Market Information   >   Food News Clipping

Food News Clipping

June 25, 2014

2014.06.30

FAS/Seoul Monitoring of Media Reporting on Agricultural Issues
Today's Date:   Monday June 25, 2014
For Coverage:   June 16 ~ 25, 2014
 

1. BILATERAL/MULTILATERAL ISSUES

 

The 5th round of RCEP trade negotiations will be held in Singapore on June 23rd [Korean, BSY]

http://www.hkbs.co.kr/?m=bbs&bid=envnews5&uid=304325                                            

SUMMARY: The 5th round of Regional Comprehensive Economic Partnership (RCEP) will be held in Singapore from June 23 – 26, 2014. The participating countries will discuss the market liberalization for products, service and investment and other important elements such as regulations and cooperation in competition. They will also deal with the modalities proposed by each country to achieve effective market liberalization, and the intellectual property rights to promote comprehensive FTAs.
 

Columbian Congress Delays Ratification of FTA with S. Korea [English, BSY]

http://english.yonhapnews.co.kr/business/2014/06/19/12/0502000000AEN20140619002400320F.html                  

SUMMARY: Columbia¡¯s congress has delayed the ratification of Korea-Columbia FTA due to a growing public opposition toward the free trade pacts. An official, who spoke on condition of anonymity, said that the deal may not be signed this year, since it must be ratified by the senate before it is reviewed by the lower house of the Colombia congress. The agreement must also be reviewed for constitutionality under Colombia¡¯s Constitution. Korea, which mainly exports automobiles and auto parts to Columbia and imports coal and coffee, had ratified the agreement in April. In 2013, South Korea¡¯s trade with Colombia came to US $1.55 billion. Under the deal, South Korea will remove its import tariffs on 96.1 percent of all products from Colombia in 10 years. Colombia will also eradicate its tariffs on 96.7 percent of products imported from South Korea in 10 years.
 

Indonesian Trade Minister, ¡°Indonesia- South Korea CEPA failed to reach a deal¡± [Korean, BSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=101&oid=001&aid=0006960836

SUMMARY: South Korea and Indonesia failed to reach an agreement as the nearly two years negotiation on a Comprehensive Economic Partnership Agreement (CEPA) collapsed. According to Indonesian Trade Minister Muhammad Lutfi, the core reasons for failure were conflict between the strong request to guarantee Foreign Direct Investment from Korean side with Indonesia¡¯s scope of desired access to Korea¡¯s agricultural market. Considering the presidential election slated for July 9 in Indonesia, the talks won¡¯t resume under current Indonesian Administration.
 

Korea-New Zealand FTA [Korean, BSY]

http://www.metroseoul.co.kr/news/newsview?newscd=2014061500040      

SUMMARY: At the 7th round of Korea-New Zealand FTA talks, two parties came to a consensus on service, investment, origins, intellectual property right, and etc., while differences on the scope of protection regarding oversensitive agricultural products were revealed. The government will continue negotiating with New Zealand balancing the benefits of both countries while considering the sensitivity of Korean agricultural products.

 
2. BIOTECHNOLOGY ISSUES

 

Processed Food GMO Indication Investigation [Korean, YGY]

http://www.foodnews.co.kr/news/articleView.html?idxno=51142

Summary: Consumer groups and civic organizations are seeking to investigate and report GMO indication for items in categories such as health functional food and corn processed food. The Korean Civic Network MOP7 has stated ¡°In order to correct the mistaken understanding and recognition for GMO, there will be lectures for the general public, international symposium exhibitions, and campaigns. On the same note, Slow Food Korea has reported that upon investigation of 43 products, such GMO indication was nonexistent. It also stated that ¡°In 2010, Korea¡¯s self-sufficiency rates of grain for soybeans and corn were 10.1% and 0.9% and Korea solely relies on imports for canola oil.¡± Approved imports of GMO products were totaled to 8,877,000 tons in 2010, the largest amount ever since the LMO was enforced in 2008.
 

