Significant income growth in the Republic of Korea has led to an increase in living standards, rising demand for agricultural products and changes in food consumption patterns toward a diet that includes a higher proportion of meat, dairy, fruit and wheat based products.

Reflecting declining growth in farm productivity, limited arable land and an aging farm population, agricultural production in Korea has been unable to meet rising demand. As a result, imports have taken a more prominent role in food supply.

As one of the leading agricultural exporters to Korea, particularly of wheat, dairy products and beef, Australia is in a strong position to help meet growth in food demand and changing food consumption patterns in Korea.

from an agriculture based to an industrialised economy

Over the past four decades, the Republic of Korea has transformed from an agriculture based to an industrialised economy. Agriculture’s share of Korea’s economy declined from 27 per cent in 1970 to 3.5 per cent in 2005. Over the forty years to 2005, gross domestic product in Korea increased at an average rate of 7.6 per cent a year.

Significant economic growth in Korea has led to an increase in living standards and changes in food consumption patterns away from traditional foods such as rice, barley and potatoes toward meat, dairy products, fruit and wheat based products. Agricultural production in Korea, however, has not been satisfying these changing consumption patterns, mainly because of the relatively limited availability of arable land and competitive pressure for resources from nonagricultural sectors. As a result, Korean food demand is being increasingly met by imports.

Korea’s government has been implementing reforms in the agriculture sector and reducing tariffs and nontariff barriers on agricultural imports through multilateral and bilateral trade negotiations. Tariffs on agricultural imports have been gradually reduced and import quotas have been replaced by tariffs or tariff quotas to improve market access. Despite these efforts, protection of many agricultural commodities, including dairy products and beef, remains relatively high.

Australia is one of the leading exporters of agricultural products to Korea, particularly of wheat, barley, sugar, beef and dairy products. If access to the Korean market was widened, Australia would be in a position to make a significant contribution to meeting the rising food demand and changing food consumption patterns in Korea.

food consumption in Korea
Before the mid-1980s, rice was particularly important in food consumption in Korea, while barley and potatoes were mainly consumed by low income groups. Home grown vegetables and seafood complemented grains consumption. Livestock products and fruit, on the other hand, were regarded as luxury food products. Accordingly, consumption of these products was low and Korea was mostly self sufficient in their production.

Rapid economic growth since the 1960s (table 1) has led to substantial changes in Korean food consumption patterns. Consumption of the main staple foods — rice, barley and potatoes — has declined, while consumption of meat, fruit, vegetables and dairy products has increased.

1 economic growth
Republic of Korea, annual averages
	GDP	GDP per person
	%	%
1965–1975	9.3	6.9
1976–1985	7.6	6
1986–1995	8.9	7.8
1996–2005	4.4	3.7
1965–2005	7.6	6.2
Sources: Bank of Korea (2006); National Statistical Office, Korea (2005).

consumption of livestock products has increased markedly
Between 1975 and 2005, meat consumption increased fivefold from around 6.4 kilograms to 31.9 kilograms per person (table 2). Over the same period, beef consumption more than tripled on a per person basis, from 2.0 kilograms to 6.6 kilograms and consumption of pork, chicken and other processed meats increased more than fivefold to 25.3 kilograms per person.

Similarly, consumption of dairy products increased more than tenfold between 1975 and 2005. This significant increase can be attributed primarily to government initiatives that have promoted milk consumption, particularly for children.

Changing consumption patterns have also led to changes in the sources of daily calorie intake. Between 1975 and 2005, the proportion of calorie intake from animal products doubled, from 7.4 per cent to 15 per cent, while intake from traditional food sources, such as rice, barley and starchy root vegetables, declined.

