1 Korea’ s Agro-food Exports and Its Export Promotion Policy Dr. Jeongbin Im Professor, Seoul National University, Korea Agro-food Export in Korea Agricultural exports are considered important not only for Korean agriculture but also for the whole national economy. First, it is a leading factor in the growth of the agricultural industry and contributes to the farmhouse’s income increase. One of the basic characteristics of agro-food is low price elasticity of demand compared with other manufactured products. Therefore a little overproduction of agricultural products tends to cause price collapse and income decrease. However, agro-food exportation supports domestic price by promoting consumption of surplus products in the overseas market and eventually becomes effective in raising farm income. Second, agro-food exports could motivate high quality production of agro-food to satisfy the international standard. It could also help domestic product compete effectively with imported products. Agro-food, which is expected to be exported should meet HACCP, ISO, GAP, and other kinds of safety and quality standard tests in production and distribution at the international level. Agro-food exportation catalyzes the advancement in domestic agro-food production and distribution system up to the advanced countries’ level. In addition, building high quality production and distribution system with competitive safety guarantee will contribute in protecting the domestic industry from the influx of foreign agro-food. Third, agro-food exports have been contributing to the national economy. Korea Rural Economic Institute (KREI) has calculated the contribution created from USD 10 billion of agro-food exportation to the national economy by using inter-industry analysis. According to results, such amount of agro-food exports generates USD 12.6 billion of production inducement effect, USD 4.5 billion of value added inducement effect, and creates 56,000 new job opportunities. Comparing with the impact of vehicle exports (NF sonata basis), the production and value added inducement effect of agro-food exportation are equivalent to the effect of 390,000 vehicles exportation and 470,000 vehicles exportation respectively. Aside from this, agro-food exports contributes to the promotion of national prestige in the way Korean food culture spreads into the world. It can also be conducive to restore confidence in the agriculture industry, enhance food security, and retain the good quality of the environment. Thus Korean government is resolutely turning away from traditional domestic agro-food market which gradually reaches its limit. It then tries to elaborate relevant policies to positively expand agro-food exportation as Korea recognizes that the global creation of a new market and demand for Korean agro-food is one of the good approaches to attain the sustainable growth of Korea’s agriculture. Korea’s situation of agro-food exports is summarized as follows. First, agro-food export has been steadily increased from USD 3,500 million in 1995 to USD 8,000 million in 2012 with an rate of average 5.4% per year. However annual growth rate of agro-food exportation is relatively modest compared to that of total exportation which has 9.1% average annual growth rate.
12
Embed
Korea s Agro-food Exports and Its Export Promotion Policyap.fftc.agnet.org/files/ap_policy/291/291_1.pdf · Korea’s Agro-food Exports and Its Export Promotion Policy Dr ... which
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1
Korea’s Agro-food Exports and Its Export Promotion Policy
Dr. Jeongbin Im
Professor, Seoul National University, Korea
Agro-food Export in Korea
Agricultural exports are considered important not only for Korean agriculture but also
for the whole national economy. First, it is a leading factor in the growth of the agricultural
industry and contributes to the farmhouse’s income increase. One of the basic
characteristics of agro-food is low price elasticity of demand compared with other
manufactured products. Therefore a little overproduction of agricultural products tends to
cause price collapse and income decrease. However, agro-food exportation supports domestic
price by promoting consumption of surplus products in the overseas market and eventually
becomes effective in raising farm income.
Second, agro-food exports could motivate high quality production of agro-food to satisfy
the international standard. It could also help domestic product compete effectively with
imported products. Agro-food, which is expected to be exported should meet HACCP, ISO,
GAP, and other kinds of safety and quality standard tests in production and distribution at the
international level. Agro-food exportation catalyzes the advancement in domestic agro-food
production and distribution system up to the advanced countries’ level. In addition, building
high quality production and distribution system with competitive safety guarantee will
contribute in protecting the domestic industry from the influx of foreign agro-food.
Third, agro-food exports have been contributing to the national economy. Korea Rural
Economic Institute (KREI) has calculated the contribution created from USD 10 billion of
agro-food exportation to the national economy by using inter-industry analysis. According to
results, such amount of agro-food exports generates USD 12.6 billion of production
inducement effect, USD 4.5 billion of value added inducement effect, and creates 56,000 new
job opportunities. Comparing with the impact of vehicle exports (NF sonata basis), the
production and value added inducement effect of agro-food exportation are equivalent to the
effect of 390,000 vehicles exportation and 470,000 vehicles exportation respectively.
Aside from this, agro-food exports contributes to the promotion of national prestige in
the way Korean food culture spreads into the world. It can also be conducive to restore
confidence in the agriculture industry, enhance food security, and retain the good quality of
the environment.
Thus Korean government is resolutely turning away from traditional domestic agro-food
market which gradually reaches its limit. It then tries to elaborate relevant policies to
positively expand agro-food exportation as Korea recognizes that the global creation of a new
market and demand for Korean agro-food is one of the good approaches to attain the
sustainable growth of Korea’s agriculture.
Korea’s situation of agro-food exports is summarized as follows. First, agro-food export
has been steadily increased from USD 3,500 million in 1995 to USD 8,000 million in 2012
with an rate of average 5.4% per year. However annual growth rate of agro-food exportation
is relatively modest compared to that of total exportation which has 9.1% average annual
growth rate.
2
Table 1. The share of agro-food export in Korean national export
Note: export value for each item are aggregated data based on AG Code ( HS Code) for 2013 from Korea Agro-Fisheries & Food Trade
Corporation
Source: Korea custom and Trade Development Institution, 2013.
