The government has called on companies to do their patriotic duty and produce more rice-based products.To sweeten the deal, the government has lowered the price processors pay for rice by 30%. Snacks and alcoholic drink makers are the main focus of the programme. The authorities are hoping liquor drinkers can be persuaded to switch to traditional Makgeolli rice wine rather than ever more popular foreign spirits. Rice can also be used to make beer, an avenue the authorities are hoping brewers will pursue more vigorously. While the campaign is unlikely to see a massive boost in rice consumption, we do agree that there is room to increase the use of rice in processed food. In Japan, which also has a heavily protected rice market, the proportion of rice used in food processing is far higher than in Korea. Another option to get rid of the excess stocks would be to resume regular food aid to North Korea. This however will be dependent more on relations between the two states than the needs of South Korea's pampered farmers.

As rice farmers have been suffering with the slack demand, South Korea's cattle farmers have been fairing unexpectedly well through 2009. Demand for expensive Hanwoo beef has been surprisingly resilient, helped by the speedy recovery of the Korean economy in the middle of 2009. By September, prices for Hanwoo cattle were at multi-year highs as supply struggled to keep up with demand. Demand has been helped by country of origin labelling regulations which means even restaurants have to display where their beef is from. This has allowed consumers to avoid less favoured imported beef. US beef has been doing particularly badly as nervous consumers stay away over health fears and lingering resentment following the protests against US beef imports in 2008.

While beef and poultry consumption performed well in 2009, the latter helped by its low price compared to other meats, demand for pork fell sharply. Ever safety-conscious Korean consumers were put off by the H1N1 swine flu scare as well as the high price compared to other meats - in 2009 pork was three or four times the price of chicken and more expensive than some cuts of imported beef. In 2010, we expect pork consumption to recover slightly, but growth will again trail that of beef an poultry.