2 food consumption per person
Republic of Korea
		1965	1975	1985	1995	2005
daily calorie intake per person
vegetable products	cal.	2 345	2 212	2 384	2 520	2 559
	%	96.1	92.6	88.7	85.2	84.9
animal products	cal.	95	178	303	439	455
	%	3.9	7.4	11.3	14.8	15.1
total	cal.	2 440	2 390	2 687	2 959	3 014
consumption per person		kg	kg	kg	kg	kg
food grains		177.1	193.8	169.3	148.5	122.3
rice, milled		121.8	123.6	128.1	106.5	80.7
barley, milled		36.8	36.3	4.6	1.5	1.1
wheat		13.8	29.5	32.1	33.9	31.8
corn		0.9	2.4	3.1	3.3	4.9
miscellaneous grains		3.8	2	1.4	3.3	3.8
starchy roots		92.5	35	11.9	11	17.2
potatoes		7.3	7.1	3.1	3	4.2
sweet potatoes		76.5	23.7	5.5	3.7	4.8
sweeteners		1.3	5.2	11.7	17.8	21.3
pulses		5.9	8.3	10.7	11.1	11.2
soybeans		4.4	6.4	9.3	9	9
vegetables		45.5	62.5	98.6	160.6	144.9
fruit		9.8	18.6	36	54.8	62.6
meat		4.7	6.4	14.4	27.4	31.9
bovine meat		1	2	2.9	6.7	6.6
pig meat		1.9	2.8	8.4	14.8	17.8
poultry meat		0.5	1.6	3.1	5.9	7.5
eggs		1.9	4	6.3	8.6	9.1
milk		0.3	4.6	23.8	47.8	62.7
oils and fats		0.4	2.7	9.2	14.2	18.5
seafood		18	29.9	37.2	45.1	48.1
Sources: Ministry of Agriculture and Forestry, Korea (2006); KREI (2006).

declines in consumption of grain based products
Consumption of grains per person has been declining in Korea. Between 1975 and 2005 consumption fell by 37 per cent to around 122 kilograms. Traditionally, rice and barley were the two major cereals consumed in Korea, accounting for more than 85 per cent of total cereal consumption in the 1970s. Rice consumption per person was around 81 kilograms in 2005, compared with a peak of 132 kilograms in 1980 and slightly below 100 kilograms in 1998. For barley, rising household incomes have resulted in per person consumption falling from 36 kilograms in 1975 to 1 kilogram in 2005.

On a per person basis, wheat consumption has increased since the 1970s, while the consumption of corn has doubled. More recently, bean products have been perceived as healthy food products in Korea and this has promoted the consumption of high protein bean products such as soybeans and red and green beans.

consumption of fruit, vegetables and seafood
Historically, Koreans consumed a significant amount of vegetables but little fruit. While Korea was mostly self sufficient in vegetables, imports were required to meet domestic demand for fruit. In recent years, demand for both fruit and vegetables has increased in response to growth in household incomes, but domestic production has not been able to meet the increase in consumption.

Vegetable consumption increased substantially in the 1990s, before a small decline in the early 2000s. On a per person basis, vegetable consumption was around 145 kilograms in 2005, compared with 63 kilograms in 1975.

Fruit consumption per person increased markedly from around 19 kilograms in 1975 to 63 kilograms in 2005. Since the mid-1990s, the increase in fruit consumption has been met largely by imports, particularly of oranges, fresh grapes and tropical fruits such as bananas and pineapples.

Fish, shellfish and edible seaweed are traditional foods in Korea. While growth in seafood consumption has been slower than growth in meat consumption, growing incomes have led to a considerable increase in seafood consumption. Seafood consumption reached 48 kilograms per person in 2005, a rise of over 60 per cent from 30 kilograms in 1975.

international comparison of food consumption
Daily calorie intake in Korea has reached a level similar to that in more developed countries (table 3). In 2005, Korea’s daily intake was higher than that in Japan, but lower than that in the United States and Australia. Compared with developing Asian countries, daily calorie intake in Korea was higher than in China, Thailand and Indonesia.

