Korean beef on the rise in spite of the decline in the wholesale price

[Photo provided by Hanwoo Board]

The wholesale price for Korean beef has decreased despite its rising retail price, putting more strains on customers.

According to the data by the Korea Institute for Animal Product Quality Evaluation on Tuesday, the wholesale price of grade 1 Korean beef dropped 6.2 percent from 50,464 won ($38.91) per kilogram in April to 47,306 won this month. However, the retail price rose by 5.5 percent during the same period, from 91,300 won to 96,350 won.

Although it typically takes 2-3 weeks for changes in wholesale prices to be reflected in the retail prices of fresh food, the problem is that while wholesale beef prices have fluctuated, the retail prices have remained on an overall upward trend. This has resulted in an increased burden on consumers’ shopping budgets.

Even at hypermarkets like Lotte Mart and E-Mart, the selling prices have shown similar trends, with gradual increases despite fluctuations in the wholesale prices. Based on the average monthly price, a grade 1 beef sirloin at Lotte Mart sold for 96,125 won in April, but this month it was selling for 99,800 won, up 3.8 percent. In May, it sold for an average of 79,025 won, but the average price continued to rise in June and July. At E-Mart, based on the list price on the 10th of each month, grade 1 Korean beef sirloin was sold for 99,800 won in April, but since May, it has been sold for 103,800 won, an increase of 4,000 won.

“We regularly hold Korean beef events through card discounts and events linked to Shinsegae points to provide consumers with affordable Korean beef,” an E-Mart representative explained,

However, many consumers find it difficult to comprehend why the retail prices of beef have not decreased significantly despite the decline in wholesale prices.

Explaining the disparity between wholesale and retail prices, a distribution industry source highlighted that prepackaged beef, which is distributed to end consumers, requires primary processing, such as deboning, and secondary processing, including cutting and packaging. The recent increase in labor costs and other fixed expenses, particularly in primary and secondary processing, has contributed to higher costs.

“Operating costs like labor and material expenses have led to a relatively lower reduction in the sales price compared to the market price decrease,” said an unnamed official from a hypermarket.

Meanwhile, the decline in wholesale beef prices will persist. The projection was based on two key factors: the continuous growth in beef cattle and the ongoing contraction in overall consumption due to high prices.

According to recent data, the number of Korean beef cattle in the country witnessed a year-on-year increase of 2.31 percent and a month-on-month increase of 1.06 percent in May. There was a substantial rise in beef cattle aged one to two years, recording a 4.62 percent increase, while those aged two years and older saw a growth of 4.35 percent. However, in contrast to the increasing cattle population, the sales volume of Korean beef in May experienced a significant decline of 11.59 percent compared to the previous year.