[Next FTA] 1: K-Food Exports Hit Record High... 'FTA Partners' Account for 82% of Exports

Exports surged 4.6-fold in 20 years
Beyond processed foods such as ramen and kimchi, extending to sauces and grapes
Last year's exports topped $10.2 billion

Editor's Note
K-food exports have grown 4.6-fold in 20 years, surpassing $10.2 billion last year. Not only ramen and sauces but also fresh agricultural products such as grapes are becoming more competitive in global markets. Free trade agreements (FTAs) have helped expand export markets, but significant challenges remain, including the spread of counterfeit K-food products and Indonesia's mandatory halal certification. To mark the 20th anniversary of the Korea-ASEAN (Association of Southeast Asian Nations) FTA entering into force, this six-part series looks back at the achievements of K-food exports and examines strategies and challenges for sustaining growth.

K-food is expanding its reach. Beyond processed foods such as ramen and kimchi, sauces and fresh agricultural products such as grapes are gaining popularity in overseas markets. K-food exports are also surging. After reaching a record $10.2 billion last year, they are targeted to hit $12.2 billion this year. This strong performance reflects the expansion of the market for K-food. Starting with Chile, the first country with which South Korea's FTA took effect in 2004, South Korea has signed a total of 23 FTAs covering 60 countries, including the United Arab Emirates (UAE) in May this year. As a result, K-food exports, which stood at just over $2.2 billion in 2005, exceeded $10.2 billion last year, a 4.6-fold increase in 20 years. The public and private sectors have launched an all-out effort to expand exports, focusing on a range of measures that tap into growing global interest in and consumption of K-food, including developing new products tailored to local markets, expanding global distribution networks, and strengthening marketing linked to the Korean Wave.

Visitors are sampling fresh grapes, including Shine Muscat, and halal Korean beef at the K-Halal Food Festival in Kuala Lumpur, Malaysia, on the 10th (local time). Photo by Im Onyu.

◆More than 82% of K-food exports in the first half of this year went to FTA partners= FTAs lower trade barriers such as tariffs, making it easier for Korean companies to sell their products overseas. The share of agricultural and food exports going to FTA partners is steadily increasing. According to the Korea Rural Economic Institute, agricultural and food exports in the first half of this year totaled $5.3 billion, up 4.8% from the same period a year earlier. Exports to FTA partners rose 3.9% to $4.36 billion. A total of 82.3% of agricultural and food exports went to FTA partners. Their share of exports also rose from 38% in the first half of 2015 to 82.3% in the first half of this year. Among FTA partners, the largest markets for agricultural and food exports in the first half of this year were, in order, ASEAN, the United States, China, Japan, and the European Union (EU). The Middle East has also recently emerged as a new opportunity. The Comprehensive Economic Partnership Agreement (CEPA) with the UAE took effect in May this year, enabling South Korea to use the UAE as a stepping stone to enter markets in member states of the Gulf Cooperation Council (GCC).

◆K-food exports continue to set record highs= K-food exports are on track to set another record this year. They surpassed $10 billion as of September 29. That milestone came 18 days earlier than last year, when exports crossed the $10 billion mark on October 17. Growth in the U.S. market stood out. Despite trade uncertainty, exports to the United States reached $1.724 billion this year, up 15.3% from the same period a year earlier, the highest figure among major export markets. Exports to the EU also rose 15.8% to $772 million, while growth was also recorded in the GCC and the Commonwealth of Independent States (CIS), among other markets. It is also notable that export markets are expanding beyond traditional major destinations to cover a wider range of regions. By product, ramen featuring spicy flavors was popular. Ramen exports rose 24.7% to $1.116 billion. Kimchi exports also increased 3.2% to $125 million. As the popularity of K-content, including Korean dramas and films, has spurred interest in Korean cuisine, demand for Korean-made sauces has also grown. Exports of sauces and other condiments increased 9.2% to $315 million.

◆Expanding fresh agricultural exports... Grapes targeted to reach $100 million= Efforts are also underway to expand exports of fresh agricultural products, whose share is smaller than that of processed foods. Of the $5.382 billion in agricultural and food exports in the first half of this year, fresh products accounted for $714 million. Exports of major products such as strawberries, grapes, and pears are growing, but they still make up a small share of total exports. Grapes are a notable example of change. When the Korea-Chile FTA was signed, grapes were among the products that raised significant concerns that an influx of cheap imports could hurt domestic farmers. The government used FTA funds to modernize fruit-growing facilities and improve quality competitiveness. As a result, grapes are considered an example of turning the threat of import liberalization into an export opportunity. Grape exports in the third quarter of this year totaled $38.02 million, up 72.3% from the same period a year earlier. The annual export target is to exceed $100 million for the first time among fresh agricultural products. According to the Ministry of Agriculture, Food and Rural Affairs, grape exports grew more than 3.6-fold, from $23.5 million in 2019 to $85.7 million last year. If this year's target is met, exports will be up 16.7% from last year.

◆"Grapes turned the FTA threat into an opportunity"= Song Miryeong, Minister of Agriculture, Food and Rural Affairs, also cited grapes as an example of turning the threat of an FTA into an opportunity. In connection with discussions on joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), she explained that grape farmers had feared serious losses when the Korea-Chile FTA was signed, but grapes have since grown into a leading fresh agricultural export. Support for expanding exports is also continuing on the ground. Established in 2019, the Korea Grape Export Association (K-Grape) helps farmers produce high-quality grapes and expand their overseas sales channels. "Taiwan accounted for 58% of total exports last year, but we expect exports to the U.S. market to grow rapidly this year as we enter major retail outlets such as Costco," said Lee Seunghee, head of K-Grape. She added, "With the peak shipping season of November and December approaching, we will meet our $100 million export target by supporting product packaging, cold-chain systems, and logistics costs."

Supported by: Ministry of Agriculture, Food and Rural Affairs and Korea Rural Economic Institute

This content was produced with the assistance of AI translation services.