S. Korea imports of U.S. dairy products growing

South Korea represents an opportunity for some segments of the U.S. dairy industry.

By RICHARD SMITH

For the Capital Press

Published on December 22, 2014 1:59PM


Opportunities for U.S. dairy exports to South Korea center mainly on cheese and butter, followed by value-added ingredients such as whey proteins and lactose for food.

With the U.S-South Korea free trade agreement in place, an increasing appetite for western cuisine and an increasingly uncompetitive domestic industry, U.S. dairy exports to South Korea will continue to grow in coming years, the country representative for the U.S. Dairy Export Council said.

That would be true especially for cheese, where consumption is increasing 10 percent annually, said Yoon-Sang Lee, president of the Seoul public relations and marketing firm Intnet.

But U.S. production of cheese and butter must be adjusted to local tastes, as the products contain more sodium than the level to which South Koreans are accustomed, Lee said.

“If U.S. suppliers could lower the sodium level, there would be greater opportunities for market penetration,” he said.

South Korea’s stock of powdered milk is at a 12-year high because of an oversupply and shrinking demand, the daily Joongang Ilbo reported.

The newspaper reported the Korea Dairy Committee said the amount of stored powered milk had reached 15,554 tons last June, the highest level since November 2002.

But that is because the supply is governed by subsidies that guarantee dairy farmers a profit, Lee told Capital Press.

“Supply is continuing despite low demand, and thus we are seeing an increase in stock of milk powder,” he said.

Demand for U.S. milk powder is not affected by the current local milk powder situation, Lee said.

“It is mainly affected by the tariff and thus future export of U.S. milk powder would mainly rely on the KORUS FTA quota schedule,” he said.

Prospects for U.S. extended shelf life milk are stronger, but it would take five or more years for the price to be competitive as the tariff goes down under the FTA, Lee said.

Last year, U.S. ESL milk came into the country but was unsuccessful in penetrating the retail or major foodservice market because of farmer and public sentiment, Lee said.

The price was at least 20 percent higher than domestic milk prices, but competitive against premium milk prices. However, the taste was highly rated among potential customers, he said.

“So quality is not an issue, only general public sentiment,” he said.



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