June 27, 2011 / 12:41 PM / 6 years ago

S.Korea to resume Canada beef imports after 8 years

<p>A store clerk adjusts Canadian beef at a meat store in Tokyo January 15, 2006.Yuriko Nakao</p>

SEOUL/WINNIPEG, Manitoba (Reuters) - South Korea said on Monday, it will resume imports of Canadian beef that it suspended in 2003 after an outbreak of mad cow disease, and will allow meat from cows younger than 30 months old.

A wider choice of beef imports may help tame inflation in Asia's fourth-largest economy, which is still recovering from its livestock herd's worst outbreak of foot-and-mouth disease.

Both countries also agreed to end their dispute over resumption of beef imports through the World Trade Organization, their agriculture ministries said.

South Korea's agriculture ministry said, the government will submit a motion to the South Korean parliament to review the bilateral deal before announcing details of the import safety criteria.

"The Canadian government told us that all the procedures would be completed by December 31 of this year to resume beef imports. And, our government said, that we would do our best to resume the imports within the period," the ministry statement said.

Canada, the third-biggest beef shipper, described the agreement as "a breakthrough," but noted that it still requires public consultations and legislative approval in South Korea.

"After almost a decade, Canadian beef producers are on track to gain access to the lucrative South Korean market, making our industry and entire economy stronger," said Canada's agriculture minister Gerry Ritz, in a statement.

South Korea is the last major beef-importing country to agree to lower its restrictions on Canadian beef, since a 2003 outbreak of mad-cow disease (BSE) in Canada.

Restored access would be worth more than C$30 million ($30.3 million) by 2015 for Canadian cattle farmers, according to the Canadian release.

In 2002, prior to its ban, South Korea was Canada's fourth biggest beef market, accounting for 12,000 tonnes, or four percent, of South Korea's total beef imports.

Earlier this year, South Korea confirmed 150 foot-and-mouth cases in 11 provinces, and culled a third of its hog population and five percent of its cattle to halt the disease's spread.

Seoul turned to imports to alleviate meat price spikes.

"The government is trying to diversify import channels of food and agricultural products to minimize supply volatility and price hike impacts," said Sun Yoo, an economist at Woori Investment & Securities.

Government data showed annual consumer inflation eased in May for a second consecutive month after setting a 29-month high of 4.7 percent in March. Nevertheless, it remained above the upper end of the central bank's two to four percent target range.

MATCHES U.S. ACCESS TO KOREA

Canada's access for beef under 30 months is virtually the same as access the United States already has to the South Korean beef market, said Brad Wildeman, chairman of a trade committee that advised Agriculture Minister Ritz.

"It is a big deal," he said. "The timing is really ideal for us to get back in there."

Canadian competition could pressure prices of U.S. beef sold to South Korea, said Don Roose, president and analyst at U.S. Commodities in Iowa.

But any loss of U.S. sales to South Korea could be partly offset by Canada shipping less to the United States, he said.

"It brings up a whole lot of unknowns," Roose said.

Chicago live cattle futures declined sharply on Monday, but it's unlikely the Canada-South Korea deal is the main reason, Roose said, adding there are ample U.S. supplies of beef and cattle.

South Korea is the largest importer of U.S. beef year to date through April, buying 165,880 lbs.

The opening of South Korea's market comes as Canada is expected, over the next decade, to ship a growing share of its beef to Asia, Mexico and Russia, and less to the United States, said Gib Drury, chair of the Canada Beef Export Federation.

Aging North Americans are eating less beef, he said, while growing populations elsewhere with improving incomes are adding more meat to their diets.

How quickly South Korea resumes its place as a top beef market for Canada depends on China, Drury said.

China agreed last summer to lower its Canadian beef restrictions, but trade has yet to resume.

"If China opens faster than Korea, there quite frankly won't be any beef available for Korea, because China can consume all the Canadian beef we produce," Drury said.

Canada exported more than 400,000 tonnes of beef and veal in 2010, with the United States and Mexico buying the most.

China may resume importing Canadian beef as early as September, and likely no later than the end of 2011, after resolving questions about Canadian processing methods, Drury said.

The head of Canada's biggest cattle organization said, South Korea will likely offer the most immediate beef demand.

"The U.S. has been having a heyday in Korea in terms of exports this last year," said Travis Toews, president of the Canadian Cattlemen's Association. "It's important for our processors to have access to that market."

($1=$0.99 Canadian)

Reporting by Cho Mee-young in Seoul and Rod Nickel in Winnipeg; additional reporting by Bob Burgdorfer in Chicago; Editing by John Picinich, Jim Marshall, Carole Vaporean and Sofina Mirza-Reid

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