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.