Imports drive down Korean grain production

By Neil Merrett

- Last updated on GMT

Related tags: South korea, International trade

Korean production of wheat and corn is set to decline as the
country's food industry turns increasingly to imported materials
for its needs, says a new report.

The findings by the United States Department of Agriculture (USDA) suggest that food producers in the country are benefiting from cheaper imported grains to meet increasing demand. This trend is likely to be driven further by South Korea's ambition to align itself further with global trade, to boost its own export potential. As a result, domestic production of key grains like wheat and corn, is expected to decline during the year. Production of milling wheat, predominantly used in noodle formulation, is expected to decline to 5,000 metric tonnes for the year, according to South Korea's Ministry of Agriculture and Forestry. This will result in a fall of 810 metric tonnes from 2006. The South Korean customs service expects milling wheat imports to increase by about 8 per cent over the next two years. Imported corn demand is expected to undergo the highest increase, rising by eight per cent during the season, declining only slightly the year after. Due to these increased imports, domestic production is set to decline by around 9,600mt in 2007, according to USDA estimates. The growing importance, particularly in the food industry, for imported raw materials is matched by South Korea's desire to expand its presence within global trade. Just last month, speculation grew that the country's government was in preliminary discussions with its EU counterparts over the possibility of a free trade agreement. This followed the controversial signing a few weeks earlier of a similar trade agreement with the US, which has met with some opposition over reforms to meat and food production in South Korea. While some in the country, especially in agricultural food circles, oppose Korea's increased reliance on imports, the trend seems unlikely to reverse in the coming years. A report published last year for the USDA's Foreign Agricultural Service, estimates that the country now imports 60 per cent to 70 per cent of its total agricultural needs. "Suppliers have a strong opportunity to export raw materials and ingredients for food processing inSouth Korea,"​ stated the report. "The country's food and beverage manufacturing and processing industry is a major user of imported raw materials, intermediate products, ingredients, and additives." "Imports are necessary because domestic production cannot meet demand,"it added.​ This demand is in part, being driven by growing consumer expenditure on food products. According to statistics by consumer analyst Euromonitor, South Korea is expected to spend €41bn on food products in 2007, from €39bn in 2006.

Related topics: Markets, South Asia, Supply chain, Bakery

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