THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY
Date:
GAIN Report Number:
Approved By:
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Report Highlights:
After a difficult year in 2017 caused by a long-lasting Highly Pathogenic Avian Influenza (HPAI) outbreak in Korea, Post projects that production will rebound in marketing year (MY) 2018 to 905,000 metric tons (MT) from 850,000 MT in MY 2017. Post also anticipates that consumption will increase in MY 2018 to 1.01 million MT, as consumer confidence rebounds following the cleanup of HPAI, and demand is increased due to a series of international sporting events. Finally, imports are forecasted to increase to 135,000 MT to meet the
increased demand from these sporting events. Both U.S. and Brazilian imports are expected to increase, as the United States recovers from the effect of its own 2017 HPAI outbreak and Brazil recovers from the impact of an April 2017 tainted poultry meat scandal.
Amanda F. Hinkle
Sunyoung Choi / Amanda F. Hinkle
Annual
Poultry and Products Annual
Korea - Republic of
Commodities:
Production:
In Marketing Year (MY) 2018 (January – December), Korea’s chicken production is projected to increase 6.5 percent to 905,000 metric tons (MT) from 850,000 MT in MY 2017, mainly for three reasons: 1) to meet potential extra chicken demand during several international sporting events throughout MY 2018 (the Winter Olympic Games in Korea in February, the Russian Soccer World Cup in June and the Indonesian-hosted Asian Games in August), 2) to meet recovered consumer demand for chicken meat after a long-lasting Highly Pathogenic Avian Influenza (HPAI) outbreak, and 3) to meet strong demand for poultry caused by its relatively cheaper prices compared with pork and beef.
In MY 2017, Korea’s chicken production is expected to decrease 5.5 percent to 850,000 MT from 900,000 MT in MY 2016, due to a reduced number of slaughtered chickens during the first half of MY 2017. The number of chickens slaughtered during the first six months of 2017 decreased significantly (by 9.9 percent) to 436 million birds, from 484 million birds during the same period of previous marketing year.
An ongoing Highly Pathogenic Avian Influenza (HPAI) outbreak across the Korean peninsula had caused a large depopulation (about 34.3 million birds) of the chicken inventory starting in November 2016. During an intensive HPAI “stamping out” period by the Korean government, 25 million birds, or 52 percent of the total layer
inventory, were culled. About four million broiler chickens were also depopulated, including 1.7 million parental stock (PS) broiler chickens. This led to a deficit of commercial chicks and parental stock broilers for almost two months, and thus a reduced number of chickens available for slaughter. In short, the HPAI outbreak meant that Korean broiler farms were faced with two problems. First, during the first quarter of 2017, a
suspension by the Korean Quarantine Authority on the movement of live birds within the HPAI infected areas prevented farmers from shipping out chickens to slaughter on a timely basis. Second, farmers faced a reduced number of PS broiler chickens, which led to a scarcity of commercial chicks.
However, chicken production for the second half of 2017 is expected to recover rapidly, as the HPAI outbreak has slowed since May 2017, and the inventory of PS broilers has increased to meet expectations for increased potential demand in early 2018 (caused by the Winter Olympic Games in February).
Korea’s Monthly & Yearly Slaughtering Figure for Chicken (Unit: 1,000 birds)
Jan. Feb. Mar. Apr. May June First 6 Months Sub Total Annual
Total
MY 2014 63,512 64,604 62,701 65,606 79,184 81,289 416,896 885,324
MY 2015 70,032 59,809 72,065 75,027 81,846 91,856 450,635 966,965
MY 2016 72,420 70,565 82,821 81,786 86,338 90,030 483,960 992,518
MY 2017 68,871 62,218 72,061 67,040 77,391 88,521 436,102 N/A
Change (%) -4.9 -11.8 -13 -18 -10.4 -1.7 -9.9 2.6
Source: Korea Broiler Council (KBC)
HPAI Outbreak
Since the HPAI outbreak began in November 2016, it spread across the nation and led to a massive
depopulation of Korean chickens during the first half of MY 2017. In total, about 32 million chickens, or about 20 percent of total chicken inventory, were culled. The massive depopulation of layers also caused a shortage of egg supplies in the Korean food market during the first half of 2017. Egg retail prices doubled, despite the extra supply from a government-imposed short-term duty-free Tariff Rate Quota (TRQ) for 98,600 MT of fresh eggs and processed egg products.
