South Korea Citrus Annual - 2009

South Korea Citrus Annual - 2009

Unshu orange production for MY 2009/10 is forecast at 650,000 metric tons, up more than 130,000 metric tons from the previous year. A variety of government and industry programs have been introduced to remove lower quality fruit from the marketplace in order to limit the downward price pressure resulting from this year’s bumper crop. Meanwhile, MY 2009/10 orange imports will rebound to 110,000 metric tons in large part due to improved economic conditions.

Orange imports from Jan-Sep totaled 68,000 metric tons, down 35 percent from the previous year. This drop in imports was due to the weak won and the economic slowdown. However, orange imports during MY 2009/10 are expected rebound to 110,000 metric tons due to a relatively favorable foreign exchange rate, the availability of quality oranges in California, and signs of economic recovery. This projected increase in trade is expected to attract new importers. The
prospects for U.S. oranges in MY 2009/10 are expected to remain bright in large part due to consumers’ familiarity with the high-quality fruit. The U.S. was the top supplier from Jan-Sep, with imports totaling 64,000 tons, which was nearly 95 percent of total imports. The remainder was from Chile, South Africa, Spain and Australia. The U.S. is expected to retain its strong foothold in the Korean market. In addition, the KORUS FTA will strengthen that position through the reduction of import duties. More information on the benefits of the FTA is available at:
http://www.fas.usda.gov/info/factsheets/Korea/commodity-citrus.asp





Production: Unshu orange (tangerines) production for MY 2009/10 is forecast at 650,000 metric tons, up more than 130,000 metric tons from the previous year (Note: greenhouse production and late varieties are excluded from these estimates). This year’s bumper crop, which is mainly due to favorable weather, combined with large pear, apple and persimmon crops could put downward pressure on local orange prices depending on the success of various industry and government initiatives to limit production. In order to stabilize prices, the Jeju government and local growers plan to reduce the total volume of oranges in the marketplace through marketing orders, tree thinning programs and support payments. In addition, check-off and FTA transition funds are used to improve industry infrastructure and conduct marketing activities. These programs are explained in further detail below. Marketing Orders At the request of the Jeju government, the Ministry for Food, Agriculture, Forestry, and Fisheries (MIFAFF) implemented a marketing order for Unshu oranges in MY 2009/10. The aim of this action is to supply only the highest quality fruit to the market by removing small, oversized, and otherwise inferior fruit. The lower quality fruit is used in juice production and private consumption. The order is in effect from October 29 through March 31, 2010. Last September, the growers and Jeju government announced a separate campaign to remove 15 percent of MY 2009/10 production from commercial channels. This program will in effect remove 100,000 metric tons of disqualified fruit, including small and damaged fruit, from the market. This activity will continue until the end of harvest season. Earlier in the year, Jeju implemented a fruit reduction program that included tree removal, tree thinning, farm closure, etc. Through this program 37,000 metric tons of Unshu orange production capacity was eliminated. Direct Payment Programs The Jeju government introduced a direct payment program to help stabilize citrus prices in MY 2009/10. This program is a biennial harvesting program, which removes all fruit from trees during the early season in order to improve yields the following year. The Jeju government paid growers over 3 billion won ($2.5 million) to take 2,470 hectares out of production thereby reducing production capacity by an estimated 41,000 metric tons. FTA Transition Fund The Jeju government requested 50.6 billion won ($42.1 million) in FTA transition funds for 2010. MIFAFF is expected to provide the requested funding, which is nearly 35 percent larger than the previous year’s request. These funds will be used to upgrade citrus production infrastructure and improve crop quality. As part of the plan, Jeju will build another large scale Agriculture Product Processing Centers (APC) next year. The APC will have a capacity of 10,000 metric tons. Jeju plans to build six more large scale APCs and 13 medium size APCs by 2017. Check Off Program Jeju continues to use its citrus check-off program in MY 2009/10. The funding for this year’s program is 2 billion won ($1.7 million). The central government provides half of the funding, while the remainder is collected through a 0.5 percent check-off fee from auction sales and producer group donations. Check-off funds are used to support marketing activities, foreign market development, training farmers to produce quality fruit, and improving marketing channels. The marketing activities include television commercials, citrus festivals across major Korean cities, and advertisements in large apartment buildings.


Trade: Jeju authorities have set a goal to export 10,000 metric tons of Unshu oranges during MY 2009/10. The goal seems overly ambitious compared to the previous year, which recorded exports of 1,342 metric tons. However, the Jeju government is strongly encouraging farmers to export as way to help prop up domestic citrus prices. The export markets targeted are Russia and Canada with 4,000 metric tons each and South East Asian countries with 2,000 metric tons. Exports to the United States are minimal because of quarantine issues. In order to reach these export targets, the Jeju Citrus Grower’s Cooperative Federation has been working with farmers to approve a long-term export contract in order to secure a stable supply of citrus regardless of the fluctuation of domestic citrus production level. The Federation is working to improve packaging in order to minimize damage during shipping and has also developed a Good Agricultural Practice (GAP) certification program for farms and packinghouses. Orange imports from Jan-Sep totaled 68,000 metric tons, down 35 percent from the previous year. This drop in imports was due to the weak won and the economic slowdown. However, orange imports during MY 2009/10 are expected rebound to 110,000 metric tons due to a relatively favorable foreign exchange rate, the availability of quality oranges in California, and signs of economic recovery. This projected increase in trade is expected to attract new importers. The prospects for U.S. oranges in MY 2009/10 are expected to remain bright in large part due to consumers’ familiarity with the high-quality fruit. The U.S. was the top supplier from Jan-Sep, with imports totaling 64,000 tons, which was nearly 95 percent of total imports. The remainder was from Chile, South Africa, Spain and Australia. The U.S. is expected to retain its strong foothold in the Korean market. In addition, the KORUS FTA will strengthen that position through the reduction of import duties. More information on the benefits of the FTA is available at: http://www.fas.usda.gov/info/factsheets/Korea/commodity-citrus.asp


Policy: As part of the existing import protocol, NPQS applies a 100 percent fumigation policy for imported California oranges due to red scale. For the existing import protocol, please contact the Plant Protection and Quarantine Division in APHIS headquarters. In response to the detection of the Mediterranean fruit fly in LA County (La Verne) and San Diego County (Mira Mesa, Imperial Beach and Escondido), California and the detection of citrus fruit fly and white striped fruit fly in LA County (La Verne) in 2009, the National Plant Quarantine Service (NPQS) imposed an import ban on citrus including oranges from quarantine areas designated by the Animal Plant & Health Inspection Service (APHIS). Phytosanitary discussions with Argentina (oranges), Mexico (limes) and Chile (mandarins) and others are still pending.