3. GRAIN & OILSEED ISSUES

 

Measures must be taken in response to rice tariffication [English, BSY]

http://english.hani.co.kr/arti/english_edition/e_international/643423.html                  

SUMMARY: At a National Assembly hearing on June 19, with the Prime Minister and Cabinet Members of economic affairs present, the National Assembly called for an urgent need to implement measures in response to rice tariffication.  Yun Myeong-hee, a member of Saenuri Party, said that the government must provide sufficient financial aid, prohibit the distribution of mixed rice, increase of Direct Payment for double cropping in the paddy field and lower the electricity charges to rice processing complexes. He also emphasized that the government must promise to exclude rice from negotiation tables of all FTAs.  Park Min-soo, the opposition party member, claimed that before the government informs the WTO of rice concession plan, it must publicly announce the tariff rate, which must be reviewed by the National Assembly.
 

Will the South Korean rice market be opened [English, BSY]

http://english.hani.co.kr/arti/english_edition/e_international/643423.html                  

SUMMARY: On June 20, the South Korean government held a rice tariffication public hearing at the main auditorium of the Korean Rural Community Corporation¡¯s Human Resources Development Institute building in Uiwang, Gyeonggi Province, to collect opinions from agriculture-related groups. While the government showed its strong support for tariffication, the farmer organizations had divided opinions. Kim Kyung-gyu, food policy officer for the Ministry of Agriculture, Food and Rural Affairs argued that rice tariffication is unavoidable and that the government will exclude rice from negotiation tables of all FTAs. Sohn Jae-bum, secretary general for the Korea Agricultural Management Forum, agreed with the government saying that additional MMAs will threaten the domestic market. On the other hand, Park Hyung-dae, policy committee chief for the Korean Peasants¡¯ League, claimed that ¡°the end of the rice tariff grace period doesn¡¯t necessarily mean rice tariffs,¡± and the government should put more efforts on diplomatic negotiations.
 

The opposition party member Choi Kyu-seong claims, ¡°It is time to consider rice tariffication.¡±[Korean, BSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014062290721

SUMMARY: Choi Kyu-seong, an opposition party member and the former chairman of the Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee, said in his interview that ¡°rice tariffication is the most practical way to minimize the damage of domestic rice market,¡± and that ¡°with the self-sufficiency rate of rice over 90 percent, it is like an opium to increase the MMA quota.¡± He also claimed that ¡°If Korea opened the rice market in 2004, the MMA quota wouldn¡¯t have reached 410,000 tons, which is 9% of domestic consumption. Also, Korea should protect domestic market by imposing high tariffs as much as 400% like Japan. Delaying the tariffication will only worsen the situation, and Korea may need to put up with unfavorable conditions regarding other industrial sectors.¡± This interview draws much attention since the opposition party is taking a stand against the rice tariffication.
 

Rice prices going down¡¦ calls for immediate measures [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=233152&page

SUMMARY: Rice farm gate prices fell down below the level of 170,000 won (per 80kg) for the first time since September 2012.  According to the Korean Statistics, average rice price in May was 169,917 won per 80kg, which was 0.7% lower than the price in April and 3.1% lower than the price during the harvesting season last year. This is caused by heavy stocks held by rice distributors including rice millers had purchased lots of paddy rice from farmers who suffered from harvest pressure last year. In fact, rice stock in May stood at 626,000t, which is 9.5% higher than last year¡¯s stock level or 49,000t. The government predicts that if this trend continues, it will adversely impact the prices for the rice with new crop harvest approaching this year. The fear for upcoming decision of rice tariffication will also expedite  rice prices declining further because rice farmers are probable to release new crop at a bargain price during the harvesting season.
 

