The South Korean Government is encouraging its livestock producers to send more female cattle to slaughter as it looks to manage rising supplies of locally produced beef in the country. 

Cattle prices have fallen by 22pc in South Korea over the past 12 months, prompting local farmers to take to the streets to protest against rising beef imports.

The drop in cattle prices has not been reflected by lower prices for beef on supermarket shelves, prompting suspicions that middlemen are taking excessively high profits in the distribution system.

The South Korean Government has announced plans to streamline distribution systems for consumer goods in the country, and is starting with beef.

During his New Year address, President Lee Myung-bak said stabilising consumer prices was his government's top priority in 2012.

Korea’s agriculture minister Suh Kyu-yong told local media this week the Government was examining problems in the distribution process and possible distortions in pricing “in order to draw plans to lower beef prices”.

He said the Government will simplify beef distribution by replacing the current five-stage handling system from slaughter to retail with a three-stage system.

The Korean Herald said the minister disagreed with claims by Korean farmers that the downfall in cattle prices was caused by increased supplies of imported beef.

“Hanwoo consumption last year gained 30,000 tons from a year ago to 216,000 tons,” Minister Suh said.

“Hanwoo consumption can continue to grow if the quality of beef is improved and distribution costs are reduced.”

The Korean Herald said the minister attributed the cattle price fall to the increased number of cows raised from 2002 to 2010, and he vowed to cut back the number by encouraging livestock farmers to kill female cows.

Korea’s local Hanwoo cattle herd has risen in the past three years from 2.6 million head to an estimated three million now.

“The government aims to weed out 200,000 female cows over the next two years to meet the optimal number of cows by the end of next year,” the Korean Herald said.

To cut beef supply, the government is promoting veal.

“After the ministry’s veal tasting event on January 9, we are receiving inquiries from hotels, restaurants and consumers about veal, which is soft and low in fat, therefore good for diet,” Minister Suh said.

To stabilise cattle feeding costs, the government plans to apply tariff quotas to 21 grain fodder items, up from the current 11, and keep applying zero value-added tax for the next 10 years, according to the minister.

“We will double the grass cultivation area for cattle feeding by 2014, and start offering subsidies from this year for farmers growing feed grain to induce a 20 percent cut in animal feed prices,” he said.

On the issue of the recently-passed Korea-US Free Trade Agreement, which will gradually remove the 40 percent tariff on US beef over the next 15 years, the minister said Korea’s livestock business will still be sustainable if feeding costs are slashed by 2.7 percent annually. 

Imported beef accounts for about half of South Korea's total annual beef consumption.

Australia supplied about 49pc of South Korean beef imports last year, followed by the US (38pc), Mexico (11pc) and New Zealand (2pc).

Korea imported 20pc more beef in 2011 than the previous year, largely to make up for a protein deficiency created by heavy livestock culling (mainly pigs) in the wake of a devastating Foot and Mouth Disease outbreak in late 2010.

Of the additional volumes imported, most was sourced from the US (66pc), followed by Australia (31pc) and New Zealand (3pc).