FTA with U.S., beef imports to cause sharp drop in local pork prices
The Hankyoreh, Seoul
FTA with U.S., beef imports to cause sharp drop in local pork prices
23 July 2007
Seoul - Yonhap News - The proposed free trade pact between South Korea and the United States as well as high demand for beef is expected to cause a drop in local pork prices, a think tank said Monday.
The report by the GS&J Institute in southern Seoul said the pork prices could fall by up to 30 percent within the next decade.
The research, consulting and publishing institute, run by former head of the state-run Korea Rural Economic Institute Lee Jung-hwan, said imports of American beef that resumed in late April could cause prices to fall 15 percent, while the lowering of tariffs for pork under the free trade agreement (FTA) could result in another 13 percent drop in prices.
It added that plans to gradually lower duties on U.S. beef entering the country under the FTA could push local pork prices down by an additional 2 percent.
In the April 2 agreement, Seoul pledged to lower current tariffs for those two items in 15 years and 10 years, respectively.
The country now levies import duties of 40 percent on beef and 22.5-25 percent for pork.
"There is a clear link between increased import and consumption of foreign beef and local pork prices," said the latest report. It said if beef imports rise 10 percent, local pork prices fall about 2.9 percent.
This year alone, the amount of imported beef including U.S. meat could rise 52 percent from last year to 320,000 tons.
In less than three months, more than 1,500 tons of U.S. beef have been imported, with the amount rising sharply as major discount outlets are planning to sell the meat in August. Seoul banned U.S. beef in late 2003 following the discovery of a case of mad cow disease.
On the impact of duties on local pork prices, the institute said if import duties on pork are removed by 2017, the price for 1 kilogram of American pork will fall to a little over 4,000 won from slightly more than 5,000 won at present.
The report said that even with current tariff rates, the U.S. product was ahead of pork from Canada and Chile, and once the FTA is ratified by lawmakers and goes into effect, it could increase its lead.
The report is bad news for local farmers who raised 9.46 million pigs as of June. This was a 4.8 percent gain from a year earlier and reflected a rise in prices.
One hundred kilograms of pork cost 226,000 won in May, up from 205,000 in November 2006.