3 international comparison of food consumption, 2005
	Korea	Japan	Australia	United States	China	Thailand	Indonesia
daily calorie intake
per personq	cal.	cal.	cal.	cal.	cal.	cal.	cal.
vegetable products	2 485	2 087	2 332	2 575	2 397	2 366	2 743
animal products	484	592	998	1 062	554	291	150
total	2 969	2 679	3 330	3 637	2 951	2 657	2 893
consumption per person	kg	kg	kg	kg	kg	kg	kg
cereals	202.9	170.2	99.2	164.4	202.4	162.3	252.4
starchy roots	19.4	37.8	53.9	52.9	74.2	42.6	68.6
oil crops	93.9	58.6	104.2	105.8	63.8	64.1	93.2
fruit	62.2	57.6	123.8	119.1	51.4	82.8	51.7
vegetables	259	119.6	111.2	123.4	251	41.1	32.4
sugar crops	156.9	96.8	343.6	158.7	72.9	401.3	119.3
meat	32.6	33.2	87.4	93.7	59.8	23.3	11.9
milk (whole, fresh)	39.3	75.5	226	256.8	13.8	22.1	7.3
eggs	11	18.6	7.1	14.8	17.5	8.5	3.8
fish, seafood	51.6	64.9	23.2	23.8	na	31.1	21.3
na Not available. Source: FAO database.

The proportion of daily calorie intake from vegetable products (including grains) in Korea (at around 85 per cent in 2005) is higher than in the United States (71 per cent), Australia (70 per cent), Japan (78 per cent) and China (81 per cent), but lower than in Thailand (89 per cent) and Indonesia (95 per cent).

Daily calorie intake from the consumption of livestock products in Korea is considerably lower than in other developed countries, but higher than in most other Asian countries. In 2005, for example, Korea’s daily calorie intake from meat consumption on a per person basis was around 35–37 per cent of those in the United States and Australia. Per person consumption of dairy products in 2005 was around 15–17 per cent of the levels in the United States and Australia.

Koreans consume a significant amount of seafood. On a per person basis, daily calorie intake from the consumption of seafood in Korea was more than twice that in Australia, the United States or Indonesia in 2005.

structural adjustment in agriculture

Korean agriculture is characterised by a scarcity of arable land, small farm sizes, aging farmers and lower wages and on-farm labour productivity relative to other sectors in the economy.

agricultural land availability is limited
Korea’s land mass is around 10 million hectares, with less than one-fifth of that area cultivated for agriculture. Over the past few decades, total agricultural land has declined (figure A), with a marked reduction in the area cultivated for grains.

Despite the reduction in total agricultural land, average farm size has been increasing, from around 0.9 hectares in 1965 to around 1.4 hectares in 2005 (figure A). The share of farms with less than 2 hectares declined from around 93 per cent in 1965 to 85 per cent in 2005 (figure B).

farm population has been declining and aging
Reflecting the relatively small farm size, farming has been labour intensive in Korea. Over the four decades since 1965, however, farm population has declined from around 55 per cent of the total population (15.8 million) to 7.1 per cent (3.4 million) in 2005 (figure C). This significant decline in the rural population mainly reflects the effects of rapid industrialisation and associated urbanisation.

Rapid expansion of manufacturing and services industries in urban centres has resulted in a widening gap between rural and urban incomes. This, in turn, has led to significant migration of rural population to urban centres. Wages paid to farm workers are markedly lower than in other sectors of the economy.

Migration from rural areas to urban centres has significantly affected the on-farm labour force. Younger members of farm households are leaving rural areas to seek better paid employment. Farms are increasingly dependent on aging household members who no longer have the options for moving elsewhere in the workforce. In 2005, nearly 55 per cent of people engaged in commercial farming were 60 years of age or over, whereas the proportion who were under 30 years of age constituted only 1.6 per cent (figure D).

In response to lower wages and profitability in the farm sector, many farmers are increasingly looking for part time work to supplement their income. In 2005, non-farm income accounted for over 60 per cent of total farm household income, compared with only 20 per cent in 1965 (figure E).

labour shortages have led to an increase in farm mechanisation
Rural labour shortages have placed significant pressures on the farm sector to adjust in order to improve farm productivity. There was a rapid increase in on-farm machinery up to the late 1990s (figure F). Most of the machines employed on farms are relatively small because of farm size.

Reflecting higher mechanisation, the degree of capital intensity in agriculture has increased. Measured by real capital spending per hectare, capital intensity rose from 20 million won (US$21 600) to 283 million won (US$276 000) between 1965 and 2005. In contrast, labour intensity (measured by labour hours worked per hectare) has been trending downward (figure G).

