FAS/Seoul Monitoring of Media Reporting on Agricultural Issues

Today's Date: Thursday January 15, 2015

For Coverage: December 21, 2014 ~ January 15, 2015

1. BILATERAL/MULTILATERAL ISSUES

Why consumers cannot feel the effect of FTA tariff abolition [Korean, HTJ]
http://daily.hankooki.com/lpage/economy/201501/dh20150114083013138060.htm

SUMMARY: After the effectuation of FTA between Korea and Australia from December 2014, the tariff for Australian cherries has changed from 24% to 0%. However, consumers are not feeling proper effect of the FTA.  Moreover, even though import price of U.S cherries have decreased for 19%, consumer price have increased for 42.4% since the KORUS FTA in 2012. The Consumers Korea, a consumer’s civic group, found out that the consumer price had even increased while import price had decreased in market.  About this situation, aT; a state trading company said they are planning to make high efficient distribution structure with creative idea contest or others. One of ranked mart in Korea said that stocks purchased before the FTA can make consumers to take time to feel the effect of FTA. They also forecast gradual decrease in price of FTA products if there are no special elements affecting price of those products.

New goal on agriculture and food export, increased export percentage with FTA countries [Korean, HTJ]
http://view.asiae.co.kr/news/view.htm?idxno=2015011310013824120

SUMMARY: The Ministry of Agriculture, Food, and Rural Affairs (MAFRA) announced today in governmental business report that they will achieve 7.7 billion dollars in exporting agricultural products and foods in 2015. Also they plan to expand export ratio on FTA contract countries from 33% of 2013 increase up to 40% in 2015.

2. LIVESTOCK ISSUES

Vaccination avoidance in farms accelerating FMD spread [Korean, HTJ]
http://www.segye.com/content/html/2015/01/14/20150114004022.html?OutUrl=naver

SUMMARY: FMD vaccination rate on swine is now 100% in Korea. However, anti-virus body formation rate is low or even close to 0%, making FMD spreads out. According to the Korean Animal and Plant Quarantine Agency (QIA), antivirus-body formation rate was 35.8% in FMD infected farm located in Jincheon, compared to 89% of not infected. This is because of vaccination cost and default meat occurrence lead farms to avoid vaccinating.  Swine farms have to pay about $2 per one vaccine with 50% of governmental cost aid, which is burden for large scale farms. Also, inappropriate vaccination may induce defaults in meat, which make farms to lose their profits.

Pork price remains stable despite of ‘FMD shock’ [Korean, HTJ]
http://www.yeongnam.com/mnews/newsview.do?mode=newsView&newskey=20150115.010170804310001
SUMMARY: Although the FMD spreads out, pork price is now remains stable and expected also in the future.  According to the MAFRA, the FMD is not affecting pork price because the number of total FMD culled swine is smaller than the number of slaughtered swine during the December 2014 to now.  A researcher In-dae Ji from the KREI said pork price is climbing up with some reasons including substitution effect of chicken by HPAI, spread of camping culture, and reduced number of sow in 2013.

Controversy on table rice import [Korean, HTJ]
http://www.nongmin.com/article/ar_detail.htm?ar_id=246489&subMenu=articletotal
SUMMARY: Korean government and farmers are now having controversy on importing table rice. If the government imports table rice, it will lead farmer’s resistance and price fall, if not, it will lead negative affect in tariff verification on rice in the future. The MAFRA said government has to import table rice because the demand on imported table rice still exists and this can lead a violation against the WTO regulation. Even though MAFRA thinks they have to import rice, they are still concerned about this issue because the national rice price is steadily falling since September 2014. MAFRA said that they will decide about this issue after first quarter of 2015, considering the national rice price.

Foot and mouth disease spreads out, alert on distribution industry [Korean, HTJ]
http://www.cctoday.co.kr/?mod=news&act=articleView&idxno=878861
SUMMARY: Distribution industry is now closely observing Korean Lunar New year’s day market as foot and mouth disease (FMD) gradually spreads out in Korea. Fortunately, spread of FMD is not affecting sales and demand of livestock until recent date. According to the E-mart, one of the leading distribution companies in Korea, sales on Korean pork and beef have recently increased for 16% and 3.4% respectively compared to the same period in 2014. This is because prices have fallen down with changed governmental regulation on stamping out, making numbers of stamped out stocks decreased and because of even increased shipment of stocks from farms. National Agricultural Cooperative Federation (NACF) authority said that sales on Lunar New year’s day will not largely fluctuate since stamped out stocks are only 5% of whole livestock and meat demand is still increasing now. 

Number of Hanwoo breeding farm is decreasing under hundred thousand [Korean, HTJ]
http://www.nongmin.com/article/ar_detail.htm?ar_id=246536&subMenu=articletotal

SUMMARY: According to the National Statistical Office (NSO), the number of Hanwoo breeding farm in December 2014 are 99,285, which is decreased for 16.6% compared to the same period of 2013.  A researcher Hyung-woo Lee from the Korea rural economy research institute (KREI) said this is because of breeding abandonment in small scale farm is now increasing, while scaling in farms is rapidly undergoing. He also said that as government starts to compensate for shut downed farm, small scale farms decide to shut down rather than breeding because they think it is more favorable for them. As with this situation and small scale farms gradually decrease, livestock industry authorities are worried about losing their competitive edge.

