Cattle graze after being put out to pasture at Daegwallyeong Pass in PyeongChang, Gangwon Province, northeastern South Korea, on May 31, 2021. (Yonhap)
SEOUL, Feb. 24 (Korea Bizwire) – The impact of government policies on the consumer and businesses alike is substantial, as seen in regulatory policies implemented by the previous Moon Jae-in administration to combat high demand in the real estate market.
The Moon government’s belated shift to supply policies resulted in criticism for causing confusion in the market.
While accurately diagnosing the market is challenging, biased diagnoses and decision-making can lead to serious side effects.
The current government’s recent approaches to prevent the steep decline in Korean beef (hanwoo) wholesale prices have raised concerns.
In response to the recent drop in wholesale prices, Agriculture Minister Chung Hwang-keun announced that the government would reduce the size of the herd nationwide by 140,000 cows before 2024 to address oversupply.
Unlike the previous government, which focused on the demand side of the real estate market, the current administration aims to address the hanwoo market’s problems by targeting the supply side.
Hanwoo wholesale prices have been falling for a lengthy period of time, and concerns have been growing among livestock farmers that the situation may become more severe than in 2013, when cattle prices notably fluctuated.
This photo, taken Feb. 20, 2023, shows Agriculture Minister Chung Hwang-keun speaking to lawmakers at the National Assembly in western Seoul. (Yonhap)
Analysts attribute the decline to a combination of internal and external factors, such as increased breeding leading to lower prices, reduced consumption due to higher interest rates, and rising feed prices.
In the mean time, despite the recent drop in Korean hanwoo wholesale prices, farmers in the industry continue to express concern and anxiety.
However, consumers have not seen a corresponding reduction in prices, with the exception of a recent “half-price discount event” in the retail industry.
Critics suggest that the complex distribution process has resulted in static prices for consumers, leaving retailers to reap the benefits of the price drop without passing the savings on.
The Hanwoo Association, an industry body representing hanwoo cattle growers, argues that the government’s large-scale imports of beef last year also contributed to the drop in Korean hanwoo prices.
To stabilize prices, the government temporarily removed tariffs on imported beef and brought in 100,000 tons of beef last year.
However, the association believes that the imported beef that was rapidly imported has still not been fully consumed, and continues to drive down Korean hanwoo prices.
In addition, the COVID-19 pandemic has impacted the market, with fewer people dining out leading to increased meat consumption at home, encouraging farmers to breed more cattle.
This photo taken on Feb. 17, 2023 shows Korean beef being sold at a local hypermarket store in Seoul. (Yonhap)
The government’s measures to stabilize Korean hanwoo prices have no state budget support, and farmers are suffering from falling cattle prices and increasing production costs.
The government’s plan to slaughter cows may cause small farms to go out of business. The Hanwoo Association has appealed to the government to come up with effective measures to stabilize the industry and protect small farmers.
According to the association, 2,000 small Korean livestock farms are expected to close in a year due to a series of unfavorable factors, and as many as 20,000 farms are expected to go out of business by 2025.
The government needs to implement measures to protect these farms urgently.
The hanwoo industry is facing serious challenges, and the government’s policies are crucial to stabilizing the market.
It is necessary to consider the opinions of Korean beef farmers and provide effective measures to protect small livestock farms, appealed the association.
Jerry M. Kim (jerry_kim@koreabizwire.com)
