Hanwoo farmers worried about uncertain market

Kim Kee-Seong has operated a small ranch with about 100 prized Hanwoo cattle in the Hoengseong countryside in eastern Gangwon Province, about 137 kilometers east of Seoul, for the past 30 years. Housed in pens just a few yards from his front porch, the cows are close to the farmer, now well into his 60s, both literally and figuratively.

“I grew up on a farm in Hoengseong,” he says. “These cows are my livelihood and they represent a tradition for my family and for all of Korea.”

Indeed, the free-range Hanwoo cattle are extolled by government organizations and citizens alike for being of much higher quality and taste than their factory-farmed American cousins.

When asked what makes the Hanwoo meat so tender, the 165-centimeters-tall farmer cracks a smile and says, “It’s a secret. But I’ll say that it’s 50 percent good breeding and 50 percent the raising process.” When it comes time to talk about the business though, Kim gets more serious.

Lately the Hanwoo industry, which provides about 43 percent of all beef in Korea, has been suffering. Hanwoo farmers like Kim are facing tough times and many are worried about what the future has in store.

“There are so many problems we’re facing,” said Kim, walking through the aisles of cattle and reaching out to pet a small calf as he walks by. “If we don’t find some way to work with the government, I’m worried about what will happen to us (farmers).”

The problems Kim talks about are complex and have been brewing for quite some time. Last year the industry was dealt a devastating blow from a bout of foot-and-mouth disease that led to the culling of thousands of pigs and cattle. The disease was so widespread that euthanasia drugs ran out and farmers were forced to bury some of their livestock alive.

Over-breeding has led to a surplus of beef resulting in sharp price drops. In some instances, cattle are being traded for less than the price of pigs.

According to the Agricultural Outlook Forum report issued by the Korea Rural Economic Institute (KREI) in March this year, wholesale Hanwoo prices are 18 percent lower now than in the same period in 2010. They cite overall economic uncertainty and high consumer prices as factors driving away the demand for the meat.

But Kim and some of his fellow farmers believe there is more to it than that.

He thinks part of the blame lies in the recent Free Trade Agreement between Korea and the United States. He also blames the April mad cow scare for driving people away from beef and the government for not doing enough to stop American imports when health concerns arise.

The legitimacy of these concerns is somewhat questionable. A May report from the Ministry of Food Agriculture Forestry and Fisheries (MFAFF) showed that beef sales had actually risen 3.3 percent.

More than anything, he is concerned about costs.

“It’s fine that we can ship our electronics (to the U.S.) at a cheaper price and that they can export some of their cattle here for cheap, too,” says Kim. “But Hanwoo is special to Korea, and if they are going to do that, we deserve some kind of subsidy.” To that end, Kim and the community of farmers in Hwangseong have banded together to petition the city for more help.

“Mostly we’re asking that they help us with our food costs,” said Kim. “The worst case scenario, for me, would be if I couldn’t afford to feed my animals anymore.”

Hanwoo have a highly regulated diet that farmers aren’t allowed to deviate from. If they do, they can lose the privilege of the Hanwoo title. The strict diet consists of grass, hay and an imported feed similar to dog kibble. Antibiotics and animal proteins are avoided as much as possible. Kim says he spends about 100,000 won ($86) per month to feed each cow, bringing his food costs to around 10 million won each month.

The cows selling prices are determined by the quality of their cuts. Currently, Kim is selling each cow for anywhere between 4 million to 8 million won. At those prices, it’s hard to recoup enough to earn a living.

The government has not been entirely complacent, though. Kim said that Hoengseong city officials responded positively to their pleas, though no specific action has taken place yet. On a broader scale, MFAFF is stepping up to help as well.

They’re trying to reduce the number of overall cattle by 200,000 by the end of 2013 to solve the over-breeding problem.

They’re also replacing military meat with Hanwoo and domestic Holstein as well as trying to develop a veal market within Korea.

In the meantime, they are also encouraging discount sales of the meat in an effort to rekindle consumer interest. Unfortunately, many of the large chain grocery stores and restaurants have largely disregarded these efforts. Few have reduced their retail prices and, in some instances, they’ve even increased them.

An investigation by the Consumers Union of Korea revealed that some department stores were taking home profit margins as high as 38.5 percent, compared to a margin of 3.8 percent at the wholesale level. Farmers like Kim don’t see a single won of such high margins.

Despite all these problems, Kim isn’t ready to give up yet.

With the farming community banding together he still has hope.

“We’re a community of many different people, with many different opinions,” he said. “But we all agree on the need for change, and things look promising.” 

(Yonhap News)