Foot-and-Mouth Virus Drives Up Korean Meat Prices
This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.
Good evening I'm Saijal Patel and you're watching “Asia Market Daily”.
Food inflation is a huge concern as we head into Lunar New Year.
Most of the focus has been on prices in China.
But in South Korea, the price of meat has been rising as well.
It's been almost 2 months since the first outbreak of foot-and-mouth disease in the country, and despite government efforts to counter the spread, the virus shows little signs of abating - keeping the pressure on prices.
SBS CNBC's Hyunmo Ahn reports.
So far the virus has been found in 7 cities and provinces, even hitting a state livestock research institute. Hundreds of thousands of personnel have been deployed for culling and vaccination, amid criticism that the government reacted too late.
Lee Jae-Yul, Disaster & Safety Bereau, Ministry of Public Administration and Security:
"Additional 2.2 million doses of vaccines have arrived from Britain and Germany. The distribution has begun immediately and we will complete the inoculation before the new year holiday."
It's an effort that has cost Seoul about 1.8 billion dollars so far, including compensation to affected farmers. The end cost is estimated to be the largest ever.
So far around 2.3 million pigs and cows have been put down so far in South Korea. That's 1 out of every 6 livestock animals.
The mass cull is taking a toll on the country's meat supply, exacerbating already-severe food inflation. Wholesale prices of pork have doubled in just one month to a record high level. And the tight supply is being compounded by the approach of the Lunar New Year holiday, when meat sales traditionally spike. Concerns over milk prices are also rising, as 5% of total milk cattle have been slaughtered, too. That's curtailing exports as well.
Moon Mi-Ho, Director of Public Information Office, Korea Customs Service:
"Meat exports dropped 86% last year compared to the previous year, while imports of Australian beef ribs rose 12%, and US beef ribs jumped 58%, the biggest rise in 11 months."
For now the government says there is no plan to boost imports or cut import duties despite the shortages. Now the country is bracing for more disease - Avian flu could become a problem after 20 confirmed cases were found in poultry last week. With the entire nation under an epidemic spell, the livestock industry is not the only victim. Tourism is also feeling the pinch as local festivals are cancelled and travel warnings issued.
Meanwhile, inflation in Hong Kong hit 3.1 percent in December the highest in almost 2 years.
Food inflation, in particular, rose 4.3 percent last month compared to a year ago.
So, how is inflation affecting the islanders' everyday life?
CNBC's Oriel Morrison and Bernie Lo go shopping, for a first hand experience.
Bernie Lo: Oriel we're buying some greens, It's good for you.
Oriel Morrison: Makes you strong
Bernie Lo: Yep high in iron like Popeye said, I think he ate spinach but this is called Choi Sum it's a staple in Chinese cooking. $14 for one caddy which is a measure of weight and maybe 10 years ago it was three or four dollars.
Oriel Morrison: 10 years ago.
Bernie Lo: Yeah so it's basically.
Oriel: What about two years ago?
Bernie Lo: Ha?
Oriel: What about two years ago?
Bernie: About 10, about 10 dollars or thereabouts.
Oriel: So you haven't had a huge inflation problem over the last few years.
Bernie: No inflation runs about just over three percent, but the food inflation is responsible for a lot of that, you know how around the world, the really weird weather has led to you know lower crops and that sort of thing, we've had that problem in China in recent years. But the other problem is also the Hong Kong Dollar peg against the US dollar which makes up very uncompetitive against other currencies. You came from Sydney so you.
Oriel: Yes, I brought my Aussie dollars.
Bernie: Whoa this is like gold here in Hong Kong. I'll give you an example. There's this Australian chicken shop which I used to patronize near where I live and five years ago they charged maybe 10 US dollars for a roasted chicken. It's double that largely because they're all imported from Australia.
Oriel: Quite often on the show you take your money out and throw it away.
Bernie: It's worthless right. The only place that we find it competitive is against, when we go to the US , when we're buying US goods, you know we go up and down, mostly down in recent years with the US dollar, but against the Aussie, against the Euro, you know it's been a really really tough terrain.
Thanks for watching “Asia Market Daily”.
I'm Saijal Patel from CNBC Asia.
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