Fruit and vegetables to Korea

(Last updated: 27 Nov 2008)

Trends and opportunities

The market

Fruit

Levels of self-sufficiency in fruit production are declining, which may open the door for greater imports.  In 2007, per capita fruit consumption has increased by almost four per cent, compared to domestic fruit production which has decreased by 0.4 per cent. In 2007, Korea imported US$673 million of fresh fruit, a 15 per cent increase from the previous year.   

Korea’s main fruit imports are:

• bananas
• pineapples
• kiwi fruit
• grapes
• grapefruit
• lemons
• oranges
• cherries
• mangoes 

While bananas have been the traditional mainstay of imports, accounting for 50 per cent of imported fruit, oranges and grapes are starting to take significant portions of the market (28 per cent and 11 per cent respectively).

Australia is well placed to supply navel oranges from July-October when the northern hemisphere supply stops. Also, in May 2000 a protocol was developed between Australia and Korea to improve the prospects for importing oranges from Australia. This protocol requires the cold treatment of imported oranges to protect against fruit fly. Since that protocol was introduced, imports of Australian oranges during the Korean summer season have grown strongly.

As for market access agenda for Australian fresh fruit, the Tasmanian cherry has been progressing, which is expected to be completed within a couple of years. The table grape is listed as next item after the Tasmanian cherry. The market protocol for the Australian mango to Korea was established in 2007. 

Vegetables

Korea is mainly self sufficient in fresh vegetables except for onions, potatoes, ginger and garlic. It imports limited volumes of Western vegetables such as broccoli and asparagus but due to its geographical proximity, significant amounts of vegetables come from China. Contract growing of cabbage, garlic and sesame seeds by Chinese growers has become common in the market. In 2007, Korea imported US$372 million in fresh vegetables, a 14 per cent increase from the U$325 million imported in 2006.

Opportunities

The Korean National Plant Quarantine Service bans the import of most Australian fresh fruit with the exception of green bananas, mangoes, oranges and lemons. Vegetables such as onions, asparagus, broccoli, cauliflower and potato have no such quarantine problems, but the Korean National Plant Quarantine Service has prohibited the import of potatoes from VIC and WA into Korea due to quarantine issues. Korea has accepted Tasmania as being free from R. similis and therefore the import of Tasmanian carrots is currently permitted.   

Despite the quarantine restrictions on fruit, Australia is well positioned as a supplier of fresh produce because of its 'clean' image and its ability to supply on a counter-seasonal basis. Australia is also the largest exporter of fresh potatoes to Korea during the Korean winter. The potatoes are used for manufacturing potato chips.

Competitive environment

China is the major supplier of fresh vegetables due to its geographical proximity and its capacity to grow similar varieties that are in demand in Korea.

Tariffs, regulations and customs

All imports into Korea are controlled by the Ministry of Commerce, Industry and Energy and while quarantine issues such as fruit fly and codling moth have been major impediments to market access for Australian producers, periodic bilateral discussions between quarantine agencies are helping improve this situation. For example, the protocol reached in May 2000 regarding the importation of oranges from Australia that have been cold treated to protect against fruit fly.

Some vegetables are allocated quotas that are managed by industry associations or relevant government agencies. While it is possible to import more than the quota, the higher duty that is charged generally creates an uncompetitive price situation. Orders for items such as sesame seeds, onions and garlic are subject to a tendering process, so Australian exporters should use their Korean agent to participate in this area.

Tariffs vary considerably depending on the product and whether an import quota system applies. Tariffs are typically much higher for products that are produced domestically. Tariffs for specific items can be obtained from the Korean Customs Service's Tariff Database.

Labelling requirements should be in Korean and include: country of origin, importer's details, and product name.

Industry standards

While there are some specific industry standards that Australian exporters will need to discuss with their Korean agent, there are some that relate to consumer preference rather than formal requirements. For example, round-tip carrots are preferred to pin-pointed ones as they attract premium prices and there is a consumer preference for high quality fresh presentation.

All permitted plant and vegetable products require health and phytosanitary certificates.

Marketing your products and services

Market entry

Australian suppliers are best advised to steer away from competing in produce sectors dominated by lower-cost Chinese producers of cabbage, garlic and sesame seeds and focus on providing quality fresh Western-style vegetables such as iceberg lettuce, broccoli and asparagus.

Product preference and seasonality are also important and consumer preferences on the size and shape of certain produce should be carefully researched to avoid market failure. For example, round-pointed carrots attract the greatest retail price compared to other varieties.

The counter-seasonal supply opportunities also improve prospects for southern hemisphere suppliers such as Australia. Korea’s summer weather, with high levels of humidity and occasional typhoons, can sometimes provide lucrative market opportunities for foreign suppliers.

You should also keep up-to-date with the supply situation of local produce in Korea on a weekly basis and maintain close contact with traders who have good networks with wholesalers as you want someone who knows how to clear customs quickly to keep your produce fresh. While supermarket chains do not import fresh produce directly due to lack of experience, potato snack manufacturers source fresh potatoes directly to save costs. 

In marketing your produce in Korea you should focus on:

• Supporting your agent or representative and keeping them up-to-date with supply capacity on a regular basis as this will ensure you are able to move quickly when opportunity arrives.
• Capitalising on Australia’s image of being a safe, clean and green supplier.
• Ensuring you focus on guaranteeing delivery quality and have adequate back-up strategies to counter spoilage.
• Good presentation of fresh produce as this is critical to attract a premium price.

Distribution channels

The fresh produce local distribution system is somewhat complicated with the inclusion of several steps such as middlemen and commission brokers at the wholesale level.

Fresh produce can be traded at wholesalers' markets through an auction system or through middlemen from growing areas. The major supermarkets make direct transactions with the growers to reduce their costs.

Traders of fresh produce have close links with wholesalers so it is important for Australian exporters to identify importers who know how to clear customs in the shortest possible time to keep their produce fresh.

The import of certain fruit and vegetables, including oranges, garlic, onions, potatoes and sweet potato, is managed by designated industry associations or government agencies in order to minimise the negative impact on local growers. In the local market the National Agricultural Cooperative Federation (NACF) plays a significant role in product collection, distribution and member financing.

Links and industry contacts

Government, business and trade resources for Korea

Agricultural and Fishery Marketing Corporation – www.afmc.co.kr
Ministry for Food, Agriculture, Forestry and Fisheries – www.mifaff.go.kr
National Agricultural Cooperative Federation – www.nonghyup.com/eng/index.jsp

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

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