Although the actual depopulated number of broilers was about four million birds (about five percent of total broiler inventory), the HPAI outbreak had a large impact on the Korean broiler industry during the first half of 2017 due to the resulting suspended movement of live birds, including the suspension of receiving commercial chicks within the HPAI surveillance areas. According to the Korea Broiler Council (KBC), about 35 percent of total broiler farms were located within the HPAI surveillance areas (a three to 10 km radius around each farm with an HPAI outbreak) and the farms in these areas could not receive any commercial chicks for about 50 days. This moratorium on movement caused a reduced supply of chicken in the market and an increase in the farm gate and wholesale market prices accordingly.
HPAI was confirmed positive on 419 farms since the first outbreak of HPAI on November 16, 2016. The most recent case was reported on June 19, 2017. The breakout of HPAI positive farms during this time period (November 16 - June 19) was as follows: 125 duck farms, 153 layer farms, 53 native chicken farms, 5 layer breeding stock farms, 18 broiler breeding stock farms, 4 broiler farms, 7 quail farms, 33 duck breeding farms, 1 duck egg farm, 6 Beksemi farms, 1 ornamental bird farm, 1 native breeding stock farm, 1 broiler GPS farm, 1 duck GPS farm, 2 wild goose farm, 1 other and 7 ogol chicken farms.
Status of depopulated birds (November 16, 2016- June 19, 2017): Chicken: 31.7 million (20.4% of total chicken stock)
Layers: 25 million (36% of total layers
Layer Parental Stock: 0.44 million (51.5% of total layer breeding stock) Broilers, Native & Ogol chickens: 4.4 million (5.6% of total broilers)
Ducks: 3.32 million (37.9% of total ducks)
Quails and others: 3.01 million (20.1 % of total stock)
HPAI was also confirmed positive in 65 cases from wild birds and their fecal matter (45 cases from wild birds and 20 cases from their fecal matter). Wild birds were found to have the following strains of HPAI:
H5N6 Type (52 cases)
H5N8 Type (13 cases)
Consumption:
In MY 2018, Korea’s chicken consumption is projected to increase three percent to 1.01 million MT from 0.98 million MT in MY 2017, due to potential extra chicken demand during several upcoming international sporting events scheduled throughout marketing year 2018. Normally, the Korean chicken industry experiences about a five percent increase in chicken consumption during big sporting events. The winter Olympic Games is
In MY 2017, Korean chicken consumption is expected to decrease slightly (1.4 percent) to 977,000 MT from 991,000 MT in MY 2016, mainly due to: 1) reduced domestic supply from the HPAI outbreak, and 2) a decrease in consumer confidence in food safety in poultry and egg products caused by a long-lasting HPAI outbreak and domestic pesticide contaminated egg issues that occurred in August 2017. However, chicken consumption will not decrease significantly because it is still a cheap source of animal protein relative to beef and pork.
As the supply of domestic chickens decreased substantially during the first half of MY 2017, it led to increased prices for farm gate and wholesale chickens (39 percent and 29 percent respectively). Meanwhile, consumer prices increased only three percent during the same period due to pressure from the Korean government and many consumer civic groups.
Korea’s Average Chicken Prices During January – June Period (Unit: Korean Won / Kilogram)
Price CY 2016 CY 2017 Change (%)
Farm Price 1,374 1,916 39%
Wholesale price 2,677 3,451 29%
Consumer price 5,329 5,498 3%
Source: National Agricultural Cooperative Federation (NACF)
In MY 2016, Korea’s chicken consumption increased three percent to 991,000 MT from the previous marketing year as a result of increased domestic chicken supply and chicken imports and subsequent lower
prices. Additionally, a TV documentary program advertising a “New Diet for High Fat and Low Carbohydrates” pushed up extra demand for beef, pork, and chicken meat, and was very popular among Korean consumers throughout the year.
