October 7, 2003
South Korean Fishery Resources Seen Depleted; Imports from US Forecast to Decline in 2003
South Korean fishery resources are being steadily depleted and, at the same time, fish catch quotas in foreign waters are being restricted. As a result, domestic fishery production declined seven percent in 2002 to 2.48 million metric tons (from 2.67 million metric tons in 2001). Despite the drop in production, total imports of seafood in 2003 are not expected to increase greatly from the $1.88 million in 2002. The slow economic situation in Korea, combined with rising seafood prices may have led to a decline in consumption. Imports from the U.S. are forecast to decline in 2003 as many U.S. exporters are shifting to the Chinese market.
During the first eight months of 2002, total seafood imports from the U.S. amounted to $94 million, slightly down from $101 million during the same period last year. Until 2000, Korea enjoyed a trade surplus in seafood. However, they are currently suffering a growing trade deficit in seafood. Korea exported about $1.16 billion of seafood in 2002, down from $1.27 billion in 2001.
Supply and Demand
Korea harvested 2.48 million metric tons of seafood in 2002, including 1.1 million tons in the on/offshore, 782,000 tons in the shallow sea aquaculture, 580,000 tons in the deep-sea and 18,500 tons in fresh water. Seafood production in Korea is forecast to decrease in the future due to the depletion of fish resources in adjacent waters and the enforcement of Exclusive Economic Zones (EEZ) by Korea's neighboring countries. In addition, Typhoon Maemi in September 2003 seriously damaged the shallow sea aquaculture, which will affect local production in 2003 and the beginning of 2004.
The Alaskan pollack catch declined sharply to 25,000 tons in 2002, from 199,000 tons in 2001, because the Korea fish industry failed to secure private catch quotas for Alaska pollack at Russia's international bid in early 2002. Again in 2003, the Korean fish industry failed to secure any private catch quotas for Alaska pollack and the Korean government was able to secure a government quota of only 22,000 tons in 2003. Total quotas of all types of fish purchased by the Korean government from the Russian government in 2003 were 51,800 tons, including 22,000 tons for Alaska pollack, 2,500 tons for cod, 20,000 tons for saury and 7,300 tons for squid. Russia is expected to reduce the government quota even further in the future, and will likely keep foreign fishing boats from catching fish in Russian waters starting in 2004.
However, Korean fishing companies made several private agreements with Russianfishing companies for joint catching of 116,000 tons of Alaska pollack in 2003. This is different from a catch quota where a Korean vessel would catch fish in Russian waters. It may involve Korean investment in Russian fishing infrastructure or Korean fishery instruction. As ground fish, surimi, and roe production directly correlates with the Alaskan pollack catch, total production of these products is expected to drop significantly in 2003 as well. Deep-sea production is also expected to decline in the longer term as Russia reduces Alaska pollack catch quotas in effort to rebuild its fish stocks in coastal waters. The deep-sea industry catches mainly Alaska pollack, tuna and squid.
Fresh water production is also expected to decline in the foreseeable future as enforcement of relaxed governmental anti-pollution environment regulations tightens. Fresh water production amounted to 18,500 tons in 2002, down from 20,600 tons in 2000.
The success of Korean industry efforts to change consumer perception of fish (as a healthy alternative to red meat), to diversify fish products, to improve quality, and to develop processing technology will be key in expanding domestic demand.
Seafood imports by Korea increased to $1.88 billion in 2002, up from $1.65 billion in 2001. Korea remains an important market for U.S. seafood suppliers. Given Korea's high per capita consumption and lower domestic production, imports are expected to rise to meet local demand in the coming years. Although U.S. fish are of high quality compared to competitors, they are also higher priced than those of competitors.
Korea also exports a large volume of fish products. In 2002, Korea exported 429,884 metric tons valued at $1.16 billion. The major species exported to other countries in 2002 were tuna ($274 million), oysters ($76 million), squid ($65 million), conger eels ($58 million), imitation crab meat ($44 million), and flat fish ($42 million).
The Korean government has used the higher adjustment tariffs ranging from 30 to 70 percent for 12 fish species to protect select domestic seafood, mainly from China. The normal applicable tariffs are between 10 percent and 20 percent. To further support the domestic industry, the Korea government is focusing on aquaculture in shallow waters to secure a stable supply of fish and working hard to purchase fish quotas from other countries, including Russia. Korea and China reached an agreement on the fishing quota for 2003, which allows Korean vessels to catch 60,000 tons inside China's EEZ and in return, Chinese vessels can catch 93,000 tons in the Korean zone. Korea also agreed with Japan on the 2003 fish catch quota in each other's EEZ, which allows each country to catch 80,000 tons.