The government promotes the implementation of rice check off system [Korean, BSY]

http://www.palnews.co.kr/board_view_info.php?idx=70141&seq=&seq2=1                            
SUMMARY: To secure stable development and competitiveness of Korean rice industry, the Ministry of Agriculture, Food and Rural Affairs (MAFRA) is promoting the ¡®four key tasks for the rice industry development,¡¯ which includes systemizing and scaling the rice production, enhancing the marketing efficiency, encouraging consumption, and reinforcing the R&D. In fact, the Ministry is reviewing to implement the rice check off system to help the producers engage in independent and responsible activities such as boosting consumption and conducting research and development. For the smooth operation of the check-off system, the government plans to deduct the withholding tax from the area direct payment, making the contribution mandatory.
 

4. LIVESTOCK ISSUES

 

Additional outbreak of HP-avian influenza suspected in Daegu [Korean, BSY]

SUMMARY:  There is a possible outbreak of HP-avian influenza (HPAI) virus in Daegu after 13 dead chickens were found positive for flu. The corresponding farm is about 5 km away from the poultry farm where the virus was confirmed on the 17th. The government will send the specimen to the Ministry of Agriculture, Food and Rural Affairs for more accurate inspection.
 

Avian Influenza detected in Dalsung, Daegu [Korean, BSY]

SUMMARY: The highly-pathogenic bird flu virus was found at a poultry farm in the country of Dalsung, Daegu, resulting in culling 13 geese and 388 chickens to prevent the spread. The corresponding farm had taken in 107 chick geese last month from the geese farm in Heongsoeng, Kangwon Province, where the virus was confirmed on May 31 (Saturday).
 

Outbreak of Avian Influenza confirmed in Hoengseong, Gangwon-do [Korean, BSY]

SUMMARY: The Ministry of Agriculture, Food and Rural Affairs has confirmed an additional outbreak of HP Avian Influenza (HPAI) at a duck farm in Heongseong, Kangwon Province, and 969 ducks and 20 chickens in the nearby regions have already been slaughtered to prevent the spread. The disease was previously found in February near Seomgang, Wonju area, possibly caused by migratory birds from China, but did not affect the poultry farms in Heongseong at that time. As migratory birds moved north due to rising temperature, the government was planning to announce to declare Korea AI free that the bird flu is under control at the end of this month.

 

Korea Pork Producers Association discusses to adjust pork prices [Korean, BSY]

http://www.asiatoday.co.kr/view.php?key=20140618010010080                

SUMMARY: Today, the Korea Pork Producers Association (KPPA) will discuss the ways to adjust pork prices. The association is looking to reduce the wholesale price by 2% when it exceeds the level of 6,000 won per kg and by 1% when it is between 5,500-6,000 won per kg. When the wholesale price is between 3,500-4,000 won per kg, the association suggests increasing the price by 1% and by 2% when it is below the level of 3,500 won per kg. The current whole sale price is 6,438 won per kg, which is largely affected by the skyrocketed international market price due to the outbreak of Porcine Epidemic Diarrhea (PED) in the U.S., Canada, Japan, and etc. and by the increase in demand after the HP Avian Influenza (HPAI) was found in Korea.
 

5. MARKETING ISSUES

 

Pasta Sauce Reports Strong Sales Growth as Korean Families Look for Easy-to-Cook Dishes [Korean, OSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=101&oid=020&aid=0002597002

Summary: It is reported that leading Korean retail store chains have expanded the shelf space on pasta sauces as the sales continue a strong growth.  According to the industry source, sales of pasta sauces in Korea totaled 54 billion won, up 15 percent from the previous year.  Marketers point out that increase of single and two member families as well as more mothers in economic activity has prompted strong demand on 'easy to cook' dishes such as pasta.  Leading local food processors, including Daesang, Ottogi and CJ Cheiljedang, currently take over 70 percent of the pasta sauce market in Korea.

 

Food Manufacturers Target Health-Conscious Consumers with Gluten-Free and Low-Sodium Products [Korean, OSY]

http://news.donga.com/3/all/20140623/64585832/1

Summary: Some of the Korean food manufacturers are focusing on 'Gluten-free' and 'Low-sodium' products to target health-conscious consumers.  Our Home Co. has reported that sales of its instant noodle products saw 150 percent growth since it introduced 'gluten-free' products last year.  All the major soy sauce processors have recently launched low sodium products.  Some of Kimchi manufacturers have also joined in the trend and launched low sodium version Kimchi.  Hyundai department store has reported that the sales of low-sodium product section saw 17 percent growth so far this year.

