Rising Labor Costs and Plummeting Hanwoo Prices... Farming Households Still Struggling

Prices of agricultural and livestock products, including Korean beef (Hanwoo), have fallen sharply, while labor costs have surged, resulting in little improvement in farm household finances last year. Although the farm terms of trade index, which indicates the financial condition of farm households, showed a slight improvement, it still remained well below the baseline.

According to the "2023 Farm Household Sales and Purchase Price Survey Results" released by Statistics Korea on the 26th, the farm terms of trade index, which reflects the business conditions of the agricultural and livestock industry, stood at 90.2 (2020=100), a slight increase of 0.7% compared to the previous year.

Although there was a slight rebound compared to 2022, which saw the largest decline on record (89.6), the index still remained significantly below the baseline (100), indicating that farm household financial conditions did not improve substantially. The farm terms of trade index is calculated by dividing the farm sales price index by the farm purchase price index; an increase in this index means an improvement in farm household finances.

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The farm sales price index, which indicates the level of agricultural product sales prices last year, recorded 108.7. Although fruits and vegetables (10.9%) and grains (2.0%) showed an upward trend, livestock products (-7.0%) and other agricultural products (-2.3%) declined, resulting in only a 0.9% increase compared to the previous year.

Grains and fruits and vegetables rose by 2.0% and 10.9%, respectively. Non-glutinous rice (4.7%), corn (38.9%), red beans (37.2%), and sweet potatoes (30.3%) increased, while glutinous rice (-47.1%), soybeans (-11.9%), and black soybeans (-26.9%) saw significant price drops.

Due to abnormal weather conditions and other factors, prices of fruits and vegetables, which surged last year, saw increases in apples (45.5%) and peaches (18.8%), while leafy vegetables (-2.5%) and root vegetables (-6.4%) declined.

Livestock products fell by 7.0% due to a sharp drop in Hanwoo prices caused by the spread of rump skin disease. For Hanwoo, prices of bulls dropped by 27.7% and cows by 15.3%. Prices of other livestock such as broilers (11.9%) and ducks (14.7%) rose. Other livestock products, including milk (5.9%) and honey (1.6%), increased by 2.5%.

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The farm purchase price index, which indicates the level of material and expense costs incurred by farm households, rose 0.3% from the previous year to 120.4, continuing its upward trend. The farm purchase price index has been rising since the COVID-19 pandemic, with 2020 as the base year at 100.0, followed by 105.0 in 2021 and 120.1 in 2022.

Material and expense costs decreased by 3.0% and 4.4%, respectively, but labor costs surged by 7.5%, driving the overall increase. Among material costs, fertilizer expenses fell by 22%, while feed and pesticide costs rose by 2.3% and 12%, respectively. Labor costs increased for both women (8.0%) and men (6.1%).

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