South Korea: Agricultural Situation & Market for the United States Michael Fay U.S. Agricultural Trade Office Seoul Food & Hotel 2011 Seoul, Korea April 25, 2011

Foreign Agricultural Service Seoul, Korea

Geography 





Size roughly equal to the state of Indiana Only land border to the North; Surrounded by water on three sides Mountainous with no extensive plains; only 19.7% arable

Foreign Agricultural Service Seoul, Korea

Demographics    

 

Homogeneous 50 million people Population growth rate declining One of the world’s most densely populated countries Rapid urbanization 1/3 Christian, 1/3 Buddhist, 1/3 nonaffiliated

Foreign Agricultural Service Seoul, Korea

Agricultural Production  

 

Small farm size (3.6 ac) 1.2 mil farm households including 693,000 fulltime Agriculture accounts for only 2.5% of GDP Agricultural products: rice, root crops, barley, vegetables, fruit, cattle, pigs, chickens, milk, eggs and fish.

Foreign Agricultural Service Seoul, Korea

Farm Foundation Shrinking 

3000 2500 2000



1500 1000



500 0 1970

1984

1998

Farm Households (thousands) Farm Area (thousand ha)

Number of farms is estimated to continue to drop Cultivated area is estimated to drop Food demand is expanding

Economy  

U.S. Recovery But Uncertain Global Conditions



Exports Main Pillar of Korean Economy

Foreign Agricultural Service Seoul, Korea

 

2010 GDP growth is 6.2% Exports: demand in major markets 2010 Domestic Consumer Demand-up. Export Demandup Unemployment, Debt relatively high.

Economic Performance GDP (US$ bil., curent prices, PPP)

Real Growth Rate (%) Forcast 14000 12000 10000 8000 6000 4000 2000 0 1970

15 10 5 0 -5 -10 1990

1995

2000

2005

2011

Consumption     

Increased affluence More women in the workforce Well-traveled younger generation Increased demand for international flavors More western style family restaurants

Foreign Agricultural Service Seoul, Korea

Retail Market Structure 

Food Sales     



Traditional – 23.9% Supermarkets -33.7% Hypermarkets – 28.7% Dept. Stores – 4.4% On-line – 4.2%

On-line sales growing rapidly, 27.2% growth.

Foreign Agricultural Service Seoul, Korea

Trade 



Top four trading partners: China, United States, Japan and Hong Kong Major exports: semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel, ships and petrochemicals.

Foreign Agricultural Service Seoul, Korea

$ Billion

Total Korean Agricultural Imports 30

25.0% 20.0%

25

15.0%

20

10.0% 5.0%

15

0.0%

10

-5.0% -10.0%

5

-15.0%

0

-20.0%

1 2 3 4 5 6 7 8 9 0 200 200 200 200 200 200 200 200 200 201 Value

Growth

Foreign Agricultural Service Seoul, Korea

Agriculture: Exports 

 

Main agricultural exports: leather, seafood, cigarettes, snack foods, noodles, beverages and kimchi. In 2010, total value of ag exports $5.6 bil. Represents 1.2% of total Korean exports.

Foreign Agricultural Service Seoul, Korea

Agriculture: Imports 

 

In 2010, South Korea imported $23.8billion worth of agricultural products 25.7% from the U.S. Main Ag. imports: corn, wheat, hides, soybeans, hay, pork, beef and citrus

Foreign Agricultural Service Seoul, Korea

Total Agricultural Imports Intermediate & C-O values off sharply in 2010 7

Billion U.S. Dollars

6 5 4 3 2 1 0 Bulk

Intermed 2008

C-O 2009

Forest 2010

Foreign Agricultural Service Seoul, Korea

Seafood

Agriculture: Market Access U.S. Export Successes:  $6.1 billion in ‘10  #5 Consumer-Oriented ($1.8 billion)  #4 Beef  #5 Pork  #8 Dairy Products  #3 Coffee