Pork consumption stays high in Korea despite of foot and mouth disease [Korean, HTJ]
http://www.newsis.com/ar_detail/view.html?ar_id=NISX20150109_0013404946&cID=10401&pID=10400
SUMMARY: The Ministry of Agriculture, Food, and Rural Affairs (MAFRA) announced that average auction price of pork fur trimmed, skin trimmed, and average retail price for pork belly stays higher than 2014 with increasing 42.3%, 38.4%, and 14.3% respectively during Jan 1 to 6.  The MAFRA says that demand on pork increased with substitution effect by HPAI outbreak and changing consumption pattern.  This pattern includes spread of camping culture and preference on low-fat part in pork.  They expect that the price rise in pork due to lack of supply will not occur even though foot and mouth disease spreads out. They also said that pork is now on the maximum supply and consumption, so foot and mouth disease will not affect supply of pork to be decreased.

3. MARKETING ISSUES

Price of Starbucks Coffee is Highest in Seoul in the World, Consumer Group Survey [Korean, OSY]

http://news.donga.com/3/all/20150113/69052173/1

Summary: According to a recent survey by the Korean Consumer Coalition, retail price of many food and beverage products was the highest or higher than average in Seoul compared to other major cities in 13 countries surveyed around the world.  In particular, price of Starbucks coffee (Americano) and Montes Alpha Cabernet Sauvignon wine (imported from Chile) sold in Seoul was the highest among the cities surveyed.  The consumer coalition argued that the Korean government should make additional efforts to lower the retail price of food and beverage products in the market down by streamlining the supply chain.

Whiskey Market Declines for 6 Consecutive Years [Korean, OSY]

http://news.donga.com/3/all/20150112/69051435/1

Summary: Sales of whiskey in Korea amounted to 1.78 million cases (9 liter per case) in 2014, down 3.4 percent from the previous year.  The decline of the whiskey sales in Korea has started since 2008 under the global economic crisis. 

Korea-Australia Free Trade Agreement Brings Fresh Cherry Price Down in Winter [Korean, OSY]

http://economy.donga.com/List/Market/3/0108/20150111/69030171/2

Summary: Korea-Australia Free Trade Agreement (KAFTA) that went into force in December 2014 has significantly lowered fresh cherry price in Korea.  Price of Australian fresh cherries (250 gram pack) in Lotte Mart on January 12, 2015 is 7,900 won, which is 20 percent lower than New Zealand cherries (NZ cherries are subject to 25 percent import tariff).  Other retail store chains are also strengthening the sales promotions on Australian cherries reflecting the strong consumer recognition on the effect of KAFTA.  For example, E Mart, the leading hypermarket store chain in Korea plans to launch Australian cherries in the stores on January 15 at 11,800 won per 500 gram pack.  Marketers point out that fresh cherries could potential become a leading fruit offered in retail stores in winter months under the KAFTA.

Price of Imported Skate Soars ... Due to Reduced Catch in South American Seas ... $120 per 10 Kg Box [Korean, OSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=103&oid=015&aid=0003226677

Summary: Price of top grade imported skate marked W130,000 won (or $120) per 10 kg box in the Seoul Metropolitan Fishery Wholesale Market on January 2, which was over 200 percent increase from a year ago.  Reduced catch in South American seas is reportedly the main cause of the price increase.  In particular, imports of skate from Chile in 2014 amounted to 173 metric tons, down almost 90 percent from the previous year.

E Mart Launches 'Australian Lamb Meat Sales Promotion' in 26 Stores in Celebration of the Coming 'Year of Lamb' [Korean, OSY]

http://news.donga.com/3/all/20141230/68825977/1

Summary: 2015 is a year of lamb according to the lunar calendar.  Processors and distributors have started to launch new products and services that are themed on lamb to capitalize on the increased consumer attention on lamb.  For example, E Mart (the leading large-scale grocery retail store chain) launched 'Australian Lamb Meat Festival' in 26 stores in the Seoul Metropolitan Area on December 29.  

Four Out of Ten Korean Internet Shoppers Purchased Products from Foreign On-line Shops ... On Average Spent $450 Per Year [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014122461451

Summary: Korea Internet Service Agency (KISA) reported on December 24 that its recent survey of 5,000 local internet shoppers indicated that four out of ten Korean internet shoppers had purchased from foreign on-line shops at least once in the last 12 months.  Average yearly spending by each internet shopper on purchases from foreign on-line shops amounted to $450.  'Sporting goods & Clothing' was the leading category that attracted the highest ratio of the Korean on-line shoppers to foreign on-line shops.  50.8 percent of the on-line shoppers replied that they purchased 'Sporting goods & Clothing' at least once from foreign on-line shops.  'Functional food & Food materials' (35.1%), 'Cosmetics' (23.7%), 'Handbags and Accessories' (21.5 %) were other top ranking products that the Korean on-line shoppers shopped in foreign on-line shops.  88.3 percent of the internet shoppers replied that they most often visited foreign on-line shops run by American companies, followed by Japan (18.4%) and China (10.4%).