FAS/Seoul Monitoring of Media Reporting on Agricultural Issues

Today's Date: Tuesday July 15, 2014

For Coverage: July 1 ~ 15, 2014

1. BILATERAL/MULTILATERAL ISSUES

FTA negotiators back at table after summit  [English, BSY]

http://koreajoongangdaily.joins.com/news/article/article.aspx?  

SUMMARY:

South Korea and China started a new round of negotiations for a bilateral free trade agreement yesterday scheduled to last through Friday. This is the first negotiating session since the presidents of both countries agreed during their summit talks in Seoul earlier this month to conclude the deal by the end of this year.  Last September, they agreed to eliminate tariffs on 90 percent of all products and 85 percent in terms of trade amount, but were not able to make a progress in determining which products to be labeled “highly sensitive.” Highly sensitive items are exempted from the non-tariff list. Korea wants to protect agriculture and fishery products from competition with cheap Chinese imports, while China wants to protect its petrochemicals, steel and machinery products.

A group of more than 5,000 agricultural and livestock farmers from across the country gathered in Daegu yesterday to demand the government come up with measures to protect local farmers from competition. The committee plans to have street demonstrations every day calling for a suspension of trade negotiations. “We are not pushing for a total scrapping of the FTA,” said Kim Gwang-cheon, director at the Korean Advanced Farmers Federation. “We want the government to include all agriculture and livestock products in the supersensitive products category so they can be completely excluded from tariff elimination.”  The farmers wrote in a statement yesterday, “The Korea-China FTA is estimated to generate losses of up to 29 trillion won [$28.5 billion] for local agricultural and livestock sectors after 15 years of the deal taking in effect, up to five times larger than losses suffered under the Korea-U.S. FTA.”

WTO chief rules out another delay of S. Korea’s rice market opening without cost [English, BSY]

http://www.koreaherald.com/view.php?ud=20140710000310

SUMMARY: In a written interview Monday with Yonhap News Agency in Geneva, Director General Robert Azevedo of the World Trade Organization (WTO) said that South Korea is obliged to open its rice market at the beginning of next year. Since additional extension is not permitted as the WTO Agricultural Agreement allows only one-time extension of the special treatment initially offered at the Uruguay round negotiations in 1993, the only available alternative to avoid tariffication is to receive a waiver. Yet, this option requires negotiations with the WTO members, and in the process, Korea will be forced to make compensation and set the date of tariffication. To respond to the farmers who oppose tariffication saying that the Doha Development Agenda (DDA) may reduce the import tariffs on rice, Azevedo claimed that “the obligations under Annex 5 of the Agreement on Agriculture are not affected by the ongoing DDA negotiations.”

The 12th round of Korea-China FTA talks will be held [Korean, BSY]

http://www.segyefn.com/articles/article.asp?aid=20140710020340&cid=0501010000000?OutUrl=naver

SUMMARY:  The Ministry of Trade, Industry and Energy (MOTIE) announced that the 12^th round of Korea-China FTA talks will be held on July 14-18 in Daegu Province. Two parties are expected to have a comprehensive and focused discussion covering all areas including product and service, investment, regulations and cooperation field as President Park and Chinese president Xi Jinping agreed to enforce their efforts to seal the FTA deal by year’s end.

2. BIOTECHNOLOGY ISSUES

Korea, U.S. Strike Deal on Organic Equivalency [Korean, BSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=102&oid=001&aid=0006990319

 SUMMARY: The Ministry of Agriculture, Food and Rural Affairs (MAFRA) announced that Korea and the US came to terms on Organic Processed Food Equivalency Agreement. Organic processed products certified in Korea can now be labeled as organic in the U.S. without additional certification from the U.S. The MAFRA said that the biggest achievement was an agreement to apply Korea’s GMO labeling standards regarding the usage of GMO ingredients. While the United States prohibits the use of GMO in manufacture of the organic processed food, Korea not only prohibits the use of GMO but also applies the non-detection-standard, which strictly regulates organic labeling by not allowing the use of “organic” claim when GMO is detected in the analysis result. Under the agreement, among the products certified under two countries’ system, only those that are finally processed in the two countries and contain 95% or more of organic ingredients will be within the scope of equivalency arrangement. Korea has embraced the U.S. demand, and both parties decided to prohibit the use of antibiotics in livestock.  As a result, food that contains ingredients of antibiotic treated livestock products will not be exported to the U.S. as organic and food that is processed using antibiotic treated apples and pears will not be imported to Korea as organic. Starting from this year, the government unified organic processed food management system requiring the certification by the MAFRA to label processed food as ‘organic’, and decided to recognize the counties that have the certification system equivalent to Korea’s system by making an equivalency agreement.

