Bolder action needed to help troubled breeders
Nine heads of cattle were recently starved to death in a farm in Sunchang, North Jeolla Province, as their breeder could not afford to feed them. This is shocking news. But such an occurrence was inevitable due to plunging cow prices and soaring animal feed costs. It may signal a prelude to a collapse of livestock farmers already teetering on the brink of bankruptcy.
Who ever thought that the price of male calves could nosedive to 10,000 won (less than $9)? Not only farmers but also consumers are at a loss as the price is worth less than beef on the menu at restaurants. This shows that the market does not work anymore. Breeders can no longer survive as cattle prices have continued to slide while feed prices surged by 30 percent last year alone.
On the other hand, consumers find it hard to understand why beef prices have remained unchanged despite the falling cattle prices. There must be something wrong with the distribution system. No doubt slaughter houses and distributors purchase cattle cheaper than ever. But apparently they don’t supply the beef at such lower prices.
What a strange and opaque system the nation has! It does harm to both livestock farmers and consumers at the same time. The outdated system has frequently triggered sudden price spirals, causing an extreme shortage or oversupply of agricultural produce and livestock. One example was skyrocketing cabbage prices in the autumn of 2010 when bad weather caused a drastic fall in vegetable harvests.
Whenever such a price fluctuation takes place, policymakers promise to reform the distribution networks to help maintain the balance between supply and demand. Even President Lee Myung-bak has put distribution reform on his national agenda. However, Lee and other decision-makers have been long on words but short on action.
The plunging cattle prices are a shameful case of the government’s inaction and inability to help minimize potential shocks market liberalization would bring to farming and some other sectors vulnerable to imports. Policymakers often claim that free trade will benefit consumers as they can buy foreign goods without tariffs. But, that is not always true. Take Chilean wine for example. Prices of wine from the Latin American country have continued to go up as greedy importers and distributers try to cash in on bigger margins.
Authorities must leave no stones unturned in hammering out radical measures to turn both producers and consumers into winners. The fundamental cause of the tumbling cattle prices is oversupply combined with growing beef imports. Farmers now raise over 3 million heads of cattle, 500,000 more than what is considered reasonable. Policymakers should work together with breeders to avoid the excess. It is urgent to prevent more deaths of starving cows and regain stability in cattle prices.