Enforcement Decree and Enforcement Rules of the Hanwoo Industry Act Take Effect on the 21st…Medium-Sized and Larger Companies Entering Hanwoo Sector Required to Secure Forage

The government has completed the legal foundation for improving the structure of the Hanwoo industry and stabilizing farm management. The Ministry of Agriculture, Food and Rural Affairs said it has enacted the Enforcement Decree and Enforcement Rules of the Act on the Transition and Support of the Hanwoo Industry in Response to Carbon Neutrality(hereinafter the Hanwoo Industry Act) and that they took effect on the 21st. It is significant in that effective support measures have been legislated for Hanwoo farmers who have suffered from management instability amid feed-cost burdens and repeated fluctuations in cattle prices.

5-Year Comprehensive Plan and Establishment of a Supply-Demand Control System
The core of the Hanwoo Industry Act taking effect this time is the creation of a systematic and sustainable industrial foundation. Based on fact-finding surveys and statistics, the agriculture ministry must establish a comprehensive plan to foster the Hanwoo industry every 5 years, and disclose annual implementation plans on its website.

It will also form a Hanwoo Industry Development Council to review field-oriented policies directly tied to the sector, including Hanwoo supply-demand control, payment of slaughter·shipment incentives, the calf production stabilization support program(Calf Production Stabilization Scheme), and management improvement fund support programs. In particular, the plan is to promote stability in the Hanwoo production base by establishing activation criteria for the existing Calf Production Stabilization Scheme, whose effectiveness had been controversial, in line with conditions in the field.

Stronger Standards for Corporate Participation and Mandatory Coexistence with Farms
Safeguards have also been included to prevent damage to existing farms resulting from companies entering the Hanwoo production business. Those subject to regulation are medium-sized enterprises(large companies, companies belonging to business groups subject to disclosure, etc.) and larger. Under the Framework Act on Small and Medium Enterprises, a medium-sized enterprise is a company whose three-year average sales exceed 1.5 billion to 14 billion won(varying by industry) but are no more than 40 billion to 180 billion won. If total assets are 500 billion won or more, a company is excluded from the category of small and medium enterprises regardless of sales.

For them to participate in the Hanwoo production business, they must establish a low-carbon farming plan. The attached table to the Enforcement Rules of the Hanwoo Industry Act(standards for participation in the Hanwoo production business) stipulates that this plan must include △feeding with feed containing methane-reducing additives △maintaining shipments of Hanwoo aged 28 months or younger at least 30% of total annual shipments △and manure treatment through the installation of mechanical agitation·forced-air ventilation equipment at conventional composting facilities. They must also secure land for cultivating forage crops needed for Hanwoo production and establish a forage crop production plan that includes continuous cultivation of summer·winter crops.

In addition, the Enforcement Decree requires the relevant company to prepare an analysis of its impact on the local economy and a plan for coexistence and cooperation with existing farms, and stipulates that it must collect opinions from producer groups engaged in the Hanwoo production business in the relevant city·county·district, such as farming association corporations, agricultural company corporations, and local agricultural·livestock cooperatives.

Hanwoo Association Welcomes “a New Hundred-Year Plan” …Field Effectiveness Remains a Task
The National Hanwoo Association(Chairman Min Kyung-chun) said in a statement released on the 24th that “it is meaningful that the legal·institutional foundation that will open a new hundred-year plan for the Hanwoo industry has begun to operate in earnest in the field” and added “for Hanwoo farmers who have struggled amid rising feed costs, the expansion of the imported beef market, and the challenge of the times that is carbon neutrality, implementation of the Hanwoo Industry Act will become a solid cornerstone for protecting their livelihoods and moving toward the future”.

Some point out that specific implementation measures are urgently needed for the Hanwoo Industry Act to lead to tangible results in the field. This is why the Hanwoo Association also emphasized in its statement that “the fact that the law has taken effect does not mean all problems in the Hanwoo industry will be solved immediately” and that “what matters starts now”.

The Hanwoo industry is raising its voice that the activation criteria for the Calf Production Stabilization Scheme must be made realistic. The Calf Production Stabilization Scheme is a system that compensates for the difference when the average transaction price of calves in livestock markets falls below the calf stabilization standard price    (6~7 months of age)  . It was introduced to encourage calf reproduction at breeding farms  and the maintenance of an appropriate herd size and stabilize farm management ,   . The standard price is 1.85 million won per head 185 , and compensation is paid differentially at 100,000 to 400,000 won per head depending on the number of breeding cows raised. The activation criterion is fewer than 1.1 million breeding cows.

However, the limitation has been steadily raised that the payment requirements are far removed from the field and therefore do not operate even when cattle prices plunge. This is why Hanwoo farmers are requesting that the activation criteria be made realistic. In fact, in January 2023, when cattle prices plunged, the average transaction price for female calves fell to 1.951 million won. The difference from the standard price of 1.85 million won was only 101,000 won, but no compensation was paid. This was because the number of breeding cows far exceeded the activation criterion of 1.1 million head.

According to the July issue of NongHyup Economic Holdings’ monthly Hanwoo report, the price per male calf was 4.961 million won(as of June), and female calves were 3.634 million won. Some point out that the gap between the standard price and market prices is so large that the system has effectively become a dead letter. There were 1.555 million breeding cows(as of June), about 1.4 times the activation criterion.

The system for verifying companies’ participation requirements must be operated strictly. Claims are being raised that safeguards should be accompanied to guarantee substantive supervisory authority for local governments, local agricultural·livestock cooperatives, and producer groups such as the National Hanwoo Association so that participation does not stop at perfunctory opinion gathering or formal securing of forage.

Seo Young-seok, policy director at the National Hanwoo Association, said “With the implementation of the Hanwoo Industry Act, we have taken the first step toward sustainability of the Hanwoo industry. The key will be how substantially the government can reflect the demands from the field in the 5-year plan it will establish and other measures” and added “we will closely consult with the government·and the National Assembly so that it provides practical help to farm management”.

He continued “In a situation where calf prices exceed 4 million won, the current standard price is unrealistic. And the criteria for breeding cows must be corrected, including clearly distinguishing between cows that actually give birth to calves and heifers·cows raised for fattening purposes. Only when accurate supply and demand are understood as a prerequisite can the Calf Production Stabilization Scheme operate as an effective system” he emphasized.