South Korean Free Trade Agreement Could Boost Dairy Sales
Oct 07, 2011
U.S. dairy exports have been on an incredible upward journey this decade, growing from $30 million in annual sales in mid-decade to possibly $250 million this year. Through July, some $145 million worth of U.S. dairy products has entered South Korean ports.
Amazingly, U.S. cheesemakers have shipped more cheese to South Korea since July than they have sent to Mexico, traditionally the No. 1 buyer of U.S. cheese. And if Congress passes a free trade agreement (FTA) in the next few weeks, those cheese exports to South Korea will likely be sustained and even increase. According to estimates by the International Trade Commission, U.S. dairy exports—cheese, milk powder, whey—could quickly climb to an astounding $380 million in annual sales.
Recall that President Barack Obama submitted the South Korean FTA to Congress this past Monday. South Korean President Lee Myung-bak is scheduled to visit the White House on Oct. 16, and the hope is that Congress will pass the FTA in time for President Obama to sign the agreement during that state visit.
"We are hopeful the Congress will pass the agreement quickly," says Margaret Speich, vice president of communications and membership for the U.S. Dairy Export Council (USDEC).
Inking the deal is important on several fronts, Speich notes. Foremost, a signed FTA will allow momentum to continue to grow in moving more U.S. cheese, powder and whey products to the Korean peninsula. Last week, for example, a USDEC trade mission went to South Korea in anticipation of a deal being signed.
The mission included 33 participants representing 33 U.S. dairy companies. Those companies are reporting back that they have either signed or anticipate contracts for an additional 6,000 tons of dairy products valued at $27 million over the next year. And that’s just one trade mission’s work.
As importantly, a U.S.-South Korea FTA will keep the U.S. in the game as global competitors vie for Korean business. On July 1, the European Union signed its own FTA with the Koreans. Australia hopes to sign an agreement by the end of the year, and New Zealand currently is in negotiations. All of these competitors are going after market share that was built primarily by U.S. efforts, spearheaded by USDEC and its member companies. So it’s imperative the U.S. is correctly positioned to stave off those interlopers.
The final point is that world dairy trade has softened this quarter, due to early buying, concerns over the global economy and increasing world milk production, up 8.6 billion pounds in the first seven months of 2011.
Inking a U.S.-South Korea trade deal would help shore up some of the losses. Let’s hope Congress can stop its squabbling and can get the deal done.