 

Lack of Increased Demands during the World Cup¡¦ ¡®Black Friday¡¯ Saves the Summer [Korean, YGY]

http://bizn.khan.co.kr/khan_art_view.html?artid=201406242136395&code=920401&med=khan

Summary: Due to the slump of the national soccer team of Korea, the long history of increase in demands that usually follow the World Cup season is rather fictional this year. To combat this issue, distribution companies are planning to promote a Korean version of Black Friday to booster domestic demand. Lotte Mart, a massive supermarket chain, set a 50% sale on grocery products and following the increase in grain consumption, will be releasing 400tons of stored grain for promotions.

 

Korea Ranks 11th in the World in 2013 for the Number of Cash Millionaires [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014062061361

Summary: According to 'World Wealth Report 2014' published by RBC Asset Management, the number of people that own over $1 million of cash asset in Korea totaled 176,000 in 2013, up 10.3 percent from the previous year.  Korea ranked 11th in the world for the number of millionaires (12th in the previous year).  The U.S. topped the rank by having 4 million of millionaires, followed by Japan (2.3 million), Germany (1.1 million) and China (758,000). 

 

Philippines, WTO Agree to Extend MMA Import Program on Rice Until 2017 ... May Affect Korea's Decision on Rice Tariffication [Korean, OSY]

http://news.donga.com/3/all/20140620/64449191/1

Summary: WTO made a decision on June 19 that it would allow Philippines to maintain Minimum Market Access program on rice imports until 2017.  Under the extension agreement, the volume of rice that Philippines must import from WTO trading partners will increase 2.3 times from the current 350,000 metric tons to 805,000 metric tons a year.  The extension decision is likely to generate further dispute in Korea as local opinions are divided between maintaining MMA program and switching to tariffication system on rice imports.  The current MMA program that Korea established with WTO ten years ago is scheduled to expire in 2014.

 

500,000 Metric Tons of Imported Rice is Kept in Warehouses of 100 Soccer Fields Space ... High Cost of Maintaining MMA Quota System [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014061887241

Summary: Almost 500,000 metric tons of imported rice that Korean government imported from foreign countries under Minimum Market Access Quota program are currently kept in warehouses in various locations, which is a huge financial burden to the Korean government.  The reason for the high inventory of imported rice is Korea's decision twenty years ago not to introduce tariffication system on rice imports.  Despite limited demand from local restaurants and retail stores, the volume of imported rice that Korea must import under the MMA quota agreement with WTO has increased to 408,700 metric tons this year.  In addition to the storage cost, Korean government has been forced to sell 50,000 to 200,000 metric tons of old imported rice each year at below cost.  The bigger problem is that if Korea decides to maintain the MMA quota system after the current agreement expires in 2014, Korea is likely to be obligated to double the MMA quota volume.  The voice in the Korea Ministry of Agriculture support the idea to switch to tariffication system.

 

Photo: A warehouse full of imported Chinese rice

 

Lotte Mart Starts to Sell Washington Cherries [Korean, OSY]

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=101&oid=003&aid=0005911519

Summary: Lotte Mart announced that it started to sell fresh cherries imported from Washington state on June 18.  A pack of 450 gram cherries is offered at 6,000 won.

 
 
 

Beer War¡¦ Imported Beer Captures Koreans¡¯ Appetite [Korean, YGY]

http://bizn.khan.co.kr/khan_art_view.html?artid=201406200713441&code=920401&med=khan

Summary: Due to the summer heat and the Brazil World Cup, demand for beer, especially imported beer, in Korea is rapidly rising. A Korean chain supermarket reported that beer sales has increased 12.4% this year compared to the same period last year; moreover, imported beer sales has increased 44.5% whereas domestic beer sales has only increased 1.1%. In 2013, imported beer took over 26% of the beer market in South Korea while 33.6% in 2014.

