Rising demand, a pending trade agreement and a shortage of domestic milk have put South Korea neck-and-neck with Mexico as the top export market for U.S.-made cheese. The broad interest in the market is reflected in the U.S. Dairy Export Council’s (USDEC’s) largest-ever trade mission, for which nearly three dozen members will visit the country Sept. 26-29. USDEC trade missions, which are supported by U.S. dairy farmers through their checkoff program, help bring buyers and sellers together to facilitate sales of U.S. dairy products on behalf of U.S. dairy producers and the industry.
“Global trade requires building relationships face-to-face,” says Les Hardesty, a dairy producer from Greeley, Colo., chairman of USDEC and a board member of Dairy Management Inc. “This visit will provide an ideal setting for U.S. suppliers to make valuable contacts, and for the Korea trade to learn more about U.S. capabilities. For dairy producers, this is a means to building demand for a growing U.S. milk supply.”
The mission was planned last year in anticipation of Korea-United States Free Trade Agreement (KORUS FTA). It was hoped the FTA would be in place before the trip, and while ratification has not yet occurred, import demand has escalated, in part due to an outbreak of foot and mouth disease last winter. Local milk supplies are down 10 to 12 percent, and analysts say it could take up to two years for supply to recover.
“Because of the world dynamics, Korea has been welcoming us as a cheese supplier,” says Angélique Hollister, USDEC’s director of export marketing for cheese. “The mission is a good way to show the industry in Korea that we are interested in continued business with them. We are still hoping that the (KORUS) might be signed in time but if not, we will look at it as a relationship-building exercise in advance of a ratified FTA.”
Due to the tremendous potential in Korea, USDEC’s mission has attracted the most participants ever for such a trip—some 16 member companies sending 33 people. Participants include cheese makers who sell block and barrel cheese used in foodservice or prepared foods, cream cheese used in baking and mozzarella for pizzas. The group also includes dairy product traders.
The agenda for the four-day program includes at least one plant visit (another is pending), a tour of a pizza restaurant, and a series of one-on-one meetings between potential business partners. This is the third trade mission in the past year sponsored by USDEC, but the first to Korea, where the organization has been facilitating business for more than 10 years, Hollister says.
Hollister says interest in the USDEC cheese missions has grown over the years. The two most recent missions were to Southeast Asia and to China. For new potential importers in particular, joining a USDEC mission adds a level of assurance that the member participants are serious about international trade as a regular part of their business strategy. Members pay their own travel expenses for the trips.
“Ten years ago we had a few companies participating in each mission, and they would send one person,” Hollister says. “For the Korea mission many companies are actually sending several staff, which is also a testimony to the importance of this market to our industry.”
South Korea, a country of nearly 50 million people, was already a fast-growing U.S. dairy importer prior to the FMD and KORUS developments.
U.S. dairy export value to South Korea doubled to $130 million from 2006 to 2010, according to USDA data. This year, the United States has been the leading cheese supplier to Korea (with 44-percent market share), beating out supply from Oceania and Europe. Korea also is a consistent buyer of U.S. lactose and a top-10 market for U.S. whey proteins and butterfat.
When ratified, the FTA will provide immediate duty-free access for more than 35 million lbs. of selected U.S. dairy products and completely phases out tariffs over 15 years for all items except milk powder and condensed milk.
Source: U.S. Dairy Export Council