FAS/Seoul Monitoring of Media Reporting on Agricultural Issues

Today's Date: Thursday July 31, 2014

For Coverage: July 15 ~ 31, 2014

1. GRAIN & OILSEED ISSUES

<7/21/2014>Rice industry development measures will include…  [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=234470&page=undefined                 

SUMMARY: The government announced on July 18^th that it will promote the four key tasks for development of the rice industry in order to enhance the structure of rice industry and to ease anxiety of farm households. This includes maintaining the fundamentals of stable rice production, stabilizing the farm household income, improving competitiveness and prohibiting illegal distribution.

◆ Maintaining the fundamentals of stable rice production= While the cultivation area of rice and rice consumption are decreasing continuously, the Ministry of Agriculture, Food and Rural Affairs (MAFRA) is focusing on the preservation of the outstanding farmland, investment on the infrastructure of production, promotion rice consumption and export and fostering a rice processing industry to prevent rice industry from shrinking.   

◆ Stabilizing the farm household income= The government will implement policies that will improve farm household incomes and self-sufficiency of rice. It is likely that it will increase direct payments for double cropping in the paddy field during winter.

◆ Improving competitiveness= The government plans to continue fostering the field management system to derive scaling and systemizing. It also reflected the demands of the farmer organizations by promoting studies to decrease rice production fee and to enhance the quality of domestic rice.

◆ Prohibiting illegal distribution and enforcing the capability of rice processing complex (RPC)= Similar to Taiwan, the government will consider implementing the policy that bans mixed rice and impose strict sanctions against illegal distribution. As for RPC, bargaining power will be strengthened through consolidation or alliance.

The government decided to announce rice industry development measures in September to gather more opinions from the agriculture-related groups and to secure the budget.

(News Focus) Tariff rate becomes key to South Korea's rice market opening [English, CSY]

http://english.yonhapnews.co.kr/national/2014/07/18/73/0302000000AEN20140718002100320F.html

Summary: With its decision Friday to open the rice market after 20 years of postponement, South Korea now has to wrestle with tariff rates that will determine how it can protect the nation's farmers already threatened by cheaper food imports under a slew of free trade agreements.   Friday's decision follows years of controversy over the pros and cons of opening up a market that for Koreans is synonymous with food and psychological security.   The National Federation of Farmers' Association, the most left-leaning farmers' group, strongly criticized the government's decision to open the market, calling it the result of a "lazy trade policy" and demanding negotiations on behalf of farmers' interests.

The Korean Advanced Farmers Federation (KAFF) said further postponement of market opening in exchange for additional minimum market access (MMA) volume would have a "very negative impact" on the local rice market.  Instead, the KAFF said the government should exclude rice from all FTA negotiations in the future and not renegotiate the rice sector in trade deals already in effect. It also demanded financial assistance to keep farmers' income stable and regulations to block illegal distribution of imported rice.

The agriculture ministry claims it can set the tariff at as high as 400 percent, while institutes and scholars propose a rate ranging from 300 percent to 700 percent.  Experts also say the government should adopt a special safeguard, which would give South Korea the authority to impose contingency restrictions on imports in special circumstances.  Some worry that even after the tariff rates are set with the WTO, the import tariff could go lower in South Korea's bilateral trade agreements with individual countries, a claim the government strongly denies.

Gov't to announce liberalization of rice market [English, CSY]

http://english.yonhapnews.co.kr/full/2014/07/17/18/1200000000AEN20140717008600320F.html

Summary: The South Korean government will announce Friday its decision to open the local rice market to imports subject to tariffs, officials said.  The announcement will be made following an economic ministers' meeting, according to officials from the Ministry of Agriculture, Food and Rural Affairs on Thursday.

The scheduled expiration of the exemption at the end of this year had left the country with only two options -- either open its rice market or seek another waiver.  Agriculture Minister Lee Dong-phil has repeatedly said the second option would be far more damaging to the country's farmers as it would entail a further increase in the country's mandatory rice import quota. 

Farmers, however, have strongly opposed trade liberalization, claiming the local market will be swamped by cheap imports.  The government claims it can effectively protect the local market by setting high tariffs, arguing that a country is generally allowed to set its own rates, subject to WTO approval.   The government has said tariffs of about 400 percent will make rice imports more expensive than locally produced grains.