Trade:
Imports
In MY 2018, chicken imports are projected to increase about 3.8 percent to 135,000 MT from 130,000 MT in MY 2017, mainly due to a potential increased demand driven by several international sporting events, such as the Korean Winter Olympic Games in February, the Russian soccer World Cup in June, and the Indonesian-hosted Asian Games in August. Although Brazil lost its dominant market share in Korea in 2017, due to a Brazilian tainted chicken scandal in April 2017 followed by the resumption of U.S. chicken imports since August 2017, the United States and Brazil are again expected to compete for the imported chicken market in Korea in 2018.
In MY 2017, chicken imports are expected to increase slightly (1.6 percent) to 130,000 MT from 128,000 MT in MY 2016 to accommodate for the drop in domestic chicken supply due to the HPAI outbreak during the 1st quarter of 2017. The U.S. market share is expected to recover more quickly from the 2017 HPAI outbreak (and subsequent ban on imports) than it had after the 2016 HPAI outbreak. After the January 2016 HPAI outbreak in Indiana state, imports had resumed in November 2016; meanwhile, after the outbreak of HPAI in Tennessee state in March 2017, imports resumed in August 2017, only five months later.
imports from Brazil will decrease due Korean consumers’ concerns about food safety after a tainted chicken scandal by one of the top chicken producers in Brazil in March 2017, despite no actual imports from the pertinent poultry establishment.
In MY 2016, Korea imported 128,336 MT of chicken and chicken products from the world, up 8.2 percent from MY 2015 imports (118,600 MT) due to the continuing popularity of “chicken and beer” (“chi-maek”) as a
meal. In November 2016, the Korean government allowed chicken imports from Thailand for the first time in 12 years. Fresh and frozen poultry imports from Thailand had been suspended due to an HPAI outbreak in 2004, and Korea had only allowed the import of Thai heat-treated chicken meat since that time. However, the Korean chicken industry forecasts Thai chicken imports will not be strong in the short-run, since Thai poultry is less price competitive than U.S. and Brazilian poultry. Korea imports about 15,000 MT of heat-treated Thai chicken annually. Brazil was the dominant chicken supplier to the Korean market in MY 2016 with a 73 percent market share, followed by Thailand with 12 percent, the United States with 5.5 percent, and Denmark with five
percent.
Exports
In MY 2018, Korea’s chicken exports are projected to recover to 25,000 MT, which is a slightly lower level of exports than achieved during the last year largely unaffected by the Korean HPAI outbreak, MY 2016 (27,000 MT). Most Korean chicken exports (20,000 MT) will be old layer hens to Vietnam, and the remainder will be found in chicken ginseng soup exports to Japan and the United States. Chinese demand for Korean old layer hens, which is usually high, will be low in MY 2018, due to the reduced consumer demand for Korean food products caused by ongoing political issues between two countries over the THAAD (U.S. missile defense) issue on the Korean peninsula.
In MY 2017, Korean chicken exports are expected to decrease drastically to 3,000 MT from 27,000 MT in MY 2016 due to the import suspension on Korean chicken products by several major importing countries such as Vietnam, Hong Kong and China, which came as a reaction to the HPAI outbreak beginning in November 2016. Korean chicken exports dropped by 91.5 percent to 1,256 MT during the first six months of MY 2017 compared to 14,828 MT during the same period of MY 2016. Only heat-treated Korean chicken products (in the form ofchicken ginseng soup) were exported during this period, mainly to Japan and United States. China does not allow imports of heat-treated Korean chicken products based on the current import health protocol that both countries agreed to in June 2016.