U.S. Export Challenges:  Biotech   



Children’s Food Act 



Approvals Documentation Labeling

No sale of high cal/low nutrition in schools

Organic: ROK Accreditation 2012

Foreign Agricultural Service Seoul, Korea

Agriculture: Market Access Korea-U.S. Free Trade Agreement  Two-thirds of U.S. farm products become duty free immediately.  American Farm Bureau Federation predicts agreement, once fully implemented, could provide $1.6 billion in additional U.S. ag exports.  Supported by more than 40 U.S. agricultural and food associations.  http://www.fas.usda.gov/itp/us-koreafta.asp Foreign Agricultural Service Seoul, Korea

7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00

6.11 3.66 1.99 0.60

et N am

a

0.62

R us si

ad a C an

al a

CY 2010

0.75

Vi

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ys ia

nd

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ea la

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az il Br

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lia st ra Au

na C hi

.A

1.23

M

2.14

U .S

$ Billion

Top Ten Ag. Exporters to Korea

Total Korean Agricultural Imports vs. U.S. Ag. Exports to Korea 30 24.1

20 15

23.8

20.5

19.8

17.3

15.6

14.9

10

6.9 3.4

5

2.9

4.2

3.5

4.6

Korea

The U.S.

20 10

20 09

20 08

20 07

20 06

20 05

0

20 04

$ Billion

25

6.1

e So yb ea ns W he at Co tto n

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 ai z

U.S. Market Share of Bulk Imports increased from 46.2% to 52.9%.

M



$ Billion

Bulk Imports from the U.S.

2009

2010



Le at hr So yb n O il

Ha y

es

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Hi d

$ Billion

Intermediate Imports from U.S.

2009

2010

U.S. Market Share increased from 15.6% to 18.7%.

2009

ul try

Po

Po

rk

0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Ci tru s

U.S. Market Share increased from 26.8% to 27.6%.

Be ef



$ Billion

Consumer-Oriented Imports from the U.S.

2010

Best Prospects in Korea for U.S. of Consumer Oriented Products 140 120

80 60 40 20

CY 2009

CY 2010

uc es

ro a e of fe C

CY 2008

Sa

st ed

rie s he r C

Fr ui

tJ

ui

ce s

Fr es h ef , Be

C

ho co l

at e

y ul tr Po

se he e C

er

N

ut s

0

O th

$ Million

100

Food Service Market Structure 

Spending on dining out has more than doubled in the last ten years  46% of food expenditure was spent on dining out (2008)  W64.7 trillion of cash register sales (2008)



Restaurants: Total number peaked in 2003 at 605,000 and now on a decline  Large companies are gaining market share at the expense of small-scale, family-oriented restaurants



Hotels: 553 hotels at the end of 2008 which earned W4.1 trillion, up 44% from 2000 of which food and beverage sales account for about 39%.

Resources 

Attaché Reports at http://www.fas.usda.gov    

Exporter Guide Retail Food Sector Brief Food and Agricultural Import Regulations (FAIRS) Briefs on organic sector, seafood, fresh cherries, avocados, honey, grapefruit, nuts, wine, apples, tomatoes, grain, citrus, potatoes, dairy, beef, pork, chicken, planting seeds, grapes, asparagus, etc.

Foreign Agricultural Service Seoul, Korea

Upcoming Promotional Opportunities with Seoul ATO  

  

  

   

Seoul Int’l Wine & Spirits Expo 2011– May NRA Show – May 2011 Chicago Washington State Wine Expo 2011 - June IFT Show – June 11-15, 2011, New Orleans Fancy Food Show Summer – July 2011, Washington DC WUSTA Food Service Trade Missions Idaho/Oregon, California/Hawaii 2011– June/July USA Organic & Natural Food Expo Seoul – July ATO Food ExportUSA Specialty Foods Trade Mission to Seoul 2011 – August Busan Int’l Seafood Show 2011 – Nov. ATO/SUSTA Boston Seafood Show/SUSTA 2012 – March Seoul Food & Hotel 2012 – May e-Newsletter in Hangul - 4 times/year

Thanks! www.FAS.USDA.gov www.ATOSeoul.com Foreign Agricultural Service Seoul, Korea