S. Korea to finalize stance on rice market opening next week: lawmaker [English, BSY]

http://www.globalpost.com/dispatch/news/yonhap-news-agency

SUMMARY: Joo Ho-young, chief policymaker of the ruling Saenuri Party, said that “the government will decide its final position on rice market opening during an external economic policy coordination meeting on July 25^th. It will be a decision between a temporary waiver and rice tariffication.” The issue has polarized the country with some farmer organizations showing strong opposition toward the market opening, saying that an influx of low-priced foreign rice will seriously damage the domestic rice industry. The government appears to be leaning toward tariffication, since increase in MMA quota will cause an oversupply and may force the local farmers to reduce production.

Farmer organizations request for countermeasures before rice tariffication [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=240002&subMenu=articletotal

SUMMARY: While Korea Peasants League (KPL) still shows opposition toward tariffication, Korea Advanced Farmers Federation (KAFF) and Korea Rice Pro-Farmer Federation (KRPF) say that they will accept rice market opening only if the government implements the measures to protect local rice industry.

*Measures to prevent the influx of foreign rice: Farmer organizations stated four-point demands that are directly linked to tariffication. First, high tariff rate must be set to prevent the imports of foreign rice outside the MMA quota. Second, the government must promise to exclude rice from the negotiation tables for all FTAs and TPP. The government must also be able to utilize imported rice in various ways. Since 1995, Korea used imported rice only for table rice and processing.  If imported rice can be used for animal feeds or overseas economic aid just like Japan did, it will be easier to control demand and supply of rice. Finally, the government must adopt Special Agricultural Safeguard (SSG), a provision in the Uruguay Round Agreement on Agriculture that allows Member countries to impose additional tariffs on agricultural products if their import volume exceeds defined trigger levels.

*Measures for competitiveness: While KAFF focuses on the maintenance of rice industry, KRPF emphasizes the stability of rural household incomes. KAFF suggests that the government must ¨increase the Direct Payment for double cropping in the paddy field from 400,000won/ha to 1,000,000won/ha, ¨lower the interest rate of agricultural policy funds from 3 percent to 1 percent, ¨prohibit the distribution of mixed rice for imported and domestic rice, ¨lower the electric charges of rice processing complex, ¨reduce the interest rate of funds for rice purchase and¨boost the rice consumption. KRPF further requested for ¨application of rice check-off system, ¨increase in agricultural inheritance deduction limit and ¨reinforcement of rice grade indication system

2. LIVESTOCK ISSUES

Pork prices bound to decline…28 percent decrease in October [Korean, BSY]

http://www.ajunews.com/view/20140801075414965                                                                              

SUMMARY: According to the Korea Rural Economic Institute (KREI), the average wholesale price in July was equivalent to 5,262 won, 8.8 percent lower than 5,771 won in June. It is expected that the wholesale price per 1 kg in August will be at the level of 4,600-4,800 won.  This is partly due to the outbreak of foot-and-mouth disease and early Chuseok when pork consumption decreases. The prices will continue to go down in September to the level of 4,200-4,400 and to the level of 3,800-4,000 won in October. Compared to last month’s average price, the average price in October may be reduced by 27.78 percent as pork is usually shipped in October. In November and December, however, the price will rise to the level of 4,200 won.

S. Korea to begin shipping ginseng chicken soup to U.S. after 10-year effort [English, BSY]

http://english.yonhapnews.co.kr/search1/2603000000.html?cid=AEN20140731003300320         

SUMMARY: South Korea will begin exporting its traditional ginseng chicken soup called samgyetang to the United States from next month after 10 years of efforts to enter one of the world’s biggest poultry exporting market. According to a local food company, Harim, the first shipment of samgyetang to the U.S. will depart the country’s southern Busan port early next month. The shipment will contain two types of ready-made products –frozen and air-sealed packages – that can both be easily prepared by heating or boiling. The products will be available in the U.S. market from as early as August 15, first through Korean grocery stores.