 

Sharp increase in meat imports¡¦eats away domestic market [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=233274&subMenu=articletotal         

SUMMARY: There is a growing voice that sharp increase in meat imports may eat away Korean meat market. In fact, according to the Ministry of Food and Drug Safety (MFDS), beef imports increased from last year by 9.3% from 100,679 MT to 116,161 MT. During the same period, pork imports increased by 22.9% to 120,836 MT (pork belly by 41.2%), and chicken imports increased by 23.9% from 43,705 MT to 54,156 MT. Korea Rural Economic Institute (KREI) predicts that beef imports will increase by 10% in the summer (June-August) from last year. The reason behind this trend is the relatively cheap price of imported meat. In April, while Korean pork prices went up from 3,571 won per kg to 6,461 won per kg in one year, imported pork prices decreased by 2.1% (3,598 won). Domestic beef prices also rose to 13,685 won per kg in April, while Aussie beef prices declined by 4.8% to 7,509 won per kg. Chicken prices maintained 2,900 won from last year, but were still higher than imported chicken prices.

 

6. OTHER MISCELLANEOUS ISSUES

 

Potato prices collapses¡¦farm dispersal sale needed [Korean, BSY]

http://www.nongmin.com/article/ar_detail.htm?ar_id=233173&page=1    

SUMMARY: Greater potato production pressed potato price. In the first week of June, daily average shipment of 400-500 ton of potatoes in Garak Market was increased up to 1,450 ton.  Accordingly prices declined from 24,000-28,000 won per 20kg to 18,000 won in the week of June 9th and collapsed to 13,000 won on June 11th - 12th.  
 

7. NEWS ARTICLES FOR RICE TARIFFICTION

 

Korea faces dilemma over rice market opening

Updated : 2014-06-22

South Korea is set to make a decision on opening its rice market with the deadline set by the World Trade Organization approaching. Up to now, a quota system has limited rice imports to some 8 percent of the local market, but the deal with the WTO ends this year.

Now, the government has two possible options: to liberalize its rice market or to ask the world trade body for another waiver to the rice market opening.

The Ministry of Agriculture, Food and Rural Affairs is expecting to announce its stance later this week, following a public hearing last Friday and most market watchers predict the ministry will propose the market opening option.

The ministry has insisted that liberalizing the country¡¯s rice market is ¡°inevitable,¡± given the already overly high rice import quota that has been growing steadily since 1993. Since 2004, the country has imported around 7.96 percent of its domestic rice consumption per year.

The ministry is trying hard to convince local farmers to accept the market opening by promising that they would impose high-level tariffs on rice imports. It also promised to exclude rice from the negotiation tables for free trade deals.

Farmers are divided over the market liberalization. The Korean Advanced Farmers Federation, a lobby group of local farmers who grow only rice, said they can accept the opening of the market if the government keeps tariffs for imported rice as high as possible. They are asking for 300 percent to 500 percent tariffs.

The progressive Korean Peasants League, however, is strongly protesting against the market opening, citing worries about free trade agreements¡¯ potential threats to the local agricultural industry.

¡°If we open the market, we will lose the ground of our rice farming and food sovereignty,¡± an official from the Korean Peasants League said.

The farmers insist that the government should request a waiver from the WTO to keep its restrictions on imported rice, though it still requires approval from the members of trade organization.

But the problem, experts point out, is that the delay in the market opening could result in a significant increase in rice imports quota, given the case of the Philippines.

The Philippines was given last week another five-year extension delaying the market opening in exchange for more than doubling its mandatory rice imports to over 800,000 tons per year.

A continued decline in South Korea¡¯s rice consumption has become a roadblock to extension of the rice quota system. Per capita consumption expected to shrink 1.75 percent on-year to 67.3 kilograms, according to the ministry.

¡°If we opt to go for another waiver, we have no choice but to significantly reduce our own rice production to avoid an oversupply,¡± a ministry official said.

By Oh Kyu-wook (596story@heraldcorp.com)

Will the South Korean rice market be opened?