Chemical fertilisers have been applied intensively in Korea’s agriculture sector to improve yields. Fertiliser application increased significantly until the early 1990s, before trending downward gradually in response to concerns about food safety (figure H). By international standards, fertiliser application rates in Korea have been relatively high. In the OECD, for example, only a few countries, including Japan and the Netherlands, have similar levels of fertiliser application to Korea’s (Roberts, Warr and Rodriguez 2006).

agricultural production in Korea
Korea’s aggregate agricultural production has increased substantially since the 1970s (figure I). The increase in total crop production is mainly attributable to the expansion of fruit and vegetable production, while grain production has declined (figure J). The increase in livestock production has been more significant than the increase in crop production. The major contributors to increased livestock production have been increases in meat production, including beef, pork and poultry.

rice production has declined
Rice production has been assisted by domestic support and pricing policies aimed at achieving self sufficiency and maintaining incomes for farmers. Underpinned by Korea’s strategic food policy, rice prices have fluctuated within a range set by the government. This has provided income support for rice farmers and has encouraged farmers to maintain high rice production.

Since the early 1990s, the emphasis on food security in Korea appears to have eased somewhat. Also, a significant change in dietary habits has led to a move away from rice consumption, resulting in a gradual decline in domestic rice production (table 4). Farmers have been directing production toward more profitable farm products such as vegetables and fruit.

4 food production, by commodity
Republic of Korea
	1965	1975	1985	1995	2000	2005
	kt	kt	kt	kt	kt	kt
food grains	5 278	6 567	6 357	5 073	5 529	5 055
rice, milled	3 501	4 669	5 626	4 695	5 291	4 768
barley, milled	1 473	1 709	573	282	161	193
wheat	184	97	11	10	2	8
corn	40	54	132	74	64	73
other grains	80	38	15	12	11	13
starchy roots	3 578	2 613	1 362	897	1 050	1 177
field potatoes	581	660	575	592	705	894
sweet potatoes	2 997	1 953	787	305	345	283
sweeteners	45	332	833	1 140	1 270	1 347
pulses	200	349	275	189	134	199
soybeans	174	311	234	160	113	183
vegetables	1 576	4 767	7 763	10 586	11 282	9 584
fruit	310	543	1 464	2 300	2 429	2 593
meat	134	316	688	1 463	1 660	1 604
bovine meat	27	70	116	155	214	152
pig meat	56	99	345	639	714	717
poultry meat	14	56	126	265	261	301
eggs	55	168	311	454	479	518
milk	9	160	1 006	2 014	2 253	2 229
oils and fats	11	23	59	31	25	25
seafood	626	2 128	3 117	3 349	2 503	2 714
Sources: Ministry of Agriculture and Forestry, Korea (2006); KREI (2006).

lower production of other food crops
Unlike rice, food crops such as barley, wheat, maize, millet, sorghum, buckwheat, potatoes and pulses, have not received much support from the government. Domestic production of these crops has been declining as a result of farmers moving toward more profitable produce such as livestock products.

Historically, Korea has produced very little wheat mainly because of unfavourable climatic conditions. Over recent years, wheat production has almost ceased and domestic wheat consumption has been met mainly by imports.

The rapid expansion of livestock industries since the 1980s has led to a significant increase in demand for feed crops, including potatoes, soybeans and maize. However, domestic production has not been able to keep pace with increasing demand. Consequently, increasing proportions of feed crops have been sourced from imports.

fruit and vegetable production on the rise
Strong demand growth for and rising prices of fruit and vegetables have been the key factors contributing to the increase in their production. Total fruit production rose almost fivefold between 1975 and 2005. A large proportion of this increase came from more profitable fruit production, including tangerines, grapes and native pears.