Outbreak of Foot-and-mouth disease decreases pork belly prices while increasing Hanwoo prices [Korean, BSY]

http://news.heraldcorp.com/view.php?ud=20140730000078&md=20140730113524_BK               

SUMMARY: While Hanwoo prices are rising due to upcoming Chuseok, pork belly prices are showing a downfall after the outbreak of foot-and-mouth disease and subsequent consumption reduction. According to the Korea Agro-Fisheries & Food Trade Corporation (at) and distribution companies, the average wholesale price of top-grade Hanwoo (per 100g) rose by at least 17 percent from the last year’s price.  Hanwoo Bulgogi increased by 17.34 percent (508 won) from 2,930 won in 2013 to 3,438 won this year. Similarly, Hanwoo rib eye rose by 8.82 percent (520 won) from 5,894 won to 6,414 won, and Hanwoo short rib increased by 6.78 percent (279 won) to 4,393 won. It is expected that Hanwoo prices will remain high as unlike poultry products and pork that suffer from additional outbreak of Highly Pathogenic Avian Influenza and Foot-and-mouth disease, Hanwoo is considered safe.

No support fund if one uses farm subsidies unfairly for three times [Korean, BSY]

http://news.heraldcorp.com/view.php?ud=20140730000021&md=20140731003919_BK                  

SUMMARY: The Ministry of Agriculture, Food and Rural Affairs (MAFRA) announced yesterday its plan to reform the system for farm subsidies to enhance the effectiveness and gain trust as more financial support is necessary due to rice tariffication and Korea-China FTA. If one uses farm subsidies unfairly for at least three times, they will be permanently eliminated from the support fund receiver list beginning from next year. Also, integrated information management system will be established to prevent embezzlement and illegal activities regarding farm subsidies. From upcoming September, the list of farm household that took advantage of farm subsidies inappropriately will be registered to the integrated information management system.

Foot-and-mouth disease returns to Gyeongsang [English, BSY]

http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=2992533

SUMMARY: The Ministry of Agriculture, Food and Rural Affairs (MAFRA) said on July 24^th that quarantine officials confirmed that a total of 600 pigs were infected by the highly contagious foot-and-mouth disease (FMD) at a farm in Uiseong County, North Gyeongsang. All infected animals were culled immediately. To prevent the disease from spreading, areas in a 15-kilometer (nine-mile) radius of the farm are under strict quarantine, and vehicles up to 10-kilmeters away from the farm should be sprayed with disinfectant. The MAFRA said that the possibility of the virus spreading is low since the virus found on 24^th was Type O, which the government has obtained vaccines against.

Pork prices ceased rising due to decrease in consumption [Korean, BSY]

http://www.fnnews.com/view?ra=Sent1001m_View&corp=fnnews&arcid=                                          

SUMMARY: According to the Korea Institute for Animal Products Quality Evaluation (KAPE), pork prices are decreasing slowly since July 17^th. On July 17^th, the average price of pig carcass was at the level of 5,000 won, reducing to 4,638 won by 22^nd. The Lotte-mart employee said “the holiday season in July is when the consumer demand for pork belly is the highest, but consumers are not buying pork belly due to skyrocketed prices. Instead, consumers tend to prefer imported pork belly or beef that are relatively cheaper.” The supply and demand after the recent outbreak of Porcine Epidemic Diarrhea (PED) are expected to determine the future prices of pork.

Avian flu confirmed at South Jeolla duck farm [English, BSY]

http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=2992621

SUMMARY: The South Jeolla Livestock Sanitation Office said yesterday that a highly pathogenic strain of bird flu, H5N8, was discovered Friday at a duck farm in Hampyeong in the southwestern province. Upon official confirmation, approximately 42,000 ducks at the farm were immediately culled. An additional 2,000 chickens at the poultry farms located within a 500-meter (0.3 mile) radius were also culled to prevent the virus from spreading. All farms within 10 kilometers of the infected farm were also banned from transporting their animals to outside regions for the next 30 days. The restriction is expected to be lifted just before the holidays at the earliest if no further virus cases are confirmed over a month.

<7/18/2014>Korea Pork Producers Association, “Porcine Epidemic Diarrhea vaccine is of no effect” [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=234406&subMenu=articletotal          

SUMMARY: At the ‘the second disease prevention committee’ held at Korea Pork Producers Association (KPPA), participants came to a consensus that the new swine vaccine does not help cure Porcine Epidemic Diarrhea (PED) virus.  According to the vaccine evaluation conducted by Animal and Plant Quarantine Agency together with KPPA · Korean Association of Swine Veterinarians · Optipharm Corporation, the survival rate of PED virus-infected pigs reached 80 percent after vaccination, but the pigs still had diarrhea. Thus, even if pigs survive the virus, the swine farms cull these pigs as one day of diarrhea means five-day delay of shipment. This shows that the vaccine is of no effect, and the only practical measure against the virus is ‘preventive disinfection.’

