I have been moaning about food prices for some time now on this blog. I have also talked about how Reliance and other firms in India are shaking up the agriculture value chain, and it has to be for the better. People have commented that this will throw people out of jobs, but here's a very good example of when distribution systems go awry, then the costs and inflation go wonky as well.
Is it true that pork is cheaper in South Korea than in China? According to the South Korean Embassy in Beijing, it is true: the Embassy said on Monday that pork is traded at far lower prices in South Korea's wholesale market than in China.
According to an Embassy survey of pork prices in the two countries, pork costs less in South Korea's wholesale market than it does in China. But in the retail market, under South Korea's complex distribution system, South Korean consumers pay nearly three times more than what Chinese consumers pay for the commodity.
According to the Embassy, as of Feb. 26, pork was traded at W2,666 (US$1=W997) per kg in the South Korean wholesale market, a mere 88.3 percent of the price in the Chinese wholesale market (W3,020).
But huge wholesale-to-retail marketing margins for pork are added in South Korea, driving the retail price up to W12,000 per kg, more than quadruple the wholesale price. By contrast, the retail price of pork in China, which has a relatively simple distribution system, is just W4,420 per kg. That's a margin of just W1,400.
The average price of beef was W13,588 per kg in the South Korean wholesale market, but the retail price was W62,000 per kg. By contrast, beef cost W3,676 per kg in the Chinese wholesale market, but between W6,500 and W26,000 in the retail market.
All this to be taken with a grain of piquant salt!!!