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Signs Point to a Recovering Korea
By Philip A. Shull
If you’re an exporter (and
especially if you export consumer-ready products), now’s the
time to turn–or return–your attention to Korea.
This enterprising nation of 45 million people, occupying an area the size of Indiana, is the fourth largest market for U.S. agriculture.
As the ancient roots of Korean culture suggest, Korea is a nation that has endured, despite a long history of economic peaks and valleys. Some of the most notable peaks have occurred in recent memory. From 1960 to 1997, Korea experienced the longest and largest economic growth in the history of the world, averaging 9 percent per year.
And then there was 1998, obviously a bitter disappointment to Koreans, and a wake-up call to investors throughout the world with expectations of unlimited growth.
But to what extent should agricultural exporters allow themselves to be dissuaded by the 1998 financial crisis? Very little, according to market observers. Recovery of food and beverage imports is expected to be rapid. Furthermore, there are abundant opportunities for new products.
The Crisis. . .
In 1998, Korea experienced its worst economic crisis since the early 1950s. Imports of U.S. consumer-ready food and beverage products, including seafood, dropped nearly 50 percent to roughly $600 million.
A wildly fluctuating exchange rate, plummeting property values, and a temporary paralysis of the financial system are among the key reasons why imports dropped so sharply.
The Recovery. . .
While full economic recovery and implementation of key reforms will be a multi-year process, the recovery of Korean agricultural imports is expected to occur more rapidly.
A number of products, including fresh and frozen vegetables, processed and frozen fruit, refrigerated doughs, coffee, wine, poultry, certain dairy products, a wide range of microwaveable foods, will likely start setting year-on-year records within the next year or two. As early as late 1998, there were strong indications that imports of these items were picking up.
The Outlook. . .
The financial crisis made importing extremely risky for everyone, and credit unattainable for many. Thus, stocks of imported consumer-ready products during 1998 were virtually exhausted.
The cycle appears to be coming full circle, though, as shortages are now expected to inspire strong demand for many of the same items in 1999.
Hotels, supermarkets and restaurants relied on their warehouses and cleaned out their freezers in order to postpone importing as long as possible.
Korea’s 75-percent dependence on imported foods, including bulk commodities, and consumer demand for high-quality foods make significant increases in food imports appear inevitable.
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The author is the departing director of the Agricultural Trade
Office in Seoul, Korea. The Trade Office can be reached at Tel.:
(011-82-2) 397-4188; Fax: (011-82-2) 720-7921.
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