With Philippines getting another WTO grace period on tariffs, Seoul now weighing how to respond

By Kim Kyung-moo, senior staff writer

A farmer yells in protest of remarks being made by Korea Rural Economic Institute senior researcher Song Joo-ho during a hearing on WTO rice tariffs at the Korea Rural Community Corporation, Human Resources Development Institute building,  main auditorium in Uiwang, Gyeonggi Province, June 20. (by Kim Sung-gwang, staff photographer)

Now that the Philippines has received an additional limited-time grace period on rice tariffs from the World Trade Organization (WTO), the next question is how South Korea will react, as it is in a similar situation.

At a Council for Trade in Goods meeting in Geneva on June 19, the WTO discussed a limited five-year grace period on the Philippines¡¯ rice tariff obligations before eventually agreeing in principle to an extension until June 2017, the Ministry of Agriculture, Food and Rural Affairs said on June 20.

In exchange for delaying the full opening of its rice market, the Philippines reportedly agreed to increase its minimum market access (MMA) for rice by 2.3 times, from 350,000 to 805,000 tons, and accept openness demands for products other than rice from seven countries. The tariff rate for the MMA rice was also lowered from 40% to 35%, with an agreement to provide quotas for all countries that want to export rice - up from 138,000 tons for three countries to 755,000 tons for seven.

The Philippines has been engaged in waiver agreements to extend its rice tariff grace period since March 2012, meeting success on its eighth attempt at bringing the matter before the Goods Council. The waiver is an exemption granted to WTO member countries under ¡°exceptional circumstances¡± according to Article 9.3 of the organization¡¯s founding Marrakesh Agreement. The Philippines pledged to apply rice tariffs as soon as the waiver expires on July 1, 2017.

Its success in the waiver negotiations is now expected to have an impact on South Korea¡¯s decision as it faces the end of its own rice tariff grace period at the end of this year. On June 20, the South Korean government held a hearing on the issue at the main auditorium of the Korea Rural Community Corporation¡¯s Human Resources Development Institute building in Uiwang, Gyeonggi Province, to gather opinions from agriculture-related groups. The only result was to reaffirm the deep divide with the government line.

¡°The end of the rice tariff grace period doesn¡¯t necessarily mean rice tariffs,¡± said Park Hyung-gyu, policy committee chief for the Korean Peasants¡¯ League. ¡°Whether we open our rice market depends on the government¡¯s bargaining ability. What we need to do now is focus all our energies on diplomatic negotiations.¡±

Kim Kyung-gyu, food policy officer for the Ministry of Agriculture, Food and Rural Affairs said additional MMAs would be a ¡°severe burden¡± on South Korea¡¯s rice industry at a time when rice consumption is dropping.

¡°Even with a waiver, tariffs are inevitable once it ends,¡± Kim said.

After the end of the Uruguay Round of multilateral trade negotiations in 1994, the WTO ordered market openness through tariffs on all agricultural products. Over the last 20 years, South Korea has been granted two grace periods. Now it needs to give notice to the WTO on whether it plans to go ahead with rice tariffs by September of this year.

Please direct questions or comments to [english@hani.co.kr]

 

<Joong Ang Daily Newspaper>

Open the market for rice - June 23, 2014

The Philippines reached agreements with its trading partners to extend quantitative restrictions on rice, a special protectionist means arranged through the World Trade Organization that should have ended in 2012, to 2017 to buy more time to secure competitiveness for its local industry and self-sufficiency in rice production. Currently the Philippines and South Korea are the only countries that limit rice imports. But the price of upholding the protection against a deluge of cheap imports has been heavy. In return for the extension, the Philippines had to more than double its minimum access volume from the current 350,000 metric tons to 805,000 metric tons and lower its tariff to 35 percent from 40 percent. It also had to concede further opening its pork and meat markets. The cost of retaining the privileged quota for rice has been too much.