Production of vegetables has also increased considerably, underpinned largely by higher production of greenhouse vegetables, garlic and onions. Production of radishes, cabbages and red peppers has remained relatively stable. Vegetable production in 2005 was twice that in 1975, but lower than the peak levels in 2000. The recent decline in vegetable production mainly reflects import competition, as imported vegetables have gained greater market access in Korea.

livestock products contribute to agricultural production growth
Strong demand growth and higher profitability have contributed to a rapid expansion of the livestock sector in Korea. The total number of livestock increased significantly between 1975 and 2000, before easing toward 2005 (table 5).

5 numbers of livestock and livestock farms
Republic of Korea
	1975	1980	1985	1990	1995	2000	2005
	’000	’000	’000	’000	’000	’000	’000
number of livestock
beef cattle, native	1 556	1 361	2 553	1 622	2 594	1 590	1 819
dairy cattle	86	180	390	504	553	544	479
pigs	1 247	1 784	2 853	4 528	6 461	8 214	8 962
chickens	29 939	40 130	51 081	74 463	85 800	102 547	109 628
number of farm households
beef cattle, native	1 277	948	1 048	620	519	290	192
dairy cattle	9	18	44	33	24	13	9
pigs	654	503	251	133	46	24	12
chickens	1 094	692	303	161	203	218	136
Source: Ministry of Agriculture and Forestry, Korea (2006).

While the total number of livestock has increased, the number of livestock farms has declined significantly. This development reflects a restructuring in the livestock sector, with the average farm size rising. Livestock farming in Korea has been changing from traditional family farms to larger scale commercial operations. The livestock sector has benefited from economies of scale and there has been a marked increase in the proportion of cattle and pigs raised on larger and specialised farms (table 6).

6 number of livestock farming households
Republic of Korea
	1980	1985	1990	1995	2000	2005
	’000	’000	’000	’000	’000	’000
beef cattle, native
under 50 head	949	1 047	619	516	285	186
50 head and over	0.2	1	1	2.5	4.1	6.1
total	949	1 048	620	519	290	192
dairy cattle
under 50 head	17.4	43.4	32.6	22.2	9.6	4.4
50 head and over	0.3	0.4	0.7	1.3	3.7	4.5
total	17.7	43.8	33.3	23.5	13.3	8.9
pigs
under 1000	503	251	133	45	22	9.3
1000 and over	0.1	0.2	0.4	1.1	2.3	3
total	503	251	133	46	24	12
chickens
under 10 000	691	302	159	200	215	133
10 000 and over	0.7	1.1	2.2	2.7	2.9	2.7
total	692	303	161	203	218	136
Source: Ministry of Agriculture and Forestry, Korea (2006).

Beef production reached a peak of 214 000 tonnes in 2000, triple the production in 1975. It has since declined to 152 000 tonnes in 2005. Higher production costs and a fall in the number of cattle because of increased beef imports have contributed to lower domestic production in recent years.

Korea’s agricultural imports
Prior to the mid-1990s, the key agricultural policy objective in Korea was to maintain a high level of food self sufficiency and income support for farm households (table 7). The agriculture sector was heavily protected and subsidised, with high tariffs and nontariff barriers such as import quotas. Imports of agricultural products were relatively small.

Protectionist agricultural policies resulted in significantly higher domestic agricultural prices during that period. The nominal rates of protection for major food products, on average, rose from slightly over 70 per cent in the early 1970s to more than 300 per cent in the early 1990s (Anderson 1987; Kim 2000). High income support for farmers also placed significant pressure on the public sector budget (Anderson and Hayami 1986; Kim 2000).

7 self sufficiency in major food products
Republic of Korea
	1965	1975	1985	1995	2000	2005
	%	%	%	%	%	%
grains	89	77	49	30	31	29
rice	89	99	103	91	103	96
barley	90	103	64	67	47	60
wheat	23	5	0	0	0	0
maize	na	na	4	1	1	1
other grains	38	6	4	2	2	5
potatoes	100	99	101	120	118	98
pulses	102	85	23	12	8	11
vegetables	100	101	98	99	98	94
fruit	100	101	94	93	89	86
meat	100	101	100	89	84	82
bovine meat	100	100	98	51	53	48
pig meat	100	108	100	97	92	84
poultry meat	100	100	100	98	80	84
eggs	102	100	100	100	100	100
milk	21	100	102	93	81	73
fish and shellfish	114	138	130	100	88	64
na Not available. Source: KREI (2006).