In MY 2016, Korean chicken exports increased about 1,000 MT, to 27,000 MT, due to the increased demand in Hong Kong for Korean chicken ginseng soup. However, Vietnam is still the biggest export market for Korean chicken, mainly in the form of old layer hens’ meat, followed by Hong Kong (3,027 MT) and the United States (493 MT), which import heat-treated chicken (chicken ginseng soup).
Tariff Phase-Out Schedule under KORUS FTA
HSK 10 Description Base Rate 2018 2019 2020
0207141010 Frozen Chicken Legs 20% 6% 4% 2%
0207141020 Frozen Chicken Breast 20% 8.3% 6.6% 5%
0207141030 Frozen Chicken Wing 20% 8.3% 6.6% 5%
0207141090 Other Frozen Chicken 20% 6% 4% 2%
0207271000 Frozen Turkey Cuts 18% 0% 0% 0%
Production, Supply and Demand Data Statistics:
Poultry, Meat, Broiler 2016 2017 2018
Market Begin Year Jan 2016 Jan 2017 Jan 2018
Korea, Republic of USDA Official New Post USDA Official New Post USDA Official New Post
Inventory (Reference) 88 89 0 88 0 90
Slaughter (Reference) 950 993 0 946 0 995
Beginning Stocks 35 35 40 45 0 45
Production 913 900 900 850 0 905
Total Imports 128 128 145 130 0 135
Total Supply 1076 1063 1085 1025 0 1085
Total Exports 27 27 25 3 0 25
Human Consumption 1009 991 1020 977 0 1015
Other Use, Losses 0 0 0 0 0 0
Total Dom. Consumption 1009 991 1020 977 0 1015
Total Use 1036 1018 1045 980 0 1040
Ending Stocks 40 45 40 45 0 45
Total Distribution 1076 1063 1085 1025 0 1085
(MIL HEAD) ,(1000 MT)
Author Defined:
Price Comparison (Unit: Korean Won per Kilogram) 4/
Cuts Domestic 1/ U.S. Brazil 3/ Imports 2/ Denmark Thailand Leg 6,120 1,103 2,163 2,248 2,981
Wing 7,205 - 2,757 2,693 3,240
Breast 6,930 - 2,241 - 2,628
1/ Chilled products, average retail price for January 1 – June 30, 2017 period 2/ Average CIF prices between January 1 through June 30, 2017
3/ Frozen Trimmed bone-less products (Mostly)
4/ Average exchange rate (1$ = 1,142.14 Korean won) for January – June 2017 period Source: Korea Chicken Council & Korea Customs Service
Countries that are currently allowed to export to Korea are as follows (As of August 18, 2017):
Approved Suppliers Items
Australia, New Zealand, Denmark,Spain,Netherlands, Japan,Canada and the United States.
Poultry birds (include pet or wild bird), hatching eggs, day old chicks.
Australia, New Zealand, Denmark, Canada, Thailand, Spain,Netherlands,
Japan and the United States Table eggs.