 

Seoul¡¯s grace period expires at the end of this year. If it seeks a third WTO waiver, it would have to pay a similar price. Korea is deciding if it should replace the non-tariff import barriers with a tariffication arrangement.

¡°The more we delay market opening, the higher the price will be,¡± said an official of the Ministry of Agriculture, Food, and Rural Affairs. It must notify the WTO of its decision in the fall.

The cost of upholding the non-tariff restriction has been mounting. The 10-year waiver that began in 1995 with minimum market access of 51,000 tons increased the import volume by 20,000 tons each year to reach 408,700 tons this year. Imports already take up more than 8 percent of domestic consumption of the predominant staple. The privilege status cost the country about 3 trillion won ($2.93 billion)over the past two decades. About 20 billion won was spent last year to store unconsumed rice imports. The government has to rent storage to hold the imported rice. About 50,000 to 200,000 tons are sold dirt-cheap to processing companies. The rice that was imported at 900 won to 11,000 won per kilogram is practically given away for 300 won.

Korea, whose economy is nine times bigger than the Philippines, would have to offer more concessions than Manila if it wants to sustain the trade barrier. Even under similar terms with Manila, Seoul would have to import 940,000 tons in five years time. We cannot concede our meat market solely to protect our rice industry. Japan opened its rice market in 1995 and Thailand in 2003 after levying high tariffs. Imports have hardly increased. Our rice has already gained competitiveness in quality. Imports won¡¯t be a threat to the local industry when levied with duties of 300 percent to 500 percent.

 

S. Korea leans toward opening rice market

2014/06/20  By Byun Duk-kun

 

SEJONG, June 20 (Yonhap) -- The South Korean government appeared to be leaning toward liberalizing the country's rice market Friday, one day after the Philippines was given a five-year extension of a waiver to open its rice market but only at what officials here called a "huge cost."

   In the eighth and latest round of negotiations with the World Trade Organization (WTO), the Philippines was given a five-year extension of the waiver that was originally set to expire at the end of June 2012.

However, the Southeast Asian country may have paid too much for the extension that ends in 2017, government officials here said.

"Under the deal reached with WTO members, the Philippines has to increase the amount of its rice imports under the minimum market access (MMA) quota by 2.3 times to 805,000 tons per year from the current 350,000 tons," an official from the Ministry of Agriculture, Food and Rural Affairs said.

"There is also an extra cost it has to pay as the country had to reach separate bilateral deals with seven WTO member countries that took part in the negotiations," the official said, adding details of the bilateral deals will not be disclosed.

Officials here noted the Philippine case shows what South Korea can expect if it, too, decides to seek another waiver on market liberalization.

South Korea was given a 10-year waiver on its rice market liberalization under a 1993 agreement with the WTO, in which the country agreed to increase its MMA import quota by 20,000 tons per year. The agreement, extended once by 10 years in 2004, is set to expire at the end of this year.

"It took two years and seven failed attempts for the Philippines to win a waiver that will expire in just three years from now while the country had to more than double its import quota," an official from the Ministry of Trade, Industry and Energy said, asking not to be identified.

Another official from the agriculture ministry said the cost of delaying market liberalization will likely be far greater for South Korea.

"As seen in the Philippine case, the country must secure the consent of all WTO members, who will most likely ask for more in return than they did to the Philippines when considering that South Korea is a much larger market than the Philippines," the official said.

"The cost we have to pay will just be too big."

 

   In 2012, South Korea spent over 300 billion won (US$294 million) to import about 360,000 tons of rice under its MMA quota, according to the agriculture ministry. Its import quota for this year has reached 408,000 tons, and the amount will permanently remain fixed even if it decides to open its rice market next year.

"The country has to spend about 350 billion won this year just to purchase its MMA quota and an additional 50 billion won to ship and store the imported rice," the official from the agriculture ministry said.

The government earlier said it will have its final decision on rice market liberalization before the end of this month.

