Boston, MA -- (SBWIRE) -- 03/04/2013 -- South Korea's agricultural exports in 2013 are likely to continue to ride on strong demand, especially from South East Asian nations. In the first 10 months of 2012, farm exports grew 7.8% year-on-year to US$670mn with the largest growth coming from South East Asian countries, of 22.4%. Shipments of processed farm products expanded the most, at 9.1% while fisheries products and fresh foods rose 7.7%.

Key Trends

?? Wheat consumption growth to 2017: 26.9% to 5.7mn tonnes. Approximately 30% of this demand is accounted for by the livestock sector. A important driver of wheat demand over the medium term will be the growing substitution of wheat feed in animal compound feed due to the relative cheaper price of wheat compared to corn. ?? Rice production growth to 2016/17: -6.3% to 4.0mn tonnes. The government is encouraging rice farmers to cultivate alternative crops under a three-year rice reduction programme running through 2013. In addition, high rice stocks have created relatively low domestic prices and have discouraged farmers from planting. ?? Beef consumption growth to 2016/17: 20.0% to 823,300 tonnes. As the foot-and-mouth disease issues in the beef sector are slowly fixed, beef consumption is likely to respond accordingly. We expect growth owing to an increase in beef imports and the expectation that consumers will substitute beef for pork. ?? 2013 real GDP growth: 3.0% year-on-year (y-o-y) (up from 1.9% in 2012; predicted to average 3.8% from 2012 until 2017). ?? 2013 central bank interest rate: 2.75% (same as in 2012; predicted to average 3.3% from 2012 until 2017).

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Industry Outlook

Since reporting the record level of the national cattle herd in June 2012 at 3.5mn heads, stock has remained high throughout the year despite government efforts to reduce cow numbers. For example, the slaughter of cows and heifers reach 63,400 heads in September which was the highest monthly slaughter in history. Indeed, the government has not only promised to slaughter 130,000 cows in H212 but it has also promoted local beef through discounts and promoting gift sets. However, prices of livestock (expect poultry) have steadily declined especially in H212. The import price index for agriculture, livestock and fishery products fell 7.5% y-o-y in September. For livestock alone, product prices decreased by 3.8% in September.

Meanwhile, imports have also been declining in tandem. Beef imports in September were reported to have fallen by 16% y-o-y with chilled and frozen imports decreasing by 16% and 14% respectively. In terms of country of origin, Australia and New Zealand's overall share remained the same at 50% and 11% respectively but the United States' market share had increase from 37% to 38%.

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