3. MARKETING ISSUES

Gov’t Audit Finds 3,753 Farms Violating Organic Standards … Organic Certification will be Canceled [Korean, OSY]

http://news.donga.com/3/all/20140730/65499550/1

Summary: National Agricultural Quality Service (NAQS) under the Korea Ministry of Agriculture reported that its audit in May found violations in 3,753 farms against the National Organic Certification Standards.  The number of farms in violations accounted for 3 percent of total farms that were certified for producing organic agricultural products.  95 percent of the violations was for use of agricultural chemicals.  Korean government has tightened audits on the local organic farms, which has resulted in a sharp decline in the total number of organic farms.  The total number of organic farms in July this year was 105,734, 17 percent drop from 126,746 at the end of December 2013.

92% of Koreans Live in Urban Areas [Korean, OSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=102&oid=001&aid=0007024584

Summary: According to a recent report by the Korean government, 92 percent of Koreans were living in urban areas at the end of 2013.  Urban areas accounted for 17 percent of total land in Korea.  Farm lands for agricultural production was the single largest category by accounting for 47 percent of total land in Korea.

Fresh Cherries Report Strong Sales Growth … Second Most Sold Fruits in Lotte Mart This Summer [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014072097371

Summary: Fresh cherries are reporting strong sales growth this summer.  According to Lotte Mart, a leading hypermarket store chains, fresh cherries were the second most sold fresh fruits in July after Water melons.  Fresh cherries accounted for 17.3 percent of the fresh fruit sales in the chain in July this year, a huge growth from 8.7 percent last July.  Lotte Mart explained that price of fresh cherries, all imported from the United States in the summer months, has lowered significantly due to elimination of the 24 percent import duty and stronger Korean won exchange rate against U.S. dollar.  A 5 kilogram box fresh cherries was sold at 48,883 won on July 18 in Seoul Agricultural Wholesale Market, which was 28.5 percent lower than the price one year ago.

International Cocoa Price Hikes … Korean Confectioners Are Likely to Increase the Price of Chocolates and Related Products Soon [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014072097381

Summary: According to ICCO, price of cocoa hit a three year high in June this year due to strong demand growth around the world.  The June price was 39 percent higher than the price one year ago.  As a result, confectionery suppliers are pressured to increase the price of related products.  For example, Hersey USA announced 8 percent price increase on July 15.  Korean confectioners are reportedly planning to increase the price of related products soon.  

An influx of American cherry brings damages to the local fruit market [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=240081&page=undefined

SUMMARY: Since South Korea-United States FTA came into effect and removed tariffs (24 percent) on cherry, American cherry imports have shown a significant increase. The annual import volume jumped from about 200MT in the early 2000s to about 9,000MT in 2012. Also, the Korea Rural Economic Institute (KREI) predicts that the total import volume in 2014 will increase by more than 40 percent from last year’s volume of 9,088MT. For the first time, more than 10,000MT cherries will be imported. This drastic increase in import is changing the fruit consumption pattern. According to the KREI survey conducted among 1,000 customers in June, 52 percent purchased cherry instead of grape. There were multiples of responders who bought cherry instead of tomato (11percent) ×tangerine (9 percent) ×oriental melon (6 percent)× peach (6 percent)× apple (6 percent). This means that American cherry can replace not only the local cherry but also other local fruits. As a result, local cherry prices are falling by 10-15 percent and demands for other fruits are reducing.

Beer Imports Hit a Record High in the First Half … Large-scale Retailers’ Private Label Imported Beers Lead the Way [Korean, OSY]

http://news.donga.com/3/all/20140716/65231414/1

Summary: Korea’s imports of beer amounted to 53,000 tons during the first half this year, up 29 percent from the same period of last year.  Japan was the leading exporter of beer to Korea during the period by accounting for 26 percent of the beer that Korea imported, followed by Netherland, Germany, China and the U.S.  Large-scale hypermarket stores have become the leading distribution channel of the imported beer.  In particular, large-scale hypermarket chains have developed their own private label imported beers to expand the sales of imported beer (L beer by Lotte Mart, 5.0 Beer by E Mart, and Bear Beer by Home Plus).  These private label beers, offered at value prices, have become the top selling imported beers in the stores.