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USDA International Egg and Poultry

31 October 2014

USDA International Egg and Poultry - 28 October 2014USDA International Egg and Poultry - 28 October 2014

USDA International Egg and Poultry

South Korea

Chicken production in 2014 is estimated to be 746,000 metric tons (MT), 5.1% above 710,000 MT in 2013 due to an increase in parent stock (PS) inventory. Industry estimates of the total number of PS inventory for 2014 is 7.3 million chickens, 500,000 higher than the industry’s optimal level of 6.8 million chickens.

 From January 16, 2014 to July 28, 2014 about 14 million poultry birds, including layers and ducks, were culled due to highly pathogenic avian influenza (HPAI-H5N8 type). Included in the total 14 million total culled poultry birds were 3.4 million broilers and 10 million layers. An outbreak of HPAI-H5N8 was reported on September 24, 2014 in ducks bred for meat production. About 1,200 ducks died from the infection and an additional 19,800 were destroyed.

The January 16 – July 28, 2014 HPAI outbreak did not have a significant impact on production due to 1) the culled broiler numbers only accounted for 0.4% of annual slaughtered chicken numbers in 2013; 2) a reduced broiler chick mortality rate during the summer season because of favorable weather; and 3) increased PS inventory throughout 2014. As a result of the estimated increased PS inventory in 2014, chicken production in 2015 is forecast to increase slightly to 753,000 MT. However, excessive chicken production and increased frozen reserve stocks from 2014 will reduce the pace of production in 2015 because of reduced profits along with decreased farm gate and wholesale prices.

On July 1, 2014 South Korea implemented a government inspection system; previously company veterinarians inspected poultry. The new system will be applied to establishments that process more than 80,000 birds per day from July 1, 2014; for plants that process more than 50,000 birds per day on January 1, 2015; and to those plants that process less than 50,000 birds per day on January 1, 2016. The South Korean chicken industry had increased the chicken production up to 15% since the start of 2014 in the anticipation of increased demand from international sporting events (the February Sochi Olympics, the Brazil World Cup in June, and the September Incheon Asian Games).

The South Korean chicken industry had experienced heightened sales in the past during such events. However, actual consumption did not meet expectations during the first 7 months of 2014 due to the HPAI outbreak, an April ferry accident that cause many consumers to limit eating for over 3 months, and because of the time differences between South Korea and Brazil many of the World Cup soccer matches were held in the early morning. In 2015, chicken consumption is forecast to increase 1.5% from 864,000 MT in 2014 to 851,000 MT in 2015. The increase in chicken consumption is due to the relatively cheaper price than pork and in the food service industry.

South Korea’s chicken imports increased 10% during the first 6 months of 2014 to 68,241 MT from 61,994 MT in 2013 for the same time frame in anticipation of increased demand from the many international sports events, the HPAI outbreak, and PED outbreak in the swine industry. Imports of frozen chicken are forecast to increase slightly in 2015 due to an increasing market share of U.S. bone-in chickens resulting from a reduced tariff rate of 12% under the KORUS FTA. South Korea’s 20% tariff on imports in the dominant leg quarter category will be phased out by 2021 and tariffs on frozen breasts and wings eliminated by 2023. The 18% tariff on frozen turkey cuts will be eliminated by 2013.

Brazil is the United States (U.S.) strongest competitor for chicken exports to South Korea. Brazil’s chicken exports to South Korea consists mostly of boneless products. Because of Russia’s recently imposed ban on agricultural livestock imports from western countries it is anticipated Brazil will decrease chicken exports to South Korea in response to increased demand from Russia.

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