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South Korea imported $12.3 billion in agricultural goods in 2006,
4 percent of all imports. Agricultural exports were $1.8 billion.
The United States is the chief exporter to Korea, supplying a range
of products, with corn, meat, hides, soybeans, milling wheat,
and
cotton the major items. U.S.
exports to South Korea amounted to $2.85 billion in 2006.
Other important suppliers include:
- Australia: Wheat, Beef, Mutton, Wool, Sugar
- Malaysia: Rubber, Palm Oil
- New Zealand: Beef, Kiwifruit, Dairy Products
- Canada: Feed Grains, Oilseeds
- European Union (EU): Pork, Feed Grains, Processed Meat
- China
China supplies many products, with feed grain predominating for
most of the years since 1984, when trade between the two countries
became politically possible. China's ability to be a major feed
grain exporter in the future, however, seems uncertain.
The Changing Pattern
of Korea's Agricultural Imports
Agricultural imports play a vital role in supplementing South
Korea's domestic supplies of food, feed, and raw materials for processing.
As the country became increasingly industrialized and labor costs
rose, South Korean agriculture abandoned production of many crops,
such as wheat, millet, sorghum, and cotton. The small production
of barley, soybeans, and corn relies heavily on government subsidies
and protectionist trade policies. To keep the livestock, flour
milling, and export-oriented industries of textile, garment, and
leather
goods in operation, Korea must import large quantities of feed
grains, soybeans, wheat, cotton, and hides.
This import pattern prevailed from the 1960s until the late
1980s. Since then, new markets have emerged, in part because
of changes
in economic structure and reduced trade barriers. Korea's food
sector increasingly reflects trends seen in developed economies,
in which
convenience, attractive marketing, and variety are key attributes;
and animal products and processed foods and beverages become
steadily
more important in overall food consumption. As a result, with the
help of reduced trade barriers, Korea imports a new set of products,
and these emerging commodity markets offer U.S. exporters good
opportunities.
U.S. Trade With South
Korea
The United States has been the chief source of Korea's agricultural
imports for decades. A close trade relationship goes back to
1955,
when U.S. grain exports under Public Law 480 (PL 480) began—first
as grants and then extended to include credits and cash. By
the
early 1980s, when the final shipments under PL 480 were delivered,
South Korea was a top commercial market for U.S. agricultural
products.
In 2006, South Korea was the sixth-largest U.S. market overseas,
purchasing $2.85 billion in agricultural exports. Bulk and intermediate
inputs for processing—such as cotton, hides, wheat, coarse
grains, and soybeans—remain important. In general, barriers
against these input products are low, but the potential for trade
growth is also low.
On the other hand, Korea's market for agricultural items that are
ready, or almost ready, for consumers to use shows great promise.
Trade barriers are generally high, and third-country competition
can be fierce, but U.S. exports offer attributes that Korean consumers
want: low price, high quality, convenience, attractive packaging.
U.S. exports of consumer-ready products increased greatly during
the 1990s, as trade barriers fell and consumers' incomes increased.
Consumer-ready U.S. agricultural exports rose from about $250 million
in 1990—about 9 percent of total U.S. agricultural exports—to
about $760 million in 1997 (27 percent of the total). These exports
were affected more severely by Korea's economic crisis in 1998 than
were bulk and intermediate exports. U.S. consumer-ready exports
dropped to about $385 million in 1998, and their share of the total
in 1998 dropped to 17 percent.
The rapid recovery of Korea's economy lifted consumer-ready exports
to more than $1.4 billion in 2003—49 percent of total U.S.
agricultural exports to Korea. Trade in beef disappeared in 2004,
because of the discovery of a case of Bovine Spongiform Encephalopathy
(BSE, or "mad cow" disease) in a U.S. cow at the end
of 2003, and poultry meat exports to South Korea suffered from
a temporary embargo on trade after an outbreak of Avian Influenza
in the United States. Oranges, orange juice, frozen vegetables—especially
french fries—sweet corn, and a large variety of processed
foods and beverages make up the rest of this trade. Trade
in these products
continues to grow as Korea's economy expands. They represented
31 percent of U.S. agricultural exports to Korea in 2006.
South Korea's top three exports to the United States in 2006 were ramen (instant noodles), pears, and bean pastes, with U.S.
imports from South Korea totaling $217 million.
References
The Foreign
Agricultural Service (FAS) Office in Seoul, South Korea, provides
information and links about Korean
agricultural trade.
Economic
and Agricultural Overview is an FAS report
providing information about Korea's economic performance
and other factors affecting agricultural trade.
Food
and Agriculture Import Regulations and Standards is an annual
FAS report that details current Korean rules affecting imports.
Exporter
Guide is an annual FAS report that discusses Korea's markets
and how exporting firms do business there.
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