South Korea presents opportunities for U.S. dairy products

South Korea presents opportunities for U.S. dairy products

Opportunities abound for U.S. dairy products in South Korea, but some, such as cheese, may need tweaking.

With a bilateral free trade agreement, a growing appetite for western cuisine and an increasingly uncompetitive local dairy industry, U.S. dairy exports to South Korea will continue to grow in the coming years, the representative for the U.S. Dairy Export Council says.

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

Intnet also represents the California Raisin Administrative Committee.

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.

On the other hand, prospects are weak for feed ingredients as the South Korean livestock industry is expected to remain stagnant or decline as meat imports increase, Lee 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 where farmers producing milk are making 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 (ESL) milk are stronger, but it would take another five years of more years or more for the price to be competitive (as the tariff goes down under the FTA), Lee said.

And retail and foodservice customers voice strong fears of opposition from the dairy farmers and negative perception from the general public, he said.

In 2013, U.S. ESL milk came into the country but was unsuccessful in penetrating the retail or major foodservice market because of such concerns, Lee said.

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

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

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