Dairy industry expects strong growth in S. Korea

By CAROL RYAN DUMAS

Capital Press

Free trade agreements with South Korea, Colombia and Panama, passed Oct. 12 by the Senate and the House, will bring an estimated $430 million annually to the U.S. dairy sector, industry leaders say.

The pact with South Korea will mean $380 million annually in dairy exports, and the agreements with the other two countries will provide another $50 million annually, according to U.S. Dairy Export Council.

The agreements are expected to add as many as 10,000 export-related jobs on the farm and throughout the processing and transportation sectors, said Tom Suber, USDEC president.

The agreements include schedules for tariff reductions for a broad range of U.S. dairy products.

"Our producers are excited about the new export opportunities that will be realized once the agreements take effect, especially the trade pact with South Korea," Jerry Kozak, president and CEO of National Milk Producers Federation, said in a press release.

South Korea was the No. 1 export market for U.S. cheese in the April-July period with shipments of 30.5 million pounds, more than double the volume of the same period a year ago, according to USDA's Economic Research Service. Through July, overall U.S. dairy exports to South Korea were valued at $145 million, up 97 percent from a year ago. South Korea was U.S. dairy's sixth-largest export market and had the largest percentage increase among the top 16.

"We're their largest cheese supplier and No. 1 whey protein supplier," Suber said.

While U.S. dairy already has an existing market in South Korea, without the trade agreement, U.S. market share would not be able to grow because it would be on the losing end of South Korea's trade agreement with the European Union, he said.

"The Europeans' tariffs would have been getting less, and ours would have stayed the same," he said.

U.S. suppliers would not have been able to compete with European suppliers, but with the agreement, they'll be able to, he said.

The EU signed an agreement with South Korea in July, he said.

With the agreement, the U.S. will be able to increase dairy consumption in South Korea at a faster pace because dairy products will be taxed less, he said.

The phase out of tariffs, some immediate and others over 15 years, will lower the cost to a relatively affluent country with a growing appetite for dairy, he said. South Korea has 49 million consumers and a $1 trillion economy.

The U.S. pact with South Korea was completed in the Bush administration, but couldn't muster congressional approval.

Opposition came from the auto, electronic, beef and organized labor sectors. The beef and electronics sectors dropped their opposition, and the auto industry's opposition was worked out in further negotiations, Suber said.

The trade agreements with Colombia and Panama will bring a smaller benefit, but they give the U.S. better access to those markets, Suber said.

The U.S. is geographically closer to those markets than the EU or Australia, and it will allow U.S. suppliers to better compete with suppliers in Argentina and Uruguay, he said.

"Passage of these agreements represents a step forward for the dairy industry toward becoming a more consistent exporter," Connie Tipton, president and CEO of International Dairy Foods Association, said in a written statement.