Opportunities for French and Irish Beef Exporters as South Korea Lifts Trade Barriers

On June 13, 2024, the European Commission (EC) announced that South Korea lifted trade barriers that previously restricted the export of French and Irish beef to the country. This development is significant for the European Union (EU) beef industry, as South Korea is one of the largest beef import markets globally. According to the EC, removing these trade barriers not only initiates French and Irish beef exports to South Korea but also highlights the collaborative efforts between the EU and South Korea to ensure the safety and quality of food products traded between them. The EC expects that other EU member states will soon be able to export beef to South Korea, strengthening the EU-South Korea trading relationship.

It is worth noting that South Korea imposed trade restrictions on beef from 15 EU member states in 2001 due to the outbreak of bovine spongiform encephalopathy (BSE). Following extensive discussions with the EC, South Korea reopened its market to EU beef from Denmark and the Netherlands in 2019. The current lifting of trade restrictions represents a positive trend for future trade involvement of other EU countries, demonstrating the EU's commitment to maintaining stringent animal and food safety control measures.

According to International Trade Centre (ITC) Trade Map data, South Korea’s beef imports under HS code 0202 amounted to 371.35 thousand metric tons (mt), a 0.1% increase compared to 2022. Most of these beef imports came from the United States (US), which provided 176.28 thousand mt, accounting for a significant 47.47% market share. Australia followed with 157.65 thousand mt (42%), and New Zealand contributed 17.45 thousand mt (4.7%). Denmark and the Netherlands collectively accounted for less than 1% of the South Korean beef import market. The inclusion of France and Ireland is anticipated to enhance the EU's beef market share in South Korea.

Figure 1: South Korea’s Beef Imports from 2019 to 2024

Notably, the US has leveraged South Korean consumer confidence in its beef products. According to the United States Meat Export Federation (USMEF), a recent Gallup poll revealed that over 70% of South Korean respondents trust the safety of US beef, and nearly 70% intend to purchase it. However, the US is grappling with beef production challenges due to prolonged droughts, leading to an expected drop in exports in 2024. The United States Department of Agriculture (USDA) reported that US beef exports decreased by 3% in Q1-2024, with Japan, South Korea, and China experiencing the most significant year-over-year (YoY) declines. This situation presents an opportunity for the EU, particularly France and Ireland, to gain a larger market share.

Additionally, the EU is poised to benefit from its relatively lower export prices. Trade Map data shows that US beef export prices to South Korea averaged USD 6,945/mt in 2023, the highest compared to other countries. In contrast, Denmark's export prices averaged USD 4,714/mt in 2023, one of the lowest. Given the current challenges the US faces with beef exportable supplies, US export prices are expected to rise in 2024. This anticipated price increase may prompt South Korean beef importers to turn to the EU, with France and Ireland likely to benefit from this shift.

Figure 2: Beef Import Price per mt Trend to South Korea from 2019 to 2024

However, South Korean beef farmers are concerned about the impact of the expansion of importing countries, given the current management crisis due to falling cattle prices. According to Tridge data, the average price of Grade 1+B beef cattle in Hoengseong-gun, South Korea, was USD 11.21 per kilogram (kg) in W24, reflecting a 3.86% week-on-week (WoW) drop, a 12.69% YoY decrease, and a 24.21% decline compared to three years ago. With an expected increase in imports, particularly from France and Ireland, beef prices in South Korea are anticipated to drop further. This potential decrease in prices could lead to reduced profit margins amid increased production costs, raising concerns about the sustainability of the domestic beef industry.

Figure 3: South Korea’s Cattle Beef Price Trend from 2021 to 2024

In conclusion, with South Korea's beef self-sufficiency estimated at around 35%, the country is likely to continue importing beef and expanding its sourcing options. The lifting of trade barriers on French and Irish beef opens a lucrative market for EU exporters and strengthens the collaborative efforts between South Korea and the EU. However, this increased trade activity may further reduce domestic beef prices, potentially impacting the sustainability of South Korea's beef industry. As these changes unfold, it will be crucial to balance the benefits of market expansion with the need to support domestic farmers.