South Korea’s beef imports by will fall far short of previous expectations, as the coronavirus outbreak spurs the country’s first consumption drop in 15 years - with pork buy-ins set for an, unusual, decline too.
Beef imports by South Korea - the world’s fourth-ranked buyer, after China, the US and Japan – will fall to 550,000 tonnes, the US Department of Agriculture’s Seoul bureau said.
Imports at that level would represent a decline of 13,000 tonnes year on year, and come in well short of the 625,000-tonne total the USDA has pencilled in.
The decline is a reflection of consumption that the bureau pegged at 840,000 tonnes – 80,000 tonnes below the USDA’s official estimate, and representing the first year-on-year decline since 205.
The bureau blamed the downturn on the outbreak of the Covid-19 coronavirus, saying that “since the first positive case of Covid-19 in Korea on January 20, the overall economy has plummeted as more positive cases continue to be detected.”
It added that the outbreak is “creating significant economic headwinds, reducing demand for animal protein” which is vulnerable not just as a relatively expensive food item but thanks to being largely eaten in restaurants – a sector that has suffered particularly as consumers eat at home to cut the risk of coronavirus infection.
“In general, 50% of meat consumption in [South] Korea is through restaurants,” a sector “hit hard” by the outbreak, with industry data showing a 33% slump in restaurant customs during the first month after the initial Covid-19 case.
For pork - of which South Korea is also the world’s fourth-largest importer – the USDA bureau forecast imports at 600,000 tonnes this year.
That was also well below the USDA’s official forecast, of 695,000 tonnes, and showed a rare year-on-year decline, as domestic consumption was seen falling for the first time since 2011.
‘Afraid to dine out’
For beef, imports will feel particular pressure given their reliance on restaurants for demand.
“Imported beef will be hit the hardest by the drop in beef consumption coming from Covid-19,” the bureau said, noting that it was particularly popular in restaurants and institutional uses, segments in which it “is largely competitive”.
Imported beef has a share of only some 10% of beef used in South Korea ready-meal sector, which is seeing an increase in demand as eating out declines.
“As consumers are afraid to dine out for fear of catching the disease, and companies cancel activities that involve large groups of people and also instruct their employees to telework, the only sector that is enjoying a boost in sales is the convenience stores that sell home meal replacement.”
Furthermore, the downturn in South Korean beef consumption is coming at a time of buoyant domestic beef production, with producers having been incentivised by high cattle prices last year to expand herds.
The bureau added that analysis of previous disease outbreaks suggested that Covid-19 would continue to affect markets for some months yet.
“Novel viruses have historically had an impact for a minimum of 5-6 months and therefore we project that Covid-19 will affect overall meat consumption through the first half of 2020, if not longer.”