Fruits, Nuts, and Vegetables
South Korea's production of fruits, vegetables, and nuts
is large, the harvest coincides with peak U.S. production,
and import barriers are high. Nevertheless, U.S. fruits
and nuts are finding increasing markets in South Korea
because of their quality, relatively low cost, and variety.
U.S. exports of fresh fruits, vegetables, and nuts to South Korea
reached $250
million
in 2008. Oranges are the largest item in this trade. Growth
is likely to continue over the next decade, but significant trade
will be largely confined to several commodities, rather than all
fruits and vegetables. This is because South Korea produces an
abundance
of vegetables and many fruits (apples, pears, persimmons, and peaches).
Production is relatively profitable compared to other parts of
South
Korean agriculture. The fruit and vegetable share of the country's
total agricultural output value is almost one-third. The U.S. season
for many fruits
and vegetables is the same as South Korea's, implying head-to-head
competition. South Korea's tariff-rate
quota barriers are quite high in this sector. However, citrus
fruits, nuts, and certain noncitrus fruits and vegetables have
very
favorable import prospects.
Fruits. The United States
exports oranges, grapefruit, lemons, grapes, sweet cherries, and
kiwifruit to South Korea. Raisins lead in dried fruit exports.
Tariffs range from 30 percent for raisins to 50 percent for oranges,
and there is a tariff-rate quota on orange imports. The ban on
grape imports ended January 1, 1996, and the absolute quota on
oranges July 1, 1997, allowing South Korea's imports to grow more
quickly.
Under the orange tariff-rate quota that began in 1997, tariffs
of 50 percent apply within the quota. The size of the quota increased
each year until 2004. The tariff on imports over the quota amounts
declined from 84.3 percent in 1997 to 50 percent in 2004. Thus,
the quota was effectively removed in 2004 because tariffs are
the same for imports within and above it. South Korea produces
few true oranges but harvests a large crop of tangerines, almost
all from the southern island of Cheju. Imported navel oranges
are extremely popular. Government-mandated markups of 50 percent
or more at both the wholesale and retail levels, in addition to
the 50-percent tariff, were typical during the period of the absolute
quota. Compared to those levies, the current tariffs represent
lower barriers. Imports of grapefruit and lemons have been aided
by tariff reductions, from 44 percent in 1997 to 30 percent in
2004, and raisin tariffs fell from 30 percent to 21 percent. The
tariff on kiwis and fresh grapes has dropped very little, but
both fruits are favored by South Korean consumers. U.S. kiwifruit
are valued for their size and appearance, while U.S. grapes mature
over a longer season than South Korea's, so that they can be sold
before and after South Korean grapes.
Nuts. Almonds constitute over
half of U.S. nut shipments to South Korea, and only oranges are
a more important horticultural export. South Korea produces virtually
no almonds, and they are popular with consumers. The tariff on
shelled almonds fell to 21 percent in 2004. Walnuts are the second
most important U.S. nut export. Unlike almonds, they are produced
in South Korea. The tariff on shelled walnuts dropped to 30 percent
in 2004. U.S. exports of pistachios and pecans should have good
prospects. U.S. exports of mixtures of nuts and mixtures of nuts
and fruits could grow but face high tariffs—45 percent since
2004.
Vegetables. South Koreans
have always eaten large amounts of vegetables, and vegetable consumption
is expected to remain high. While the labor force in agriculture in
South Korea is declining, it is also shifting away from work on rice
production and into vegetable production. For the next decade, it
is likely that South Korea's farmers, with financial assistance in
infrastructure, buildings, and equipment from the government, will
continue to become more efficient vegetable growers. Extensive use
of vinyl greenhouses extends the vegetable season and boosts yield
and quality above that in open-field operations, although at a cost.
In general, South Korean tariffs on fresh vegetables were 27
percent in 2004. Exceptions are onions, garlic, peppers, and
potatoes (50-percent tariffs under a tariff-rate quota), sweet
potatoes (20 percent, under a tariff-rate quota) and lettuce
(45 percent in 2004). In years of normal weather, tariff-rate
quotas on the five major vegetables (potatoes, sweet potatoes,
onions, garlic, and peppers) constrain trade, with extremely
high tariffs prohibiting imports above the quotas. However, in
the case of a weather-caused production shortfall, South Korea
is likely to import large quantities at the in-quota rate.
The main source of South Korea's fresh vegetable imports is
China, which dominates most subcategories of the trade and supplies
over two-thirds of
the total value of vegetable imports each year. U.S. exports of
fresh vegetables are usually relatively small. However, in some
years, South
Korea imports significant amounts of U.S. onions to make up for
production shortfalls.
For sustained growth in trade, South Korea will need to address
uncertainties regarding delays in port clearance. Bilateral
negotiations between the United States and South Korea in 1995-97
made progress in ending or reducing practices that lengthen the
time it takes for imports to clear the ports, although problems
remain in implementing agreements. Opportunities for sustained
growth in U.S. exports are best for vegetables that grow better,
or in more varieties, in the United States than in South Korea.
Examples include fresh beans, carrots, asparagus, lettuce, broccoli,
and cauliflower.
USDA's Foreign
Agriculture Service (FAS) product brief on Fresh
Produce (June 2007) includes a list of phytosanitary
barriers that affect access to the South Korea market. Other
recent market briefs have focused on fresh potatoes, organic
foods, avocados, carrots, dried/prepared/preserved fruits,
asparagus, and sweet corn, all accessible from the FAS Attaché Reports web
page.
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