3. GRAIN & OILSEED ISSUES

The countdown to government’s announcement on rice tariffication  [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=234277&page=undefined

SUMMARY: On July 11^th, a public hearing on rice tariffication was held by Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee (AGRI) at the National Assembly. The government initially planned to announce its stance on June 30^th, but decided to postpone it after the AGRI demanded for a national assembly hearing.  Now that the national assembly hearing has ended, the government is ready to hold the International Economic Minister Meeting on July 18^th to confirm its position and introduce a draft of measures to protect rice industry after tariffication. Yet, the government may delay the announcement due to 730 by-election.

Conflicts on the tariff rate is unavoidable [Korean, BSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=shm&sid1=101&oid=003&aid=0005960365

SUMMARY:

The Ministry of Agriculture, Food and Rural Affairs (MAFRA)

The Korea Peasants League (KPL)

The Korea Advanced Farmers Federation (KAAF)

The public hearings on rice tariffication starting with the MAFRA public hearing on June 20^th, followed by the KPL debate on July 7^th, the KAFF debate on July 9^th and National Assembly public hearing on July 11^th successfully gathered opinions and elicited consensus among the agriculture-related groups. As the government continues to state that ‘rice tariffication is inevitable’, the opposing farmer organizations including the KPL are showing opposition only in principle and is beginning to change their positions, saying that they will accept rice market opening if the government promises to set a high tariff. The problem is that there is a difference of viewpoint between the government and farmer organizations regarding the tariff rate.  The government says that the tariff rate of 500 percent or more will be difficult to establish and that the rate will likely be set at 300-400 percent. The farmer organizations, however, will not tolerate tariff rate lower than 500 percent. At the National Assembly public hearing held on July 11^th, Park Hyung-dae, chief of policy from the KPL, requested the government that the rate should be at least 510 percent. Another participant said that “since the answer is clear, it is meaningless to discuss whether to open the market or not. Instead, we should discuss the tariff rate and the measures to protect rice industry after the tariffication.”

‘Amendment on Grain Management Act’ to prohibit the repacking of packed imported rice [Korean, BSY]

http://www.foodnews.co.kr/news/articleView.html?idxno=51388

SUMMARY: On July 11^th, thirteen members of the Saenuri Party proposed an amendment on Grain Management Act that prohibits the grain processors, importers and dealers from repacking the packed imported rice with an exception of brown rice. Although there are increasing cases that declare imported rice as domestic rice by putting on a false label, current Grain Management Act cannot punish these wrongdoings unless there is a proof of transaction. Yun Myeong-hee, Saenuri Party member, said that “considering the fact that the crime begins in the packing process and that it is impossible to track the distribution channel after packing, banning the repacking of rice that deceives the origin will obtain the transparency of grain distribution and protect the rights of consumers and producers.”

An ad valorem tariff will be applied to imported rice [KED, Korean, BSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014070783401

SUMMARY:  Unlike Japan and Taiwan that chose a specific tariff, Korean government decided to apply an ad valorem tariff to imported rice as a way to protect its domestic rice market. An ad valorem tariff is a tariff levied on an item on the basis of the international price and not on the basis of the quantity.

Since international prices of rice are on the rise, it is beneficial to apply ad valorem tariff than specific tariff. Assuming that the tariff rate is applied at 400 percent as the tariff equivalent, rice imported from the U.S. will cost 3,905 won/kg when utilizing the U.S. rice price in 2013 (781 won/kg). The price remains the same even when the specific tariff is applied at 3,124 won/Kg. Yet, suppose the price of the U.S. rise rose by 1.5 percent to 1,172 won/kg, applying the ad valorem tariff at 400 percent will result in higher imported price at 5,860 won/kg than using the specific tariff of 3,214 won/kg  at 4,296 won/kg. According to the Korea Rural Economic Institute (KREI), the price of U.S. California medium grain rice in June at 1,050 dollar/MT rose by 61.5 percent from 650 dollar/MT in January and by 48.9 percent from 705 dollar/MT in July last year.  Considering the climate change and the increase in demand, international rice prices are expected to rise continuously. The government is planning to announce its stance on rice tariffication no later than this month after gathering the opinions from all the agricultural-related groups at the public hearing held by the Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee on July 11^th.   