Since the mid-1990s, Korea has implemented agricultural trade reforms. There has been a gradual reduction in tariffs for agricultural imports and import quotas have been replaced by tariffs or tariff quotas to improve market access. Korea’s imports of agricultural products, particularly of meat, wheat, vegetables, fruit and seafood, have increased considerably (table 8).

8 imports of agricultural products
Republic of Korea
	1965	1975	1985	1995	2000	2005
	kt	kt	kt	kt	kt	kt
grains	688	3 086	6 430	12 779	12 988	12 553
rice	0	481	0	0	107	192
barley	106	354	0	172	146	158
wheat	476	1 703	2 996	2 777	3 266	3 406
maize	na	na	3 035	8 879	8 888	8 609
other grains	58	548	399	951	581	188
potatoes	0	0	0	10	10	20
sweeteners	0	0	0	0.2	0.4	1.2
pulses	0	61	906	1 486	1 665	1 324
vegetables	0	0	30	169	357	722
fruit	0	0	0	179	330	472
meat	0	17	0	188	386	375
bovine meat	0	0	2	148	223	143
pig meat	0	0	0	34	96	174
poultry meat	0	0	0	6	68	59
milk	48	0	2	204	645	909
oils and fats	0	72	324	612	740	886
fish, shellfish	0	0	90	932	1 404	1 758
na Not available. Source: KREI (2006).

agricultural imports from Australia

Australia is currently the third largest food supplier to Korea, following the United States and China. In 2005, Australia accounted for around 9 per cent of Korea’s total agricultural imports. Korea’s main imports of agricultural products include beef, wheat, barley, sugar and cheese (table 9).

beef
Australia has long been a major supplier of beef to Korea. Beef imports from Australia have increased significantly in recent years as a result of the import ban on US beef following the discovery of bovine spongiform encephalopathy (BSE or ‘mad cow’ disease) in the United States in December 2003. Beef trade between the United States and Korea resumed in October 2006. However, US beef exports to Korea are still constrained, as Korea will only accept boneless cuts of meat from US cattle 30 months of age or younger.

In the short term, demand for Australian beef in Korea is likely to fall as Korea is expected to increase imports of US beef. Over the medium term, beef consumption in Korea is expected to trend higher, underpinned by continued income growth. Total demand for imported beef in Korea is also expected to increase.

Prior to the discovery of BSE in 2003, the United States accounted for 70 per cent of total Korean beef imports, with around 60 per cent of trade being in rib cuts. Since the exclusion of US beef, however, Korean demand for Australian beef has increased significantly. In 2006, Australian exports to Korea increased by 40 per cent to 150 000 tonnes (shipped weight), with rib cuts representing around 25 per cent of the exports. While import demand for Australian beef has increased, total beef imports are considerably less than they were before the discovery of BSE in the United States. In the short term, if the United States is able to gain greater access to the Korean market, their comparative advantage in producing beef is likely to result in displacement of some Australian products. Currently, the tariff rate applied to beef imports by Korea is 40 per cent and domestic beef prices in Korea are well above international prices.

9 imports of agricultural products, by source
Republic of Korea
	1996	2000	2001	2002	2003	2004	2005	2006 a
	kt	kt	kt	kt	kt	kt	kt	kt
beef
Australia	57	70	58	83	64	86	101	137
United States	77	133	103	201	199	0	0	0
New Zealand	25	11	10	17	25	46	39	40
cheese
Australia	5	16	15	13	15	12	10	7
United States	5	3	4	4	5	5	6	7
barley
Australia	7	108	152	186	150	181	162	129
wheat
Australia	699	1 225	1 021	1 096	912	1 256	1 003	1 080
United States	1 626	1 427	1 421	1 252	1 363	1 333	1 261	1 111
sugar
Australia	684	748	465	673	779	1 067	1 001	1 101
United States	26	13	15	15	14	15	17	18
China	1	1	3	4	14	44	56	69
a Preliminary. Sources: Australian Bureau of Statistics (2007); United Nations Statistics Division (2005).

cheese
Underpinned by strong income growth, Korea’s cheese imports have increased significantly since the mid-1990s. Australia is currently the second largest supplier of cheese to Korea, following the United States.

