May 9, 2007

 

South Korea's grain output may weaken due to imports

 

 

Production of wheat and corn in South Korea is seen to plummet as the country is gradually becoming dependent on imports to meet its needs, according to a report by the United States Department of Agriculture.

 

USDA said South Korean food producers are benefiting from cheaper imported grains due to the country's "ambition to align itself with global trade to boost its own export potential."

 

Milling wheat, which is used in manufacturing noodles, is expected to decline to 5,000 metric tonnes for the year or a decrease of 810 tonnes from 2006, according to South Korea's Ministry of Agriculture and Forestry. 

The South Korean customs service expects milling wheat imports to increase by about 8 per cent over the next two years.

 

On the other hand, corn imports is expected to increase by eight percent, the highest this season but is seen to decline slightly after a year.

 

The increased imports will domestic production of these grains drop by around 9,600 tonnes in 2007, according to USDA estimates.

 

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.

 

Some groups have opposed the government's pact with US and the ongoing negotiations with EU, stating South Korea's reliance on imports. This development has been further corroborated by a report published last year by the USDA Foreign Agricultural Service, stating that South Korea is estimated to import 60 to 70 percent of its total agricultural needs.

 

The report said suppliers have a strong opportunity to export raw materials and ingredients for food processing in South Korea as imports help meet the domestic production.

 

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 41 billion euro on food products in 2007 from 39 billion euro in 2006.