Bovine disease hurts Seoul feed industry

Bovine disease hurts Seoul feed industry

SINGAPORE (Dow Jones): The outbreak of foot-and-mouth disease
in South Korea last month is set to scupper any chances of growth
in the country's animal feed industry this year, analysts and
trade officials told Dow Jones Newswires.

They said the impact appears to have negated the positive
effects of South Korea's economic recovery this year.

South Korea's recovery from the effects of the Asian economic
crisis, which struck in 1997, was expected to lift feed
production and imports of corn and soybeans this year on the back
of a rise in meat consumption and increased crushing activity,
they said.

South Korea is the world's second largest corn importer, after
Japan, and the fourth largest U.S. market for agricultural
products. It is also Asia's third largest importer of soybeans.

Although still confined to the cattle industry, the disease
outbreak is also expected to hit the country's swine population,
thereby reducing compound feed production and feed ingredient
imports, they said.

The foot-and-mouth disease is an extremely contagious disease
that affects cloven-hoofed animals. It was first suspected among
the cattle in Paju, near Seoul, around March 20.

South Korea's pork industry has been hard hit largely because
of a ban on its pork and beef from Japan, its largest pork export
market.

South Korea's "pig population will be down by 10 percent,"
said Jung Young-chul, director of the Jung P & C (Pork Producer
and Consumer) Institute in Seoul.

As of April 16, the disease has been confirmed to have hit the
cattle in fifteen farms. Since then, there have been no reports
of new outbreaks.

South Korea's corn needs are 99 percent met by imports as it
only produces around 82,000 metric tons of corn yearly.

The U.S. Department of Agriculture had projected South Korea's
corn imports in the year to Sept. 30, 2000, at 9 million metric
tons, up from 7.52 million tons a year earlier.

It projected South Korea's soybean imports in the year to Oct.
31, 2000, at 1.5 million tons, up from 1.45 million tons in 1998-
99 and 1.34 million tons in 1997-98.

The foot-and-mouth disease will have an immediate impact on
South Korea's compound feed output, which is now expected to be
flat to lower this year, instead of riding 3 percent-10 percent
higher on the economy's growth, said analysts and industry
officials.

Compound feeds are made up of a variety of products, such as
corn, feedwheat, oilseed meal, barley and rice bran, according to
the specific needs of the livestock farmer.

A purchasing department source at a large South Korean trading
company said: "The (foot-and-mouth disease) isn't so serious. The
maximum fall in compound feed production this year (will be) 10
percent."

A bigger decline is ruled out, thanks to the existence of a
pork import market in South Korea, he said, adding that imports
have stopped and the pork meant for export will now be used for
domestic consumption.

Jung of the Jung P&C Institute said compound feed production
is likely to slide by 5 percent-10 percent but cautioned that the
foot-and-mouth disease situation remains unstable and that
"there's a high possibility that swine can be infected."

Sunchul Choi, agricultural specialist at the U.S. agricultural
attache in Seoul said South Korea's compound feed output this
U.S. October-September marketing year is likely to be flat
compared with a year ago at 14.56 million tons. It had been
expected to rise 15 million tons.

"Until the end of this (U.S. marketing) year, there won't be
much change in swine numbers and the import of feedgrains," he
said. "But in the next marketing year, (swine numbers and
feedgrains imports) will be heavily reduced."

Pig farmers currently are trying to reduce their herds and
South Korea's usually stable compound feed prices are likely to
slide in a few months' time because swine prices have dropped
about 20 percent to 140,000 won (US$126) a head since the
outbreak of the animal disease, said Choi.

Compound feed prices, which haven't changed since the outbreak
of the animal disease, were quoted at 379 won a kilogram for pigs
of 5-10 kilograms, as of December.