The Yolks on Consumers

by Dram_man on January 15, 2009

There is a photo in the JoongAng today with an interesting caption:

A customer looks at eggs in a discount store in central Seoul yesterday as egg prices hit a record high. The Korea Poultry Association said yesterday the average retail price per egg in Seoul reached 159 won (12 cents), up 58 percent from a year earlier.

Wow that’s quite an increase. Once again another worry about the price of food increasing, and once again no mention Korea maintains up to a 41.6% tariff on chicken eggs. You think that might have something to do with the fact eggs are 159 won each?

{ 13 comments… read them below or add one }

1 Linkd January 15, 2009 at 12:40 pm: Actually, I think this is just an example of the limitations of looking at average numbers.

Last year, kind of disgusted by the standard eggs that come in those flimsy pink plastic packages (their shells were paper-thin and sometimes collapsed in my hands before I struck them against the frying pan. This isn’t good. The laws of nature should cause the chicken to direct maximum biological resources to constructing an egg that will ensure survival of the species. If the eggshells are that brittle, then what the hell else is wrong with the chicken it came from?)

So, I started buying eggs for W3500 for 10 eggs from an organic foods store operated by 논심. Their shells are strong, and in the pan, the yolks are bright yellow and stand up alert as young nipples. In the past few months, I have noticed that regular neighborhood grocery stores have a variety of 웰빙 eggs available at prices from W2500 – W3800 for 10.
2 Linkd January 15, 2009 at 12:44 pm: More hostility to foreign investors! Try this: retroactive tax audits on your imports from up to four years ago, with fresh demands to fork over $150 mil. Niiiice…

SEOUL, Jan 14 (Reuters) – Korean tax authorities are seeking about $154 million in duties from the local unit of Diageo Plc (DGE.L), the world’s biggest alcoholic drinks group.

Diageo Korea said in a statement it had received a preliminary audit assessment notice from the Seoul Customs Office for 206.5 billion won covering the period from Feb 1, 2004 to June 30, 2007.

The Seoul Customs Office confirmed it had notified the company about the duties, which are related to Diageo’s imports of whisky products. Diageo Korea markets whisky brands Johnnie Walker and Windsor in the country.
3 Linkd January 15, 2009 at 12:46 pm: …ok, up to five years ago…
4 Sonagi January 15, 2009 at 12:55 pm: Their shells are strong, and in the pan, the yolks are bright yellow…</blockquote.

The hardness of the shell is probably a good indicator of the health of the hen, but the color of the yolk is not a guarantee that the hen was fed a healthy diet. There are a number of different substances that can be added to feed to alter the color. In China, egg producers can select from more than a dozen different hues when they purchase feed for their hens.
5 Sonagi January 15, 2009 at 12:58 pm
6 mjw January 15, 2009 at 2:41 pm: LinkD,

What you’ve failed to uncover is that Diageo was under investigation for irregularities involving customs and taxes for a long time. It was determined that they broke the law and were punished for it by having their license to import revoked and now are being told to pay back all the money that they did not pay before.

Would you prefer the punishment be meted out on all furture business transactions?
7 mjw January 15, 2009 at 2:42 pm: And, is that a bit off topic in this thread?
8 WangKon936 January 15, 2009 at 2:55 pm: Anyone here eat one of those “fake” Chinese eggs?

I kid you not. I had a friend who was dating a girl who worked at some Taiwanese trade ministry and she was investigating the smuggling of imitation eggs from China. Apparently these eggs look and taste just like the hen laid originals, but have a chance of causing blindness!
9 Dram_man January 15, 2009 at 2:56 pm: I saw that Diageo story as well, and agree with mjw’s thoughts it was linked to the previous investigation.

However somethings started gnawing at me as I read the article. The fine was not about failure to pay duties per se, but rather the transfer pricing the shipments between Diageo units are made under. This difficulty makes me wonder about a few things:

1. Was Diageo actively doing so as to avoid taxes?

2. Was Diageo doing so to avoid paperwork or other administration headaches, much like people are known to sneak in over their duty free limits at the airport. Not that this makes it any less illegal or prosecutable, but it is a rather more understandable motive than simply greed.

3. Diageo was indeed reporting the actual transfer price, as part of a strategy of encouraging lower retail prices to increase sales or market share. Given the famous barriers Korea puts, or has put, in front of products so as to keep the domestic price and producers stable, a theory that the customs service thought it is acting to create that stability seems plausible to me.
10 WangKon936 January 15, 2009 at 3:04 pm: Fake Chinese eggs!

http://www.weirdasianews.com/2007/05/04/chinas-10-steps-to-make-a-fake-egg/

http://consumerist.com/consumer/food/how-to-make-a-counterfeit-egg-china-style-257693.php
11 Linkd January 15, 2009 at 3:25 pm: Did you out-research me, mjw? Good on ya. I actually didn’t go Googling, just pasted the one article I saw. As for OT – whatever.
If Drammie’s right that the dispute arose over transfer pricing, well, that is a very slippery part of international trade where multinational companies are involved. So far as I know, transfer pricing is always about tax avoidance – not that there’s anything wrong with that. An accountant who doesn’t do all s/he can to minimize a client’s taxes is being negligent. Maybe I’ll look into more later.
12 mjw January 15, 2009 at 3:40 pm: not a matter of being out-researched, linkd.
13 SomeguyinKorea January 17, 2009 at 12:23 pm: “There are a number of different substances that can be added to feed to alter the color.”

Yes…Usually, marigold, safflower, red pepper, or commercial pigments.