Rice tariff rate set at 387-522 percent [KMIB, Korean, BSY]

http://news.kmib.co.kr/article/view.asp?arcid=0922729767&code=11151400&cp=nv

SUMMARY: 

Government’s calculation of rice tariff rate

*Tariff rate: (internal price – external price)/internal price x 100(%) x 0.9(reduction rate of agricultural products in developing country)

According to the governmental document on ‘the ways to calculate rice tariff rate,’ the government deduced eight different tariff rates by applying the internal prices during 1986-1988 period and the external prices – the import and export prices of Japan and China – to the formula for tariff rate. The internal prices are based on the wholesale prices reported by the Korea Agro Fisheries & Food Trade Corporation (aT). The tariff rates calculated by the government range from 387-522 percent, but the government plans to eliminate the tariff rate above 500 percent that resulted by applying the import price (145 won/kg) of China as WTO members may question its appropriateness due to the difference in rice varieties. Without this number, tariff rate will be between 387-404 percent with an average of 396 percent. Since even the farmer organization that supports rice tariffication demands at least 400 percent of tariff rate, strong opposing voices are expected.

KPL holds an international meeting on “Opening up Rice Market in South Korea, how to solve this problem?” [Korean, BSY]

http://www.hani.co.kr/arti/economy/economy_general/645860.html

SUMMARY:  At the international meeting on “Opening up Rice Market in South Korea, how to solve this problem?,” held at the main conference room of National Assembly memorial hall in Yeouido, the farmer representatives from Japan, the Philippines and India emphasized that the “government should listen to the voices of the farmers in terms of rice tariffication. The government should not decide on its own.”

Raul Montemayer, national manager of Federation of Free Farmers Cooperatives, said that “Although the negotiation with the WTO is a secretive process led by the government, the government of the Philippines helped the farmers to represent their sides by including a farmer representative in the negotiation panel. The Philippines decided to extend the tariffication obligation, because rice is the basic stable of Filipino consumers and the major crop of Filipino farmers. Also, the cost of rice production of Filipino farmers remains high; thus, it is still uncompetitive against the imports. When the waiver was granted, farmers were very happy while the livestock industry showed opposition.”

Mashima Yoshitaka, vice chair of Japan Family Farmers Movement (NOUMINREN), pointed out that “the Korean government agreed to the terribly unfair and harsh conditions regarding the rice tariffication. The MMA quota of rice for Korea quadrupled from 51,000MT in 1995 to 205,000MT in 2004.  Korea was then forced to increase the quota by 409,000MT by 2014. The amount consists 8 percent of domestic consumption, and it is higher than that of Japan (7.2 percent).”

Afsar Jafri, East Asia coordinator of Focus of the Global South, claimed that “Self-sufficiency rate in India used to be 99 percent, but the country depends on imports for over 50 percent after five years since the tariffication in 1999. Only the farmers are suffering from the market opening.”

Park Hyung-dae, chief of policy of the Korean Peasants’ League argued that “The government’s irresponsible and illegal announcement on rice tariffication must stop. And the government trade negotiators who have argued that ‘rice tariffication is the only way’ must be changed.”

Along with Kimchi, rice may be exported to China [Korean, BSY]

http://joongang.joins.com/article/aid/2014/07/07/14754782.html?cloc=olink|article|default 

SUMMARY:  As an attempt to minimize the farmers’ opposition toward the Korea-China FTA, which will be sealed by year’s end, the government is discussing the rice export to China. Since the Chinese government currently bans the rice import in the fear of disease and insect pest from the imported rice, there is no Korean rice officially exported to China last year. It is the government’s goal to eliminate such barrier and instigate  rice exports. An official from the Ministry of Agriculture, Food and Rural Affairs (MAFRA) said that “Korea must first open the market in order to sell rice to China. Also, the hope of increase in demand for Korean rice after tariffication may reduce the opposing voices.”

4. LIVESTOCK ISSUES

Prices of duck meat are also rising [Korean, BSY]

http://news.mk.co.kr/newsRead.php?year=2014&no=966883                                                                 

SUMMARY:  According to the Korea Duck Association, the wholesale prices of duck meat reached a record high in June at an average of 11,733 won/kg, about twice the prices in January and February at 6,000 won/kg. During the first half of 2013, duck meat prices did not exceed 6,700 won/kg, but the prices already passed 10,000 won/kg this year. In fact, the prices have been on the rise since February due to insufficient supply of duck after the outbreak of HP-Avian Influenza (HPAI). The virus caused more harm to duck than to chickens; the quantity of duck meat in June reduced by 46 percent from last year, and the number of species duck that are used in breeding significantly decreased. The Korea Rural Economic Institute (KREI) predicted that the output will be 24 percent lower than the output last year at the level of 28,585MT. Since the breeding period for duck is two weeks longer than the chicken’s, it will take some time to stabilize the prices even if the imports are increased by 11 percent. An E-mart livestock buyer said that “the output will reach around 80-90 percent of normal production by this month.”