Australia, Chile, Denmark,Brazil,Netherlands,Canada,Thailand andthe
United States. Fresh, chilled, or frozen poultry meat
Australia,United Kingdom,France,Chile,Denmark,Sweden, Japan,Brazil, Thailand,Netherlands,Hungary,China,Poland,the United States and Canada
Heat-treated poultry meat
Source: The Ministry of Agriculture, Food and Rural Affairs (MAFRA)
Frozen Chicken Cut Imports by Country
Country CY 2016 CY 2017 (January- June)
U.S. 0 0 0 0
Brazil 409 1,009 118 285
Denmark 2,315 5,230 338 797
Thailand 0 0 748 2,122
Hungary 188 525 0 0
Other 0 2 1 0
Sub Total 2,912 6,766 1,205 3,204
<Breast>
U.S. 30 157 0 0
Brazil 1,714 3,411 736 1,444
Thailand 0 0 31 71
Other 0 1 0 2
Sub Total 1,744 3,569 767 1,517
<Total by Country>
U.S. 6,835 7,012 9,314 8,992
Brazil 93,544 167,869 39,262 74,458
Denmark 3,761 7,925 517 1,149
Thailand 0 0 779 2193
Hungary 188 525 0 0
Australia 487 1187 141 369
Others 0 3 374 774
Total 104,815 184,521 50,387 87,935
Source: Global Trade Atlas (GTA)
Processed Chicken Imports by Country
Country CY 2016 CY 2017 (January- June)
Volume (MT) Value (US$1,000) Volume (MT) Value (US$1,000)
China 3,468 12,779 1,852 6,447
Thailand 15,371 62,082 9,448 37,554
United States 225 1,319 206 1,204
Other 10 49 5 37
Total 19,074 76,229 11,511 45,242
PRODUCTION AND CONSUMPTION
Korea: Broiler Inventories 1/ (Unit: 1,000 birds)
Year Farms Birds 2008 1,807 77,853 2009 2,249 99,983 2010 2,238 101,690 2011 2,266 110,122 2012 2,058 97,750 2013 1,972 95,898 2014 2,035 103,593 2015 2,120 110,489 2016 1,912 101,014 2017 1,933 104,205 1/ June Inventories
Source: Korea Statistical Information Service (KOSIS)
Korea: Production Costs of Broilers 1/ (Korean Won per Kilogram in Live Weight)
Year Operating Cost Production Cost Farm Price
2008 1,049 1,097 1,567
2009 1,255 1,311 1,936
2010 1,292 1,342 1,913
2011 1,317 1,377 1,858
2012 1,299 1,361 1,693
2013 1,339 1,400 1,839
2014 1,277 1,340 1,574
2015 1,214 1,278 1,486
2016 1,183 1,244 1,514
Source: Korea Statistical Information Service (KOSIS)
Korea: Production Cost of Broilers
(Korean Won per Kilogram in Live Weight)
Item Average Cost CY 2015 Component Ratio (%) Average Cost CY 2016 Component Ratio (%)
Feed 744 61 707 60
Chicks 267 22 279 24
Family Labor 58 5 56 5
Vet & Medicine 31 3 31 3
Other 63 5 63 5
Total 1,211 100 1,181 100
By Product 3 - 2 -
Cost Total 1,214 - 1,183 -
Source: Korea Statistical Information Service (KOSIS)
Korea: Per Capita Consumption of Livestock Products (Unit: Kilogram, boneless basis)
Year Total Meat Beef Pork Chicken Egg 2007 35.7 7.6 19.2 8.9 11.3
2008 35.6 7.5 19.1 9.0 11.2
2009 36.8 8.1 19.1 9.6 11.9 2010 38.7 8.8 19.2 10.7 11.8 2011 40.4 10.2 18.8 11.4 11.6 2012 40.5 9.7 19.2 11.6 12.1 2013 42.7 10.3 20.9 11.5 12 2014 45.8 10.8 22.2 12.8 13 2015 47.1 10.9 22.8 13.4 12.9 2016 1/ 48.7 11.5 23.3 13.9 12.5 2017 1/ 48.3 11.6 22.6 14.1 10.6
1/ Preliminary forecast by the Korea Rural Economic Institute (KREI) Source: Ministry of Agriculture, Food and Rural Affairs (MAFRA)
PRICE TABLES
Korea: Year Average Broiler Prices (Korean Won/Kg, boneless basis)