The strong growth in demand for cheese in Korea is attributable to a rapid expansion of western style fast food restaurants, which have gained greater popularity, particularly among the younger generation. In the Korean market, Australian cheese competes with not only US but also EU products. There was a perception in the Korean market that European cheese was of higher quality. This perception, however, has changed as Koreans have developed their taste for processed cheddar cheese from Australia.

Cheese is one of the few dairy products not subject to a tariff quota. The current tariff rate applying to cheese imports is 36 per cent. Consumption of dairy products in Korea is low compared with that in other developed Asian countries, such as Japan. With further growth in incomes and increasing exposure to western style diets, the consumption of dairy products in Korea and its import demand are expected to rise.

wheat
Korea has relied mainly on imports to meet its domestic wheat consumption because climatic conditions in Korea are not suitable for growing wheat. Australia and the United States are the largest suppliers of wheat to Korea, accounting for around 47 per cent and 38 per cent respectively of Korea’s total wheat imports.
While demand for wheat as livestock feed is an important component of Korean wheat imports, there has been a significant increase in demand for wheat for food consumption, mainly for wheat based products such as noodles, bread and cakes, driven mainly by the younger generation.

Australia has long been a major wheat supplier to Korea. Wheat imports from Australia increased significantly during the second half of the 1990s and have since been relatively stable at around 1 million tonnes a year. In contrast, wheat imports from the United States have been trending downward since the mid-1990s. Imports from other wheat producing countries, such as Canada, have been increasing. Currently, the tariff rate applying to Korea’s wheat imports is 1.8 per cent, while the rate applying to durum wheat and meslin is slightly higher at 3 per cent.

barley
Both production and consumption of barley have been declining in Korea. Because domestic production has been falling faster than consumption, barley imports have been on the rise.

Australia is the major supplier of barley to Korea, mainly exporting malting barley which is used to produce beer in Korea. Australia has maintained its dominance in Korea’s barley market, reflecting its efficient production systems and international competitiveness. Besides Australia, Canada also exports a small amount of barley to Korea. A tariff quota applies to both malt and malting barley imports to Korea.

sugar
Korea is Australia’s largest sugar export market. Australia is the dominant supplier of sugar to Korea, accounting for more than 90 per cent of total sugar imports. Other sugar suppliers to Korea include China and the United States.

The changing pattern of food consumption in Korea toward a western diet has led to a significant increase in demand for sweeteners. Korea does not produce either sugar cane or sugar beet because of unfavourable climatic conditions. To meet the growing demand for sweeteners, raw sugar imports have been increasing.

Australia’s proximity to Korea has been an advantage over other potential competitors, such as Brazil. China also has similar advantages and has increased its sugar exports to Korea in recent years. Compared with Australia, sugar imports from China have been small. Korea currently imposes a tariff rate of 3 per cent on its cane sugar imports.

summary

Over the past few decades, rapid economic growth and industrialisation in the Republic of Korea have resulted in significant structural changes in the agriculture sector.

Reflecting limited arable land, an aging farm population and competitive pressures for resources from other sectors, agricultural production has not been able to meet the increase in food demand and changing consumption toward beef, dairy and wheat based products. As a result, imports have taken a more prominent role in meeting Korean food demand. Given the outlook for continued industrialisation and income growth in Korea, this reliance on food imports is likely to increase in the foreseeable future.

Korea’s government has been implementing reforms in the agriculture sector and reducing tariffs and nontariff barriers on agricultural imports through multilateral and bilateral trade negotiations. Despite these efforts, the level of protection on many agricultural commodities remains relatively high.

Australia is one of the leading exporters of agricultural products to Korea. If an improvement in market access is achieved, Australia will be in a strong position to make a significant contribution to meeting the rising and changing food demand in Korea, particularly in commodities such as beef and dairy products.