[In-Depth Look] Pig Farms Unhappy with 'Geumgyupsal'

These days, the media is continuously reporting news related to consumer price increases. Among them, the price of pork belly, a staple food for the public, has risen, and the term ‘Geumgyeopsal’ (Golden Pork Belly) is frequently mentioned. In fact, the consumer price of pork belly last month averaged 2,802 KRW per 100g, up 14.3% from the 2,451 KRW average in the same month last year. There are two main reasons for the rise in pork prices.

The first reason is the surge in demand following the lifting of social distancing measures. Before the easing of restrictions, in April this year, the consumer price of pork belly was 2,400 KRW per 100g, but in May, the very next month, it rose by 16.8% to 2,802 KRW. Even though the supply of pork in May increased by 2,418 heads per day (3.2%) compared to the previous year, the lifting of social distancing led to a sharp short-term increase in dining-out demand, causing market movements to secure pork supply.

The second reason is seasonal factors. Typically, from May, the holiday season, through summer, pork demand increases, leading to higher prices. This year’s price increase appears more pronounced compared to previous years, making the rise feel especially steep. Some speculate that if consumer prices rise, pork farmers’ profits increase as well, but contrary to this belief, pork farmers do not feel that their profits have grown proportionally to the consumer price increase.

The biggest reason is the rise in international grain prices due to abnormal weather and the prolonged Russia-Ukraine war. Corn, the main ingredient in feed, has a high import dependency, and as international grain prices continue to rise, feed prices are also increasing. Additionally, labor and medicine costs are rising, causing production costs to increase relentlessly. On the other hand, the farm gate price of pork is determined by supply and demand principles in the wholesale market, so it is not structured to raise selling prices in line with rising production costs caused by international grain prices and labor cost increases. Therefore, with production costs not decreasing, the worsening of pork farmers’ management is expected to intensify after September, when prices generally fall. Furthermore, if consumption contracts due to the negative perception associated with the term ‘Geumgyeopsal’ and pork prices plummet, pork farmers will have no choice but to settle prices below production costs. If management deterioration continues, warnings that about 30% of pork farms could go bankrupt next year may become a reality.

Before these concerns become reality, multifaceted support measures and a shift in public sentiment to overcome the crisis faced by pork farmers are urgently needed. Although effective policies such as interest rate reductions on feed purchase funds are being discussed and implemented, a worrying trend is consumers, burdened by already high prices, shifting to imported meat. If the imported meat market expands, it should not be overlooked that the foundation of the pork industry could be shaken at a time when food security is crucial. While it may not be easy to prepare support measures solely for pork farmers during these difficult times, considering the current reality of pork farmers, more appropriate government policy supplementation seems necessary. Additionally, rather than forming public opinion that could psychologically suppress consumption, such as the term ‘Geumgyeopsal,’ it is clear that creating a market atmosphere where many consumers consistently seek our domestic pork is needed. Of course, pork farmers must do their best to produce high-quality pork so that consumers can purchase pork with confidence.

Son Sehee, Chairman of the Korea Pork Producers Association Management Committee