Year 2013 2014 2015 2016 2017 1/ Farm Price 1,839 1,574 1,486 1,514 1,916 Wholesale Price 3,412 3,108 2,941 2,864 3,451 Consumer Price 5,971 5,615 5,254 5,364 5,498 1/ Average price, January through June 2017
Source: National Agricultural Cooperative Federation
Korea: Farm Price for Chicken Meat
Commodity Unit: Korean Won per Kilogram Chicken Meat, Farm Price
Year 2015 2016 2017 % Change comparing to previous year Month
Jan. 1,643 1,499 1,276 -14.9
Feb. 1,745 1,342 2,007 49.6
Mar. 1,790 1,373 2,041 48.7
Apr. 1,785 1,238 2,008 62.2
May 1,484 1,257 2,471 96.6
Jun. 1,379 1,535 1,666 8.5
Jul. 1,412 1,545 1,630 5.5
Aug. 1,213 1,814 - 49.5
Sep. 1,118 1,628 - 45.6
Oct. 1,415 2,018 - 42.6
Nov. 1,334 1,588 - 19.0
Dec. 1,518 1,329 - -12.5
Source: National Agricultural Cooperative Federation (NACF) and Agricultural & Fishery Marketing Corporation
Korea: Wholesale Price for Chicken Meat
Commodity Unit: Korean Won per Kilogram Chicken Meat, Wholesale Price
Year 2015 2016 2017 % Change comparing to previous year Month
Jan. 3,306 2,826 2,635 -6.8
Feb. 3,362 2,643 3,614 36.7
Mar. 3,409 2,677 3,646 36.2
Apr. 3,353 2,487 3,547 42.6
May 2,968 2,500 4,126 65.0
Jun. 2,870 2,930 3,138 7.1
Jul. 2,868 2,926 3,044 4.0
Aug. 2,626 3,225 - 22.8
Sep. 2,481 2,947 - 18.8
Oct. 2,649 3,644 - 37.6
Nov. 2,545 3,048 - 19.8
Dec. 2,849 2,512 - -11.8
Source: National Agricultural Cooperative Federation (NACF) and Agricultural & Fishery Marketing Corporation
Commodity Unit: Korean Won per Kilogram Chicken Meat, Consumer Price
Year 2015 2016 2017 % Change comparing to previous year Month
Jan. 5,511 5,265 5,062 -3.9
Feb. 5,115 5,107 5,323 4.2
Mar. 5,486 5,545 5,577 0.6
Apr. 5,386 5,308 5,510 3.8
May 5,318 5,220 5,830 11.7
Jun. 5,338 5,529 5,683 2.8
Jul. 5,338 5,436 5,290 -2.7
Aug. 5,196 5,337 - 2.7
Sep. 5,185 5,056 - -2.5
Oct. 4,965 5,716 - 15.1
Nov. 5,056 5,579 - 10.3
Dec. 5,150 5,266 - 2.3
Source: National Agricultural Cooperative Federation and Agricultural & Fishery Marketing Corporation
Korea: Monthly Average Foreign Exchange Rate (Unit: Korean Won / 1U$)
TRADE MATRIX
Korea: Import Matrix for Chicken Meat 1/ Import Trade Matrix
Country: Korea
Commodity: Chicken Meat Unit: MT & U$1,000, RTC Basis
Imports for CY 2015 CY 2016 Jan.-Jun. 2016
Jan.-Jun.
Total for Others 107,848 282,208 121,226 257,690 58,705 124,218 53,662 124,481
Grand Total 118,600 297,750 128,336 266,131 59,639 125,490 63,221 134,732
1/ HS 0207.1X.XXXX plus HS 1602.32.XXXX Source: Korea Customs Service
27
Korea: Export Matrix for Chicken Meat 1/ Export Trade Matrix
Country: Korea
Commodity: Chicken Meat Unit: MT & U$1,000, RTC Basis Imports for CY 2015 CY 2016 Jan.-Jun.2016
Vietnam 24,041 30,929 21,980 21,788 12,383 12,825 139 173
Iraq 1 21 1 19 0 0 0 1
Turkey 0 0 0 0 0 0 0 0
Australia 28 134 41 197 20 95 31 141
Russia 0 0 0 0 0 0 0 0
Other 198 1010 196 1,007 78 425 90 507
Total for Others 25,833 38,330 26,811 34,246 14,623 18,037 950 3,647
Grand Total 26,403 41,708 27,304 37,135 14,828 19,249 1,256 5,456
1/ HS 0207.1X.XXXX plus HS 1602.32.XXXX Source: Korea Customs Service
