Processed Products
Increasing affluence and changing lifestyles have fostered
greater consumption of processed foods and beverages in
South Korea. Since
domestic producers cannot fully satisfy this growing appetite and
some trade barriers have fallen, South Korea has dramatically
increased its imports
of processed agricultural products. U.S. exports more than tripled
between 1990 and 1996 (to $320 million). The economic
turmoil of 1998
hurt U.S. processed-food exports badly. They rebounded in 1999
and exceeded $400 million in 2005. Leading U.S. exports
are prepared foods
and sauces, chocolate products, juices, pet food, frozen french
fries, and canned sweet corn.
Demand is increasing for both intermediate products and
consumer-ready foods and beverages. Women have less time
to prepare meals from
scratch, but they can afford semiprepared items that they heat
at home. Changes in tastes to a more international diet
also influence
imports. Although some eating habits are markedly different from
U.S. eating patterns, snack and breakfast items are penetrating
the market successfully. Despite limited trade liberalization,
the inability of domestic producers to meet the burgeoning
demand for variety means
prospects for processed-product imports are bright over the medium
term.
The nonalcoholic beverage market in South Korea has been boosted
by growing consumer incomes, increased health consciousness, and
changes in taste. Soft drinks and juice beverages dominate the market,
but traditional beverages, as well as sports drinks and health drinks,
have gained ground in recent years. Juice imports exceed $100 million
per year. Orange juice is the most common and popular juice drink
in South Korea, but grape and apple juices are gaining favor. South
Koreans' purchases of 100-percent natural juice increased to 67
percent of total fruit beverage sales in 1996 from 25 percent in
1991. Domestic tangerines are generally eaten fresh, and not processed,
leaving the market for citrus juices available to foreign suppliers.
Although Brazil supplies most of the orange juice, U.S. suppliers
dominate all other juice markets, garnering a one-third share of
total juice imports. Vegetable juice, including tomato juice, accounts
for less than 3 percent of total juice imports. The orange juice
quota ended on July 1, 1997. A tariff rate of 58.2 percent replaced
it, which fell to 54 percent in 2004.
The frozen french fries and canned sweet corn markets are among
the most important for U.S. exporters. South Korea annually imports
about $15-25 million worth of each category.
South Korean spending on pet food is growing. The U.S. pet food
industry, more advanced and price competitive than local producers,
provided large share of the $50 million in pet food imports in 2004.
Increased competition from local suppliers is anticipated, but the
United States is likely to lead the import market. This market is
likely to continue to expand as incomes and the number of pets increase.
Shelf-life regulations were modified for most processed-food
products during the 1990s. Products which changed from government-mandated
shelf life to manufacturer-determined shelf life included dairy
products,
sausage, vacuum-packed meats, and frozen foods. After years of
discussion, the South Korean Government certified the Export Service
Center
of the Oregon Department of Agriculture to conduct health and sanitation
inspections on U.S. agricultural exports. Products certified by
the Oregon laboratory do not have to undergo food quarantine inspection
by the Ministry of Health in South Korea, resulting in much faster
import clearance.
Although most processed fruits and vegetables and their juices
are no longer subject to quantitative restrictions, high tariff
levels remain to discourage imports. These tariff levels often exceed
50 percent and will remain high even after implementation of Uruguay
Round Agreement on Agriculture commitments. Additionally, South
Korean importers have complained at times that domestic food safety
and import classification agencies have delayed import clearance
or increased uncertainty about clearance and tariff status for processed
foods.
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