South Korea and other problems
After four-plus years of banning American beef, South Korea in April again opened its doors to the importation of our beef. Ever since the announcement of the trade agreement, there have been demonstrations against it. The demonstrations grew to as many as 80,000 people. To help placate the populace and to try to keep the country stabilized, the South Korean government and U.S. suppliers agreed to amend the trade agreement to block meat from cattle older than 30 months from entering South Korea.
Reasons given for the demonstrations were the same old tired “health concerns”, or fear of bovine spongiform encephalopathy. South Korea was the third largest overseas market for American beef until after the discovery of a case of BSE in the U.S. in late 2003. These arguments have repeatably been disproved by scientists from around the world, including studies from the United Nations and the World Health Organization.
What then is the real driving force behind the demonstrations and strikes by South Korean trade unions?
Korean news columnists are saying health concerns with U.S. beef is a handy issue to inflame anti-American passion across the country. Kim Dacjoong says, “There is little to speak of in Korea if we take out America from the topics of conversation. We immigrate to America, we study in America. Every other household in Korea has a connection of one kind or another with America. Given all of this, it amounts to double-crossing to be really fond of America in all substantive matters, while bad-mouthing America in public protests.”
Other reasons being given for the demonstrations are false media reports about health risks, along with a sense that South Korea had bowed too easily to American pressure to resume beef imports from our country.
Even after the amendment to the beef agreement and the resignation of the cabinet and reshuffling of top aides, President Lee Myung-bak has expressed increasing concern that the demonstrations have been fueled by groups opposed to his election in February.
Cultural concerns, unstable governments and false media attacks are what the American cattle producer has had to deal with around the world since December 2003. The National Cattlemen’s Beef Association (NCBA), and all of its state affiliates, including the Illinois Beef Association, have worked tirelessly on behalf of the American cattlemen and women. South Korea is the last major trading country we need to get back in the fold. Hopefully, cool heads, reason and logic will prevail.
Unfortunately, South Korea is now in a time of major trade deficits. Trade with developing countries was strong with a gain of 25 to 50 percent. However, trade with industrialized counties was less than a 12 percent growth. As could be expected, oil imports were the drag on their economy, up 60 percent. Good luck to the American trade negotiators.
On the home front, high corn and distillers grain prices along with the ever increasing transportation costs are the main worries of cattle feeders across the country. Feed costs are up 30 to 40 percent compared to just two and one-half years ago.
Gregg Doud, chief economist for the NCBA, says cattle feeding operations may expect to lose $100 to $150 per head for the first half of this year. On the cow-calf side, the cow inventory is about 96.7 million head, the same level as 2006, but cow slaughter was up 7 percent and heifer slaughter was up 4 percent for the first quarter of 2008. Beef exports amounted to 1.4 billion pounds in 2007, a 25 percent increase over 2006. In 2008 the export number should be more than 1 1/2 billion pounds. If South Korea comes around, that is a potential $1 billion market.
These beef exports are helping on the plus side of the American trade deficit, but many feedlots are operating at less than full capacity and are opting to place heavier cattle in their lots to cut feed costs. All of the feedlot operator’s problems may come back and affect the cow-calf producer by way of lower prices this fall. Only time will tell.
Hay making this summer has been bizarre, to say the least. Very few people managed to get the first cutting put up in decent shape. Wet fields and slow drying forced many growers into cutting and baling their first cutting at about the time they should have been doing their second cutting. Hay was in short supply in 2007, it may be even shorter this year. It will be interesting to watch prices this winter.
To end on a happy note, I hope everyone is having a great Fourth of July weekend and cooking beef on their grills. I would also like to remind everyone that Beef Days is fast approaching. The Bureau County Cattlemen will once again be cooking 5-ounce ribeyes, all-beef hot dogs and roast beef for your enjoyment on July 18 and 19. Come out and enjoy American beef on Friday night at Soldiers and Sailors Park and Saturday at Darius Miller Park. Fun, good food and entertainment to be had by all. After all, beef is what you want.
Larry Magnuson serves as a dues director on the Illinois Beef Association Board.
