The USDA Foreign Agricultural Service rates South Korea as one of the most reliable export market for US agricultural goods with its easy access to modern retail outlets and a large urban population seeking convenient and healthy foods.
In a report Thursday, the FAS said increasing wealth, a growing number of women in the workforce and a younger generation seeking international foods also contributed to the rise of convenience stores, bulk retail outlets and western-style family restaurants.
In 2017, those imports totaled $25 billion, led by beef, corn, food preparations, pork and fresh fruit, and accounted for 27% of agricultural imports, the FAS said. Top US competitors in the South Korean market are the EU with a 13% market share, Australia with an 11% market share and China with 10% market share.
BY THE NUMBERS
With more than 51 million people, South Korea is the third most densely populated country in the world, the FAS said. More than 80% of the population live in urban areas and more than 50% live within, or in the direct vicinity of, the capital city of Seoul.
Agricultural exports from the US to Korea grew 11% last year, from $6.2 billion to nearly $7 billion, the FAS said. It was the US’ sixth largest market for agricultural exports, with the US agricultural trade surplus increasing by 12% to $6.3 billion.
Between 2012 and 2017, South Korea’s GDP grew by a cumulative 25% and is expected to grow by 2.7% to 3% annually for the next five years, the FAS said. The country’s per capita GDP is $39,000 (adjusted for purchasing power parity), compared with $59,500 in the US.
According to the UN Food and Agricultural Organization, 70% of South Korea’s land is mountainous, unsuitable for large-scale commercial farming. Moreover, the agricultural sector accounted for only 2.2% of the country’s 2017 GDP and is expected to remain a minor contributor to the economy.
Given the dense population and land scarcity, South Korea will remain dependent on imported food to feed its increasingly wealthy population, FAS said.
US EXPORT POSSIBILITIES RISING
The US-Korea Free Trade Agreement (KORUS) entered into force on March 15, 2012, significantly increasing export opportunities for US agriculture, FAS said. Although full implementation of KORUS will take more than 20 years, the bilateral agreement provides US producers the ability to expand sales of bulk, intermediate and consumer-oriented agricultural products with the elimination of duties on almost two-thirds of them.
Products such as wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, almonds, pistachios, orange juice, cherries and wine previously faced duties as high as 487%, but under KORUS these duties are being phased out.
Additionally, many other products gained increased access through duty-free tariff-rate quotas and tariff reductions, providing US exporters preferential access over many competitors, FAS said.
CATTLE, BEEF RECAP
Light cash cattle trading was reported this week in the Plains at $110.50 to $111 per cwt on a live basis, steady to up $0.50 from last week. On a dressed basis, light activity was reported at $174 to $175, steady to $1 higher than last week.
The USDA choice cutout Thursday was up $2.26 per cwt at $206.82, while select was up $1.16 at $192.35. The choice/select spread widened to $14.47 from $13.37 with 97 loads of fabricated product sold into the spot market.
There were eight steer delivery notices Thursday at zero and one retender at two.
The CME Feeder Cattle index for the seven days ended Wednesday, was $155.50 per cwt, up $0.36. This compares with Thursday’s Oct settlement of $155.25, up $1.17.