Korea diversifies agricultural export markets
Agriculture minister vows no more concessions to US in FTA talks
Korea has been diversifying export markets for its agricultural goods this year to offset falling shipments to China, which has been escalating its economic retaliation against Seoul’s deployment of a U.S. missile defense system, the nation’s top agricultural policymaker said.
Asia’s fourth-largest economy has been shipping more locally-grown agricultural products and processed food items to Japan, Southeast Asia and the Middle East, according to Minister of Agriculture, Food and Rural Affairs Kim Young-rok, who said the government will provide greater support to farmers and food firms to further increase overseas shipments.
“Despite growing global trade protectionism, deteriorating Korea-Sino ties and other unfavorable conditions, Korea has been able to export more agricultural goods and processed food products this year than in 2016,” Kim said during an interview with The Korea Times.
“The jump is largely attributed to the nation’s campaign to diversify its export markets over the past few years. Besides China and Japan, ASEAN and the Middle East have emerged as major destinations for local agricultural products,” the minister said. “The government will double its efforts to enable food exporters to increase their shipments and nurture the agriculture industry as a new growth engine.”
In the first nine months of 2017, Korea’s outbound shipments of agricultural and food products reached $5.04 billion, up 7 percent from the same period of last year. Exports to China fell 10 percent, but those heading to Japan, ASEAN and the Middle East jumped 16 percent, 13.6 percent and 10 percent, respectively.
Russia imported 32.4 percent more food products from Korea, while consumers in South American countries bought 22 percent more locallygrown agricultural goods.
“Since March when Korea decided to deploy a Terminal High Altitude Area Defense (THAAD) battery, food shipments bound for China headed downward. But in September, the exports inched up 1.1 percent from the previous year, thank to rising sales of ginseng, instant noodles and beer,” Kim said. “We believe demand for Korean food items among Chinese consumers will continue to pick up. We will also make inroads into untapped markets.”
The agriculture ministry plans to allocate greater resources to organizing more promotional activities abroad, as well as helping food firms diversify export markets and widen overseas logistics networks. It has also been working to ship fruit and other fresh produce to India, Africa and other largely unexplored markets as part of its diversification efforts, he said.
“The government has been offering customs- and quarantine-related consulting services to food exporters so that they can fully take advantage of trade agreements Korea has signed with China and other foreign countries,” the minister said. “We will also organize or financially support marketing events in the Middle East and elsewhere. Strategic and tailored export items for each market will be developed.”
No more concessions to US
Touching on the ongoing renegotiation of the Korea-U.S. Free Trade Agreement (KORUS FTA), the agriculture minister said Korea will not open its agricultural market further to the United States.
Following pressure by U.S. President Donald Trump, the Moon Jae-in administration agreed to begin an amendment process for the bilateral trade pact. While Korea’s agriculture imports from the U.S. are 10 times larger than what the U.S. imports from here, Washington is set to demand a further opening of the market.
“There is no way Korea will offer more concessions to the U.S. This time, the U.S. should offer to import more from Korea,” Kim said. “We are already grappling with huge agriculture trade deficit with the U.S. Since 2012 when the trade pact went into effect, the deficit has been expanding at a faster rate.”
In 2016, Korea’s imports of U.S. agricultural and livestock products stood at $6.8 billion but Korea’s exports amounted to only $700 million.
The minister said the government will ensure the U.S. understands that Korea already runs huge trade deficit in agriculture, but declined to outline its negotiation tactics.
“The U.S. has not yet made any demand concerning Korea’s agriculture market. So it is too early to make public our strategies. We will first try to let U.S. officials grasp the facts and persuade them not to make unreasonable demands,” he said. “We will do everything to protect the interests of local farmers.”
Vowing to soften anti-graft law
Kim pledged to ease the anti-graft law to boost the consumption of fruits, flowers and other agricultural products.
“The agriculture ministry has been coordinating with related state agencies to minimize the side effects of the law, while upholding its spirit,” he said. “We need to revise it by raising the price ceilings to realistic levels to alleviate negative impacts on farmers, fishermen and related industries.”
The nation has been implementing the law, which bans public servants, teachers and journalists from receiving meals valued over 30,000 won ($26), gifts worth more than 50,000 won and congratulatory and condolence money in excess of 100,000 won, since September last year.
It is intended to enhance transparency in society, but there have been growing complaints from several industries suffering from declin- ing sales.
The agriculture sector is among them, with flower businesses, farmers breeding hanwoo, or Korean beef, and farmers of quality fruit suffering as consumers drastically reduced purchasing these products to offer as gifts.
“We want to raise the price ceilings to 50,000 won for meals and 100,000 won for gifts, while reducing congratulatory and condolence money to 50,000 won,” the minister said. “We have been consulting with the Anti-corruption & Civil Rights Commission and other ministries to speed up the revision process. The agriculture ministry will do its best to have the law revised as quickly as possible in order to minimize its unintended adverse effects.”
To boost farmers’ income, the agriculture ministry plans to mobilize more resources to help farming households improve productivity, reduce costs, produce more value-added crops and find new income sources besides farming.
“We would like to help turn farming villages into tourist attractions so that they can attract both Korean and non-Korean visitors and secure new sources of income,” Kim said. “The ministry will work with travel agencies to offer tour packages for foreigners seeking to experience life in Korea’s agricultural villages. To spark interests in agritourism, we will also produce and upload promotional content on Youtube and SNS platforms.”
To cope with the soaring rice inventories, the government plans to encourage rice farmers to switch to other crops, he said. “It is important to keep the price of rice at a certain level to ensure rice farmers stay in business. But to do so, the government has to spend trillions of won each year to purchase rice and store it in warehouses.”
The nation has been grappling with growing rice oversupply over the years amid falling consumption as Koreans get more calories from bread, meat, fruits and other agricultural goods. But the majority of farmers are still engaged in rice farming, forcing the government to buy their crops and store them to artificially maintain the price.
“The government has been providing incentives to farmers who switch to other crops from rice over the years. With more choosing to cultivate other crops, we estimate rice inventories will decline over the long run,” he said.
Preventing animal disease and bolstering food safety
The agriculture ministry will double its efforts to prevent animal disease and bolster food safety, Kim said, stressing that it has learned valuable lessons from past mistakes.
“Korea has been grappling with the spread of bird flu and foot and mouth disease over the past few years. This year, we kicked off the quarantine campaign earlier than in the past to keep the country safe,” he said. “It is particularly important to contain any animal disease this winter as we host the Pyeong-Chang Olympics in February. We will spare no efforts to prevent any outbreaks.”
The minister expressed regret over the government’s handling of the pesticide-contaminated egg scandal in August, stressing it will place top priority on food safety.
“The scandal was caused by a combination of moral hazard among some poultry farms and the government’s poor oversight. In addition, the way chickens are bred to harvest eggs has to change to prevent the use of insecticides and antibiotics,” Kim said.
“The agricultural and food industries cannot be sustained if they lose consumer trust. Chicken farms should take the scandal as an opportunity to improve their breeding practices and produce safer eggs. The government needs to establish a comprehensive food safety management system to ensure people eat healthy and safe agricultural and livestock products,” he said.
In August, 52 chicken farms were found to have used banned insecticide on egg-laying chickens to boost output. More than 4.5 million eggs from the farms were seized and destroyed, but tens of millions of tainted eggs had already been consumed, sparking public outrage.
Consumers had remained reluctant to eat eggs, sending prices plunging, but the consumption has picked up in recent weeks as the scandal fades from people’s minds.
Besides China and Japan, ASEAN and the Middle East have emerged as major destinations for local agricultural products.