Prices for key cuts of imported beef are running about 30% above their multiyear averages, while the tariff on Australian beef has more than quadrupled. Consumers could face a heavier burden starting late this year, as inventories brought in under the lower duty run down.
Australian beef shipments to South Korea totaled 17,122 tons in August, down 20% from a year earlier, according to Meat & Livestock Australia (MLA). The drop came just after the 196,050-ton quota carrying a 5.3% preferential tariff under the Korea-Australia free trade agreement was exhausted on July 21, triggering a 24% special safeguard duty on volumes above that level. The quota ran out 53 days earlier than last year, when it was filled on Sept. 12.
Shipments had surged before that. Australian government data showed exports to Korea hit a monthly record of 32,599 tons in June and reached 29,068 tons in July, a pattern attributed to shipments being front-loaded ahead of the tariff increase. Nine out of 10 Australian shipments to Korea this year have been frozen beef, according to U.S. Meat Export Federation figures as of early July, another sign of stockpiling.
Australian Beef 27% Above Average, U.S. Beef Up 29%
Retail prices have already risen. The consumer price for chilled Australian chuck eye roll averaged 3,540 won per 100 grams in August, 27.2% above the multiyear average, according to the Korea Institute for Animal Products Quality Evaluation. U.S. beef sold for 4,245 won, up 29.1% from a year earlier and higher than the 3,737 won recorded in January this year.
The import price index for beef rose 23.9% in won terms in May from a year earlier, Bank of Korea data showed. The increase has been attributed to a weak won, higher logistics costs stemming from the war in the Middle East and reduced supply in the United States.
How soon the increases reach store shelves depends on inventories. Distributors can keep supplying product at earlier costs while frozen stock cleared at the lower tariff remains, but purchasing costs rise as more volume subject to the 24% duty comes in.
Shipments contracted and already in transit before the safeguard duty took effect can still clear customs at the previous rate if they meet the requirements, according to the Korea Customs Service, so not all incoming volume is subject to the 24% rate. The increase may hit first at smaller distributors and restaurant operators that hold little inventory.
The exchange rate is a cushion. The won averaged 1,342.6 per dollar in the first 16 days of this month, the strongest level in two years and one month. That compares with 1,466.9 won in the first quarter of this year, leaving room for import costs to ease. Shipping and storage costs, distribution margins and contract terms also factor into the final wholesale price.
MLA expects shipments to pick up late this year ahead of Jan. 1, when a new quota at the lower tariff rate opens. The government said in May that imported beef prices would face upward pressure at least through next year.
Beef prices late this year will ultimately hinge on when inventories imported at the lower tariff run out and how long the won holds up. The point at which the tariff increase is layered on top of already higher prices could be what consumers feel most.