Overview and Effects of the Temporary Tariff Removal of South Korea's Beef and Chicken Imports

South Korea announced on July 8th it will temporarily remove import tariffs on beef, chicken and several other food products. Starting this July, it removed tariffs on 100 thousand mt of beef and on 82.5 thousand mt of chicken. Current tariff rates stand at 10.6% for US beef, 16% for Australian beef, and 40% for beef of other origins.

According to data from Korea Customs Service, South Korea imported a total of 468.96 thousand mt of fresh, chilled or frozen beef (HS Codes 0201 and 0202) in 2021, with a total value of $3.56 billion. Most of the imports came from the United States, with 53% of the total, followed by imports from Australia, with 38% of the total. Other origins include New Zealand, Canada, and Mexico, which together took 8% of total imports in 2021.

In Jan-May 2022, South Korea imported a total of 201.73 thousand mt of fresh, chilled or frozen beef, with a total value of $1.86 billion. Volume compared to the same period in 2021 declined by 2.6%, but total value increased by 31%. The average import price per unit was $9.20/kg in Jan-May 2022, compared to $6.85/kg in the same period in 2021. This represents an increase of 34%. 

Source: Tridge and Korea Customs Service

With the tariff removal, South Korea expects that imported beef prices will decline by up to 8% from their current levels. As of July 11, 2022, South Korean wholesale prices for grade 1 beef ribs and/or loin stood around $13/kg.

Meanwhile, South Korea imported a total of 148 thousand mt of frozen chicken cuts (HS Code 020714) in 2021, with a total value of $268 million. Most of the imports came from Brazil, representing 88% of the total, followed by imports from Thailand, with 9% of the total. Other origins include Denmark, Sweden, and the US.

In Jan-May 2022, South Korea imported a total of 66.59 thousand mt of frozen chicken cuts, up by 4% compared to the same period in 2021. In terms of value, imports in Jan-May 2022 amounted to $147.6 million, up by 38% YoY. The average import price in Jan-May 2022 was $2.22/kg, up by 32% YoY.

Source: Tridge and Korea Customs Service

Most products comprised by HS Code 020714, which include frozen chicken legs, frozen chicken breast, frozen chicken wings, and other frozen chicken parts have a base import tariff of 20%.

It is worth noting that South Korea is an important chicken producer, with total chicken imports representing only 20-25% of total supply. Overall chicken prices could decline up to 5% just from the effect of the tariff removal. As of July 11, 2022, South Korean wholesale whole chicken prices stood around $2.8/kg to $3.5/kg, depending on the chicken size.