A public hearing, the first of its kind, on rice market opening was scheduled to be held later in the day.

bdk@yna.co.kr

More rice imports coming

End of WTO waiver looming as experts and farmers huddle

June 21,2014
 

After the World Trade Organization gave the Philippines a waiver for tariffication of rice imports until 2017 and increased the tariff rate quota by 2.3 times, Korean experts and farmers¡¯ groups gathered yesterday to urge the government to prepare for the end of Korea¡¯s second WTO waiver this year.  At a public hearing co-hosted by the Ministry of Agriculture, Food and Rural Affairs and the Ministry of Trade, Industry and Energy at the Rural Development Administration headquarters in Uiwang, Gyeonggi, yesterday, both the government and farmers acknowledged that tariffication is unavoidable and agreed on the need for measures to minimize damage to farmers and the industry. Tariffication refers to the conversion of all agricultural nontariff trade barriers into tariffs that have a ¡°ceiling¡± and to reduce them over time. For Korea, the current situation is a bit of a dilemma. If the WTO gives another waiver for a few more years, Korea will have a higher tariff rate quota (TRQ) like the Philippines. TRQs stipulate a level of reduced tariff imports beyond which the tariff rises significantly.

 
 

If the WTO doesn¡¯t approve another waiver, tariffication will begin next year and more foreign rice will be imported, threatening locally grown rice and farmers¡¯ profits.  The WTO Agreement on Agriculture stipulates an unexceptional tariffication principle for all agricultural products of member countries, but Korea was given a 10-year waiver in 1995 and another in 2004. If the WTO rejects a third waiver, tariffs will be reduced next year and more foreign rice will be imported, threatening the profits of local rice farmers. The country agreed to import the minimum market access (MMA) volume, which is 408,700 tons this year, or about 9 percent of rice consumed (4.5 million tons) last year. The MMA volume has steadily increased from 51,307 tons in 1995.  The Agriculture Ministry said a third extension of the waiver would only increase the MMA amount. 

¡°Given that domestic rice consumption is on the decline, it is burdensome to expand the MMA volume by getting another waiver,¡± said Kim Kyung-kyu, a senior official on food policy at the ministry. ¡°The government will come up with its own measures to protect farmers¡¯ profits and enhance the industry¡¯s competitiveness.¡± 
Per capita rice consumption has decreased by 1.2 kilograms (2.64 pounds) to 1.6 kilograms every year, according to the ministry. The Trade Ministry also made it clear another waiver for tari
ffication would incur significant costs, and the government will have to prepare for tariffication anyway at some point.  ¡°In case of tariffication, the government will exclude rice from negotiation tables of all FTAs that are planned to be held in order to protect the local market if tariffs on rice get lower in the course of time,¡± said Park Gun-su, a senior official on trade at the ministry. The current TRQ for Korea is 8 percent of domestic rice consumption, and 30 percent of the TRQ should be sold for meals. 
In the nine effective FTA deals, Korea and its partners excluded rice in recognition of opposition from the farmers to opening the market. Farmers have been complaining that while their production costs rose 25 percent, rice prices climbed only 4.49 percent. The Korean Advanced Farmers Federation demanded the government keep tariffs for imported rice as high as possible, between 300 percent to 500 percent, and lower the benchmark interest rate for agriculture funds to 1 percent from 3 percent. On the other hand, the Korean Farmers¡¯ League argued, ¡°While domestic rice consumption is falling, if we open the market, we will lose our food sovereignty and farms will face greater damage.¡±

BY SONG SU-HYUN [ssh@joongang.co.kr]
 
 

The information in this report was compiled by the Agricultural Trade Office (ATO) at the U.S. Embassy in Seoul Korea.  The press summaries contained herein do NOT reflect USDA, the U.S. Embassy, or other U.S. government agency official policy or view point.  U.S. food exporters can learn more about market opportunities in South Korea by reviewing ATO Seoul¡¯s Export Guide and other reports available at www.fas.usda.gov by clicking on ¡°attaché reports¡±.

 
 
View List >

Agricultural Trade Office, U.S. Embassy - Seoul
Tel: 82-2-6951-6848 Fax: 82-2-720-7921
Email: atoseoul@state.gov