Korea beef safeguard trigger imminent
After the safeguard is triggered, the duty on Australian beef will jump to 24% for the rest of the calendar year.
What it means for Australian beef exports
Product shipped prior to the point of the safeguard trigger, but which has yet to clear customs, will be allowed to enter at the lower tariff rate – although this ‘excess tonnage’ will be subtracted from the 2025 safeguard volume. The 2025 safeguard trigger volume will increase to 192,206 tonnes swt, minus the 2024 ‘excess tonnage’. In 2025, the tariff applicable to Australian beef exported to Korea will drop to 8.0%.
Due to the impending safeguard tariff increase in 2024, Australian beef exports will be further disadvantaged compared to US product (entering under the US-Korea Free Trade Agreement) in the market, with the tariff differential between the two suppliers increasing from 5.3% to 18.7% for the remainder of 2024.
The context: market insights from MLA’s Korean office
While the safeguard has incrementally increased since KAFTA entered into force in December 2014, it has been triggered every year since the agreement’s inception, except in 2022 when the Korean government waived it as a post-pandemic stimulus recovery measure. In 2020, the trigger volume was reached on 25 November, in 2021 it was on 22 November and in 2023 it was on 11 December. The safeguard is to be entirely phased out in 2029.
In 2024, Australia will trigger the Korea beef safeguard volume somewhat earlier than in recent years. This is partly due to the reduced US beef supply entering Korea, which the Australian export market has benefited from.
Australia’s total beef exports to Korea were up 4% in 2024 year-to-date (January to September) compared to 2023, with chilled grassfed up 22% year-on-year, much of which is sold through retail channels. For the July to September quarter of 2024, Australian beef volume to Korea was up 6% year-on-year.
Korea has also been experiencing some challenging economic circumstances post-pandemic, leading to reduced discretionary spending. This has caused a shift from dining out to cooking at home, increased demand for cheaper beef products and cuts, as well as switching to cheaper proteins.
The week-long Chuseok public holiday from 14–18 September saw strong sales of Australian beef, particularly through retail. The Korean Government declared a new temporary public holiday on 1 October as a means to stimulate domestic consumption, in addition to two other public holiday days on the third and ninth of October. These October holidays have helped increase beef sales, especially within foodservice.
The Namno effect
Positive perceptions of Australian beef in the high-end foodservice sector and, indirectly, retail sales, received an additional boost during the second half of 2024 in part thanks to Korean celebrity chef Namno Yoon, one of MLA’s Aussie Beef Mate chefs, who runs two famous Japanese French restaurants in Seoul.
Namno’s influence increased following his success in the popular Netflix 12-episode series ‘Culinary Class Wars’. From a starting field of 100 chefs, Namno placed in the top four finalists alongside chefs from Michelin star restaurants. His social media profile received an additional boost after BTS star JHope posted about Namno Yoon, contributing to an almost 10-fold growth in Namno’s Instagram followers in a very short time.
A range of Namno’s marinated Aussie chilled beef products will be launched in a large chain of supermarkets with over 500 stores on 23 October, with other Aussie beef products in the pipeline.
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