The Korean fruit market traditionally relies heavily on domestic production, due to strict quarantine laws and a strong consumer preference for Korean fruit. According to the United States Foreign Agricultural Service (USFAS), however, grape and grapefruit importers are making headway into this difficult market.
Grapes are one of Korea’s largest domestic agricultural products, and what little market share imports can garner has traditionally been filled by Chilean product.
The Chilean grapes are aided by the Korea-Chile Free Trade Agreement, which cuts tariffs to zero, and by their ‘fresh’ reputation on the peninsula. Korea is the top export market for Chilean grapes.
“Chilean grapes are the fastest growth item now and in the future, with good demand for seedless grapes,” June Choi from Jinwon Trading told Fruitnet.com.
The value of fresh grapes imported into Korea rose 78 per cent last year to over US$58m.
US grapes, on the other hand, have a directly competing season with domestic production, and at times are slapped with a 45 per cent tariff, one of the highest in the world. The US only has 15-18 per cent of the imported grape market share.
The latter hurdle is about to be overcome, however, with the implementation of the Korea-US FTA signed last year, which will incrementally but significantly drop tariffs on US grapes.
The FTA has drawn significant public outcry in Korea for a number of reasons. Mad cow disease in US beef has been one of the major causes, but the deal is also expected to have an adverse affect on Korean agriculture.
Korean farmers will get US$119bn in aid over the next 10 years to offset the impact.
Grapefruit, on the other hand, have no domestic production in Korea, and have so far relied exclusively on US imports. Pink grapefruit from Florida are the most popular, and there has been a 163 per cent increase in US grapefruit imports over the last two years.
Prior to 2007 the only country Korea had a grapefruit import protocol with was the US, but last year India also entered the market.
Only 22 tonnes of Indian grapefruit made its way to Korea last year, but with total imports nearly tripling between 2006 and 2007 to almost 6,000 tonnes there is a clear opportunity for growth.
With the US-Korea FTA dropping tariffs, India will need to work hard to compete for grapefruit market share.
No comments yet