Beef, the favorite meat of South Koreans, was the first meat opened to some trade. Largely because of internal price pressures, beef import quotas resumed in 1988 after 6 years of no trade. After an unfavorable General Agreement on Tariffs and Trade (GATT) ruling and revocation of GATT balance-of-payments protection in 1989 (see Policy), South Korea committed itself to operating minimum import quotas. South Korea succeeded in postponing the end of nontariff barriers until January 1, 2001, after which the beef market was fully liberalized. The government agreed in 1995 to end the shelf-life rule (see Issues and Analysis) that precluded imports of chilled beef. After losing a World Trade Organization (WTO) dispute settlement case, South Korea ended rules that allowed retail stores to sell either domestic or imported beef, but not both.
Over 1988-2003, substantial progress was made in reducing the barriers to imports. South Korea became one of the largest beef-importing countries in the world, as well as the second-largest market for U.S. beef exports. This progress was interrupted at the end of 2003, when South Korea banned imports of U.S. beef because of a case of Bovine Spongiform Encephalopathy (BSE or "mad cow" disease) in the United States. Without U.S. beef, South Korea's imports in 2004 fell sharply, and beef consumption declined. Significant imports of U.S. beef did not resume until 2007, however; volumes are still below pre-ban levels.
South Korea's beef marketing has undergone major changes. Its system for grading carcasses began in 1993; before that, there was no grading standard. Most beef was sold in relatively undifferentiated pieces, cut from carcasses in butcher shops. Virtually all beef was sold after being frozen, although most was thawed before retail sale. In recent years, Hanwoo beef has been sold fresh and presented to consumers according to a simple, three-level grading system. Supermarkets offer a variety of cuts, wrapped and labeled with suggestions for use.
South Korea's cattle were draft animals used in rice farming until the 1960s. Since then, the domestic draft breed, called Hanwoo, has been used for beef, furnishing over 80 percent of domestically raised beef with the rest coming from the Holstein dairy herd. Reflecting their origin, many Hanwoo cattle are still raised on rice farms as a sideline activity, often only one to four head at a time. This is particularly true for calf production, since fodder for one or two cows can often be found on a small farm, using family labor and roughage found on the margins of the farm. However, Hanwoo cattle are increasingly being fed on grains and other concentrates, and the scale of feedlots fattening purchased calves and culled cows is growing. Hanwoo slaughter weights have increased, mostly as a result of greater grain feeding but also because of genetic improvement. The average slaughter weight for Hanwoo cattle was 485 kilograms (kg) in 1995 and rose to 605 kg in 2007. South Korea's small scale of cattle raising and shortage of pasture, however, are fundamental constraints on the competitiveness of domestic beef production, and the prospects for strong expansion are poor.
Another part of South Korea's beef supply comes from the dairy sector. South Korea's dairy herd grew very quickly until the end of the 1980s. Rapid increases in dairy cow numbers, however, are not foreseen in the future. Comprised of Holstein cows, the herd produces young male animals, heifers, and cull cows as byproducts. Dairy cattle numbers peaked in 1995 and have gradually declined since 2001. The average slaughter weight was 543 kg in 1995 rising to 634 in 2007. Dairy animals comprised about 10 percent of the cattle slaughtered in 2007.
Pork and Poultry Meat
Koreans consume more pork than any other meat, in part because beef was in short supply and often quite expensive relative to pork. Chicken meat consumption was slow to grow in South Korea, partly because of a relative lack of recipes using chicken in the South Korean diet. The introduction of fast-food, fried chicken franchises, however, brought about expansion in broiler consumption in the 1980s and 1990s, and more growth is expected.
Since July 1, 1997, when imports of frozen pork and poultry meat were liberalized, the only formal barrier restraining trade for pork and poultry meat has been tariffs that were progressively reduced until reaching 25 percent for pork and 20 percent for poultry meat in 2004. Chilled pork and poultry meat were already free from quotas and have lower tariffs than those that face the frozen products (22.5 percent for chilled pork, 18 percent for poultry meat). Imports of chilled pork began late in 1996, after negotiations in 1995 ended a controversy over government-mandated short shelf-life rules for meats. Those rules would have effectively prevented imported chilled meat from being sent to South Korea in seaborne containers. South Korea has exported certain cuts of pork (notably loins) to Japan and other markets in some years. The government has sometimes subsidized the exports. Disease outbreaks have harmed pork and poultry farms in recent years (see Issues and Analysis).
In 2011, the South Korean government enacted new measures for cattle, swine, and poultry operations, including farm registration, minimum space requirements, increased training, stronger foot-and-mouth disease standard operating procedures, and cost sharing for vaccination expenses (see Detailed Measures for Improvement of Livestock Disease Control , FAS/USDA, June 2011).
Pork and poultry meat are produced intensively in South Korea, primarily using imported feedstuffs. About 7,000 hog farms and about 3,000 chicken farms (broiler and layer) dominate production,which is concentrated in the province surrounding Seoul, and, secondarily, in the southeast and central parts of the country. Pork production doubled in the 1980s and grew by over 50 percent in the 1990s. Both the number and weight of hogs slaughtered have increased over time. The broiler flock size has grown over the last decade, and the slaughter weight of broilers has increased, so that chicken meat production has shown an upward trend.
As in the intensive livestock industries in other major producing countries, South Korea's farms have been getting larger and larger. For pork production, boom-and-bust cycles led to concentration of production among lower cost producers. Farms with more than 1,000 hogs dominate the swine sector, with some farms having more than 10,000 hogs. The poultry industries have not seen the same wild swings in production and prices as the swine sector, but nevertheless have experienced a steady growth in size of operation as the cost advantages of large operations have aided their competitiveness. Most chicken production is on farms with 40,000 or more birds. Despite government restrictions on the maximum farm size because of environmental concerns, the trend toward larger, more efficient farms continues. Increased foreign competition, intensified since 1997, quickens the pace of change in farm size.
The South Korean market for meats continues to undergo considerable change. South Korea's marketing of pork and chicken meat was poorly developed until the 1990s. Pork, like beef, was sold thawed or frozen. Poultry meat has usually been sold fresh or chilled. Markets for specific cuts and for quality grades were largely absent, with meat sold in relatively undifferentiated form. This affected imports, since the international meat trade is increasingly concentrated in specific cuts and qualities. An undifferentiated retail market makes it more difficult to introduce cuts that usually sell at a higher price because consumers may not attach added value to a chilled product or to a cut designed to be easily used in a certain recipe. However, the lack of retail differentiation also limits the ability of domestic producers to add value through marketing specific cuts or degrees of freshness. Thus, the domestic industry shares with exporters an interest in intensifying and differentiating the marketing of meats in South Korea. In addition, South Korean consumers also have an interest in seeing more specific cuts in preparing certain dishes because they are increasingly pressed for time and interested in expanding the variety of foods they eat. The shift to a market in specific cuts has benefitted imports of certain cuts, especially pork ribs and bellies, which are sometimes in short supply and priced above world market levels.