BMI View: D ue to the strong unions behind the industry , the government will need to work closely with private companies to lead the way in enforcing changes in the agriculture sector . T he numerous free trade agreements signed in 2015 , with the Trans Pacific Partnership being the most significant, signal to us that the agriculture industry is truly going through a much-needed transformation that will lead to increasing competitiveness with global agri - players. Other efforts , such as promoting high-value add food and beverages , also support our view.
Government-led efforts will benefit the industry over the longer term and help it to remain relevant. These include: the expansion of education and financial support for farmers to allow them entry into the food processing business; plans to modernise traditional methods of food production; the creation of new agricultural food districts for exporters; and the introduction of state designation of food exporting companies.
Rice consumption decline to 201 9: 7.4% to 4.1mn tonnes. As South Koreans substitute their carbohydrate intake with bread instead of rice, consumption of the grain is expected to fall in tandem with the changing diet.
Cheese consumption growth to 2019: 1.4% to 81,000 tonnes. As Western food has become more popular in Korea, demand for cheese has expanded rapidly. The majority of cheese is consumed in restaurants and fast food outlets and comes in the form of processed cheese. Exporters with the lowest price, such as the US, have gained a market share in supplying the South Korean cheese industry.
Beef production growth to 2018/19: 18.8% to 401,000 tonnes. Even with the anticipated increase in local beef output, the country will remain reliant on imports to meet demand. Indeed, base effects are the key reason for the significant growth rate.
2015 BMI universe agribusiness market value: USD32.1bn (up from USD31.3bn in 2014; forecast to average annual growth of 2.4% to 2019.
2015 real GDP growth: 2.8% year-on-year (y-o-y) (down from 3.3% in 2014; predicted to average 3.4% from 2014 until 2019).
2015 consumer price index: 1.0% y-o-y average (down from 1.3% in 2014; predicted to average 2.3% to 2019).
We believe that the increasing appetite for Western-styled dairy products spell more opportunities for US dairy firms, especially if they adapt their high-sodium and high-cream contents to the South Korean palate, which prefers less salty, and less creamy flavours. US-made cheese and butter stand to benefit the most as these dairy products experience the highest demand from South Korean consumers. Indeed, the uptrend of Cheese imports from the US is in full swing. From January to September of 2014, South Korea imported 13.7mn pounds of cheese from the US, up 135% from the same period in 2013. As a result, South Korea now has advanced to turn into the second biggest market for US-manufactured cheddar cheese. 66% of South Korea's cheddar imports from the US are in the crisp cheese classification, which incorporates mozzarella and cream cheese. While pizza cheddar is making a sprinkle with South Koreans, cheese deals are still in their outset. With cheese utilization rising rapidly in South Korea, imports ought to keep pace, if not surpass, demand.
South Korea is slowly but surely extending its influence in the global agribusiness sphere. An example is the recent announcement by the Korean International Cooperation Agency in August 2015 that it would hand over its rice mill project in Bida, Nigeria, entirely to the Federal Government in September 2015. Starting 2007, the project was terminated for a while due to mechanical threats. Operations began again in 2013 and is presently 90% completed. The Korea International Cooperation Agency (KOICA) has various projects in Bida, including cassava processing centers in the Kogi, Enugu and Ogun states. In the case of the rice processing project, the overall process has been streamlined, with the Nigerian counterparts properly trained to operate the Korean machinery. According to the country director, the bureau has budgeted USD 1.8mn for the execution of the project.