for expected higher demand in relation to several international sporting events such as the winter Olympic Games in Russia, the Asian Games in Korea, and the World Cup event in Brazil. Korean importers also increased their import volume due to the same reasoning under a favourable exchange rate throughout MY 2014.

Although Korea has been hit by avian influenza this year, there has been little effect on the chicken industry as the depopulated flocks were mostly ducks. However, outbreaks of the disease in the UK earlier this year affected supplies of grandparent stock. Enough stock was eventually obtained through imports from France and resumption of trade with the UK after the outbreak had passed.

Camping improves chicken consumption

In MY 2015, chicken consumption is expected to increase to 915,000 MT, up 2.2 per cent from the previous marketing year due to recovered demand from the Sewol ferry accident in April 2014, and substitute demand for beef and pork as a result of increased consumer prices, and the expansion of outdoor camping as a popular activity.

In addition, the outbreak of MERS (Middle East Respiratory Syndrome corona virus) in May and June, MY 2015 saw increased demand for domestic chicken through online sales and the franchise chicken delivery sectors.

However, demand for imported chicken dropped due to the short term school break during the MERS outbreak to prevent the virus from spreading, which caused people to avoid places like public restaurants, shopping centers and discount stores.

Those consumers generally consume more imported chicken, which is relatively lower priced than domestic chicken. Most Koreans still prefer to consume a whole chicken rather than buying chicken cuts, such as chicken legs, wings and breasts. Only chicken breast is selling well for diet conscious young consumers.

Korea’s per capita meat consumption (beef, pork, and chicken) increased 2.9 Kg to 45.6 Kg in 2014 compared to the previous year. Recently, per capita meat consumption has increased gradually with the expansion of western dietary habits.

In 2014, per capita chicken consumption increased by 1.1 Kg to 12.6 Kg due to various chicken menus in franchise family restaurants and the popular “Chi Maek” (Chicken and Beer) meal available in pubs and enjoyed by many Koreans.

Brazil's exports to become more important

Chicken imports are projected in the report to increase slightly to 110,000 MT in MY 2015.

Brazil will be a dominant exporter to Korea, replacing banned US chicken imports since December 2014. US chickens amounted to 46 per cent of total imports and about 7 per cent of total supply in Korea before the avian influenza outbreak in MY 2014.

In MY 2015, total chicken imports are expected to decrease substantially by about 35,000 MT to 105,000 MT for the following reasons:

  1. Korea suspended US chicken imports since December 20, 2014 due to the outbreaks of avian flu;
  2. import prices went up due to an unfavorable exchange rate throughout 2015, which burdened Korean importers; and
  3. domestic chicken prices decreased due to stiff market competition.

Most imported chicken is frozen chicken cuts, such as jumbo whole chicken legs from the US, deboned chicken and whole chicken legs from Brazil, chicken wings from Denmark and breasts, etc. These are used in menus like fried chicken or chicken “Gangjeong” at restaurants and street vendors, who use relatively low-priced imported chicken rather than domestic fresh chicken.

In particular, US frozen jumbo whole legs are generally imported as bone-in legs and then deboned by Korean importers before further processing.

In MY 2016, Korea’s chicken exports are projected to increase to 25,000 MT from 24,000 MT in MY 2015 due to increased domestic chicken production and “Samgyetang (Chicken ginseng soup)” exports to the United States, which began in August 2014.

Further Reading

You can view the full report by clicking here.

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