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Image: International Markets & Trade

Trade

South Korea imported about $25 billion in agricultural goods in 2012, 4.8 percent of all its imports. Agricultural exports were $4 billion. The United States is the chief exporter to Korea, supplying a range of products, with corn, meat, hides, soybeans, milling wheat, and cotton among the major items. U.S. agricultural exports to South Korea Excel icon (16x16)amounted to over $6 billion in 2012. Other important suppliers include:

  • China: Feeds from starch and brewing residues, frozen and preserved vegetables, rice, processed foods, soybeans
  • Australia: Beef, wheat, sugar, dairy products
  • European Union (EU-27): Pork, wine, processed foods, dairy products
  • ASEAN (Association of Southeast Asian Nations): Rubber, palm oil, bananas, oilseed meals
  • Brazil and Argentina: Soybeans, soymeal, soyoil
  • New Zealand: Beef, dairy products, kiwifruit

 

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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 has to 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 opportunities to U.S. exporters.

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 (P.L. 480) began-first as grants and then extended to include credits and cash. By the early 1980s, when the final shipments under P.L. 480 were delivered, South Korea was a top commercial market for U.S. agricultural products. In 2012, South Korea was the fifth-largest U.S. market overseas, purchasing $6.04 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 Korea-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 total U.S. exports to Korea in 1998 dropped to 17 percent.

The rapid recovery of Korea's economy lifted U.S. 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. In addition, poultry meat exports to South Korea suffered from a temporary embargo on trade in 2004 after an outbreak of Avian Influenza in the United States. Fresh fruits, notably oranges, orange juice, nuts, 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 and tariffs fall as a result of the Korea-U.S.-Free Trade Agreement in 2012. Consumer-ready exports represented 44 percent of U.S. agricultural exports to Korea in 2012.

 

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Download larger size chart (538 pixels by 380 pixels, 96 dpi)

 

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Among South Korea's leading agricultural exports to the United States in 2012 were ramen (instant noodles), pears, and bean pastes, with U.S. agricultural imports from South Korea Excel icon (16x16) totaling $380 million.

References

The Foreign Agricultural Service (FAS) Office in Seoul, South Korea, provides information and links about Korean agricultural trade.

Food and Agriculture Import Regulations and Standards 16x16 - PDF is an annual FAS report that details current Korean rules affecting imports.

Exporter Guide PDF file is an annual FAS report that discusses Korea's markets and how exporting firms do business there.

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Seoul%20ATO_Korea%20-%20Republic%20of_11-2-2011.pdf

 

 

Last updated: Thursday, June 27, 2013

For more information contact: John Dyck

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