Fifth, overall export market has been gradually diversified. In 2000, countries in which
Korea exported agro-food with earnings of over USD 100 million include Japan, Hong-Kong,
China and U.S.A. In 2012, the number of countries that have imported agro-food from
Korea with earnings of more than USD 100 million came from 14 countries including Russia,
Arab Emirates, Taiwan, Vietnam, Thailand, Philippines, Iraq, Singapore, Australia and New
Zealand. Destinations of Korean agro-food exports have now increased to 194 countries, 14
of which have become the destinations of more than USD 100 million Korean diversified
exports with earnings from agro-food. Also, the dependence on the Japanese market in
Korean agro-food exports has declined from 61% in 1995 to 29.8% in 2012. Meanwhile the
share of Korean agro-food exports to China, U.S.A and Thailand has increased from 4.7% to
16%, from 5.5% to 8.3% and from 3.3% to 3.9% respectively during the same period. In
addition U.S.A was traditionally the second largest Korean agro-food importing country, but
since 2007, its exportation value to China has exceeded the U.S. China has now become an
important agro-food export market for Korea. East Asian countries such as Malaysia,
Indonesia and other countries like Netherlands and Canada are emerging as the new export
market for Korean agro-food.
Fig. 1. Countries in which Korea exports Agro-food more than USD 100 million
2006 Japan U.S.A China Russia HK UAE Taiwan 7
2007 Japan China U.S.A Russia HK UAE Taiwan Thailan
d 8
2008 Japan China U.S.A Russia HK Thailan
d Taiwan UAE Iraq
9
2009 Japan China U.S.A Russia HK UAE Thailan
d Taiwan
Vietna
m
2010 Japan China U.S.A HK Russia UAE Taiwan Thailan
d
Vietna
m Iraq
Philippi
ne 11
2011 Japan China U.S.A HK
Thailan
d
Vietna
m Taiwan Russia UAE
Indon
esia
New
Zealand
2012 Japan China U.S.A Vietna
m
Thailan
d HK Russia Taiwan UAE
Indon
esia
Philippi
ne
Singa
pore
Austr
alia
New
Zeala
nd
14
Ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Source: Ministry of Agriculture, Food and Rural Affairs, Ministry of Ocean and Fisheries, Korea Agro-Fisheries
& Food Trade Corporation
5
Sixth, the result of measuring countries’ contribution rate to Korean agro-food exports
(except for fishery products) growth during the period from 2008 to 2012 explains why Japan
ranks first and China ranks second with the following corresponding level of contribution:
27.3% and 19.6% respectively as shown in Table 4. Also Vietnam’s contribution level is
10.3%, while Hong Kong is 4.7% and Arab Emirates and USA showed a contribution level of
4.2%. In terms of export growth rate agro-food exports to Cambodia has increased 6.4 folds
from USD 662 million in 2008 to 4,888 million in 2012. This is the highest growth rate
among the top 20 exporting target countries. Vietnam and Singapore followed Cambodia with
2.6 folds and 1.3 folds respectively. In addition Iran, India and Malaysia showed double
increase rate.
Table 4. Contribution rate of major country to Korean agro-food exportation (2008-2012)
Unit: 1000 US$, %
2008(A) 2012(B)
Amount of
change(B-A)
Contribution
Level
Rate of
Change(B/A)
Total 3,797,443 5,782,613 1,985,170 100.0 52.3
Japan 873,636 1,415,441 541,806 27.3 62.0
china 591,684 980,606 388,923 19.6 65.7
ASEAN 381,173 849,673 468,500 23.6 122.9
U.S.A 389,741 473,065 83,324 4.2 21.4
EU 208,371 311,969 103,597 5.2 49.7
Vietnam 79,682 283,924 204,242 10.3 256.3
Hongkong 175,707 268,829 93,121 4.7 53.0
Russia 294,781 251,359 -43,422 -2.2 -14.7
Taiwan 166,458 227,993 61,535 3.1 37.0
UAE 128,995 221,741 92,746 4.7 71.9
Indonesia 85,874 142,726 56,852 2.9 66.2
Philippine 53,020 106,507 53,487 2.7 100.9
Singapore 42,051 97,468 55,417 2.8 131.8
Australia 73,776 94,005 20,229 1.0 27.4
Netherlands 71,768 93,694 21,926 1.1 30.6
Malaysia 32,842 72,484 39,642 2.0 120.7
Thailand 77,314 70,534 -6,780 -0.3 -8.8
Iran 20,091 62,395 42,304 2.1 210.6
Canada 37,579 58,149 20,570 1.0 54.7
Cambodia 6,624 48,882 42,258 2.1 637.9
Germany 27,792 45,392 17,600 0.9 63.3
India 19,562 43,324 23,762 1.2 121.5
Others 548,466 724,095 175,629 8.8 32.0
Note1) Amount of export for each country is calculated based on HS-AG code of 2013 sourced from
Note2) Suggested countries are top 20 exporting target countries of Korean agro-food in 2012 (expect EU, ASEAN) Source: Korea custom and Trade Development Institution, 2013
6
POLICY FOR AGRO-FOOD EXPORT PROMOTION IN KOREA
Overview
Korea’s agro-food export promotion policies are developed by the Ministry of
Agriculture, Food and Rural Affairs and are executed directly or indirectly through operating
units such as Korean Agro-Fishery & Food Trade Corporation (aT), local government and
government subsidiaries to support companies and farms.
Korea’s agro-food export promotion policies have three big areas of developing foreign