South Korea: Agricultural export overview 2018

Agricultural exports continued to grow in South Korea. The total export value of agricultural products from the Netherlands into Korea in 2018 was EUR 397 million, 3.2% up from a year earlier. Taking the fact that the exports grew 41% between 2016 and 2017 into consideration, it is not a negative score. The largest export commodity was pork followed by milk powder preparation, butter preparation, food processing machinery and beer. Pork and milk powder preparation were ranked in third and fourth places respectively by export value among all kinds of trade commodities exported from the Netherlands into Korea.

Fig.1 Agricultural exports from NL into KR by year

Fig.1 Agricultural exports from NL into KR by year

No.

Commodities

Exports
(EUR million)

1

Pork

79

2

Milk powder preparation

71

3

Butter preparation

40

4

Food processing machinery

20

5

Beer

19

6

Feed

17

7

Cheese

12

8

Cocoa preparation

12

9

Farming machinery

11

10

Starch

9

Table 1. Top 10 agricultural commodities exported into Korea in 2018

Fig.2 Pork and milk powder preparation exports from NL into KR by year

Fig. 2 Pork and milk powder preparation exports from NL into KR by year

Big markets

Pork exports continued to grow, and reached EUR 79 million in 2018. Since local pork price is about twice as expensive as one of imported pork, Korean consumers have increasingly demanded imported products. The Netherlands was the 6th largest exporter of pork after the US, Germany, Spain, Chile and Canada. Around 56% of pork exported from the Netherlands into Korea was frozen pork belly mainly used for Korean BBQ.

Milk powder preparation is a blend of milk and whey powder, which can lower the customs duty to Korea. Milk powder preparation exports stood at EUR 71 million in 2018. Except for 2013 and 2014 when the import volume increased extraordinarily due to shortage of local milk caused from massive outbreaks of Foot and Mouth Disease in Korea, the export volume has grown steadily. The Netherlands was the largest exporter of milk powder preparation, accounting for 62% of the market. As local raw milk costs more than twice as much, the demand for high-quality dairy ingredients from abroad is high. The Netherlands is in a good position in the Korean market for its high-quality dairy chain. Dutch milk powder preparation is largely used in the Korean dairy and confectionary sectors.

Butter preparation exports have fluctuated depending on exchange rates and market prices. Butter preparation exports have grown consecutively since 2016, and hit a record high of EUR 36 million in 2018, 32% up on-year.

Fig.3 Beer and feed exports from NL to KR by year

Fig. 3 Beer and feed exports from NL into KR by year

Growing markets

Beer exports made a slow progress between 2013 and 2016 as foreign beer brands from different countries increasingly joined the Korean market: Germany (from 2013), China (from 2015) and Belgium (from 2016). The ranking of Dutch beer in the Korean imported beer market dropped from No. 2 to No. 6 in this period. From 2017, the Korean beer market expanded again, and Dutch beer exports have also increased significantly. Beer exports jumped to EUR 19 million in 2018, 43% up from 2016.  Dutch beer has more potential to grow.

Feed exports are also growing. The Korean livestock sector is recently booming as the meat consumption soars. High quality feed ingredients are increasingly being exported into Korea. Furthermore, the growing pet industry demands high quality pet foods from abroad. Feed exports exceeded EUR 17 million in 2018.

Stable markets

Cheese, cocoa preparation and confectionary/bakery products used to be named as some of promising markets in Korea for Dutch exporters in our previous reports. However, they have not grown that much over the last 3~5 years. There is no doubt that Korean consumers prefer to foreign products made from high-quality ingredients, but the local markets for dairy and confectionary products are stagnant as the young population decreases.  The export amounts of cheese, cocoa preparation and confectionary/bakery products in 2018 were EUR 12 million, 12 million and 6 million respectively.

The positions of farming machinery, starch, fertilizer and flower bulbs are firm in the Korean market but are also not growing that much recent years.

Small but promising markets

Cut flower is one of the most promising markets in Korea.  In the past few years, cut flower exports from the Netherlands into Korea have increased and are also expected to grow in upcoming years. The needs are growing among Korean individual consumers as well as hotels for banquets, while the local production is shrinking. The amount of export was 4 billion in 2018. The Netherlands was the 2nd largest exporter of cut flowers after Columbia.

With the same reason as cut flowers, the future of Dutch ornamental plants in the Korean market is also bright. The export amount of ornamental plants was EUR 7 million in 2018. The Netherlands was the 3rd largest exporter of ornamental plants after China and Taiwan.

Fig.4 Cut flower and ornamental plant exports from NL into KR by year

Fig. 4 Cut flower and ornamental plant exports from NL into KR by year