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Foreign Agricultural ServiceSeoul, Korea

South Korea: Agricultural Situation &

Market for the United StatesMichael Fay

U.S. Agricultural Trade Office

Seoul Food & Hotel 2011

Seoul, Korea

April 25, 2011


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


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 non-affiliated


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.

Farm Foundation Shrinking

0

500

1000

1500

2000

2500

3000

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 2010 GDP

growth is 6.2%

Exports: demand in major markets

2010 Domestic Consumer Demand-up.

Export Demand-up

Unemployment, Debt relatively high.

Exports

Main Pillar of

Korean Economy

U.S. RecoveryBut Uncertain

Global Conditions

Economic Performance

0

2000

4000

6000

8000

10000

12000

14000

1970 1990 1995 2000 2005 2011

-10

-5

0

5

10

15

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

Real Growth Rate (%)

Forcast


Consumption

Increased affluence

More women in the workforce

Well-traveled younger generation

Increased demand for international flavors

More western style family restaurants


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.


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.


0

5

10

15

20

25

30

20012002

20032004

20052006

20072008

20092010

$ B

illio

n

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Value Growth

Total Korean Agricultural Imports


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.


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


Total Agricultural ImportsIntermediate & C-O values off sharply in 2010

0

1

2

3

4

5

6

7

Bil

lio

n U

.S.

Do

llars

Bulk Intermed C-O Forest Seafood

2008 2009 2010


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

Approvals

Documentation

Labeling

Children’s Food Act

No sale of high cal/low nutrition in schools

Organic: ROK Accreditation 2012


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

Top Ten Ag. Exporters to Korea

6.11

3.66

2.14 1.991.23

0.79 0.78 0.75 0.62 0.60

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

U.S

.A

Chi

na

Aus

tralia

E.U

Bra

zil

N.Z

eala

nd

Malay

sia

Can

ada

Rus

sia

Viet N

am

CY 2010

$ B

illi

on

Total Korean Agricultural Importsvs. U.S. Ag. Exports to Korea

14.9 15.617.3

20.5

24.1

19.8

23.8

3.4 2.9 3.5 4.26.9

4.66.1

0

5

10

15

20

25

30

2004

2005

2006

2007

2008

2009

2010

$ B

illi

on

Korea The U.S.

Bulk Imports from the U.S.

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

00.20.40.60.8

11.21.41.61.8

Mai

ze

Soyb

eans

Whe

at

Cott

on

$ B

illi

on

2009 2010

Intermediate Imports from U.S.

00.050.1

0.150.2

0.250.3

0.350.4

Hid

esHay

Leath

r

Soyb

n Oil

$ B

illi

on

2009 2010

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

Consumer-Oriented Imports from the U.S.

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

00.050.1

0.150.2

0.250.3

0.350.4

0.45

Bee

f

Citr

us

Pork

Poul

try

$ B

illi

on

2009 2010

Best Prospects in Korea for U.S. of Consumer Oriented

Products

0

20

40

60

80

100

120

140

$ M

illio

n

Oth

er N

uts

Che

ese

Pou

ltry

Cho

cola

te

Bee

f, Fre

sh

Fruit Ju

ices

Che

rries

Cof

fee

roas

ted

Sau

ces

CY 2008 CY 2009 CY 2010

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.

http://www.fas.usda.gov/

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

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