Picnic price rises as pork belly price jumps [Korean, BSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=101&oid=001&aid=0007003529 

SUMMARY: Unlike the government’s plan to attain price stability by encouraging the consumption of non-preferred parts such as picnic and ham in response to the skyrocketing prices of pork belly and pork neck, it is, in fact, the price of picnic that showed the highest increase.  Lotte Mart said that the consumer price of picnic in June was 15,169 won/kg, 67.78 percent higher than the price in June 2013 (9,041 won/kg). During the same period, pork belly price rose by 29.44 percent to 21,707 won/kg, and the collar butt price escalated by 26.90 percent to 22,949 won/kg.  A representative from the distribution industry said that “increasing the price of pork belly tends to be limited, so there is a tendency to raise the price of picnic instead.”

Hanwoo Prices will soar until 2017 [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=233810&subMenu=articletotal                

SUMMARY: According to the Korea Rural Economic Institute (KREI), it is expected that the wholesale price of Hanwoo will show a drastic increase until 2017. The KREI said that the wholesale price (per 1 kg) will remain at the level of 13,500-14,000 won in 2014, and will reach 14,000-15,200 from 2015 to 2017. As a result, farms are increasing the purchase of calves and the sperms. In June, calf prices exceeded 2,600,000 won, a far higher price compared to 1,810,000 won last year. The KREI, however, recommend the farms to maintain the current status as too much increase in Hanwoo production will lower the price.

5. MARKETING ISSUES

Samsung Biologics will open its second plant in 2016-2017 [Korean, BSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=101&oid=001&aid=0007004829

SUMMARY: At the ‘Global Biopharmaceutical Forum’ held in Seoul Plaza Hotel, Kim Tae-han, the president and CEO of Samsung Biologics, said that “Samsung will complete the construction of its second manufacturing facility in Songdo, Incheon Province and start the operation by 2016-2017. Before the operation, the facility will be validated by the Current Good Manufacturing Practice in March-April 2016.” Samsung Biologics is currently constructing the second plant with capacity of 150,000 L, followed by the first plant that contains stainless steel bioreactors with capacity of 30,000 L. These with the total capacity of 180,000 L, two plants consist 30 percent of CMO facilities in the world. Once the second plant operates, Samsung Biologics will be the third largest GMO corporation after Swiss Lonza and Boehringer Ingelheim.

Lotte Mart Promotes U.S. Highbush Blueberries [Korean, OSY]

http://news.donga.com/3/all/20140709/65071103/1

Summary: Lotte Mart staged a promotional event for fresh U.S. highbush blueberries on July 10 in its flagship store in Seoul.  Lotte Mart offers fresh U.S. highbush blueberries from July through September.

 

6. OTHER MISCELLANEOUS ISSUES

First Half of 2014 Reaches New Numbers on Imports of Beer in South Korea [Korean, YGY]

http://www.yonhapnews.co.kr/bulletin/2014/07/15/0200000000AKR20140715187700030.HTML?from=search

Summary: Throughout the first half of this year, imports of beer in South Korea reached maximum record. According to the country’s customs, South Korea imported 53,618 tons of beer from January to June, a 29.2% increase from the same period last year. However, the United States showed negative growth and placed fifth after Japan, the Netherlands, Germany and China as the US has exported 4,214 tons of beer to South Korea within the six months.

Grapes was the Most Imported Fresh Fruit during January-May This Year ... Oranges Stepped Down to the Second Most Imported Fruits [Korean, OSY]

http://news.donga.com/3/all/20140708/65041781/1

Summary: According to the Korean government, grapes was the most imported fresh fruit during the first five months this year.  Imports of fresh grapes amounted to $184 million, up 6.3 percent from the same period of last year.  On the other hand, imports of fresh oranges amounted to $159 million, down 20.9 percent during the period mainly due to reduced harvest in California.  Bananas ($147 million), pineapples ($36 million) and cherries ($34 million) followed in the rank.

Breakfast Consumers Lead the Sales Growth of Take-out Prepared Foods in Convenience Stores [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014070819911

Summary: Seven Eleven Korea reported that sales of take-out ready, prepared food products in its stores increased 13.9 percent during the first half this year compared to the same period of last year.  Seven Eleven pointed out that breakfast customers in particular led the sales growth as indicated by the fact that sales of the prepared food between 6 to 10 a.m. went up 22.6 percent.  Seven Eleven added that 42.6 percent of the consumers who purchased prepared food products were males in 30's and 40's.