In the U.S.-South Korea tariff negotiations, whether to further open rice and beef markets is likely to be a contentious issue, while the government is reviewing measures to facilitate the import of 'grains we directly cultivated overseas' into the country. With the grain self-sufficiency rate being low and reliance on imports high, this strategy aims to expand the food supply chain without additional market openings.
According to the government on the 19th, the Ministry of Agriculture, Food and Rural Affairs has recently commissioned a study on 'strategies to promote the domestic import of overseas agricultural resources.' The purpose is to resolve distribution difficulties arising from corporations bringing in grains cultivated overseas and to increase practical incentives for importation.
Since 2009, the government has encouraged domestic corporations to produce grains overseas. The structure involves cultivating soybeans, wheat, and corn in regions such as Primorsky Krai in Russia and bringing them into the country, with a secured volume of 2.6 million tons as of last year. However, the quantity imported into the country amounted to only 378,000 tons (14.5%). This is due to a lack of stable sales channels outside of certain corporate demands and the poor connection to domestic distribution networks.
Among the corporations that invested in this project, some have already withdrawn. Initially, CJ CheilJedang, Hyundai Heavy Industries, and Hanjin Heavy Industries engaged in overseas agricultural resource development, but these companies have since exited the business.
Currently, Lotte Corporation supplies soybeans and corn cultivated in Primorsky Krai to domestic processing companies for use in beverages and snacks. FarmStory cultivates soybeans, corn, and oats on farms in Primorsky Krai and is increasing the production of soybeans for tofu, while some of these grains are imported for processing and consumption in Korea.
An official from the Ministry of Agriculture, Food and Rural Affairs noted, "There is demand to directly cultivate special varieties of soybeans or soybean sprouts that do not contain genetically modified organisms (GMO), as they are difficult to obtain in the general import market," and added, "Even if a customized variety is cultivated overseas, the process of costs, procedures, and market uncertainties during the import stage can disrupt importation."
The government operates a tariff-rate quota (TRQ) system that applies lower tariff rates to a specified quantity of imports. The TRQ applies lower tax rates up to a predetermined amount for specific agricultural products, and higher rates are imposed on imports beyond that limit. Currently, there is a TRQ allocated specifically for overseas agricultural development, but it is primarily limited to soybeans and is subject to supply constraints.
The government sells the 'import rights' for this low-tariff quota through open bidding, allowing successful bidders to import the designated quantities at lower tariffs. This has led to instances where corporations have abandoned importation due to failures in the bidding process.
The Ministry of Agriculture, Food and Rural Affairs is reviewing whether to expand the items subject to TRQ application beyond soybeans to also include wheat and corn. Discussions are ongoing about prioritizing allocations for overseas agricultural development operators when assigning the TRQ. The aim is to allow corporations to operate more stably from overseas cultivation to domestic import and use.
The government explains that since the TRQ operates on a global total rather than on a country-specific allocation, increasing the volume designated for overseas agricultural development will not affect the overall import volume. This means improvements in allocation and operation are within the existing framework, unrelated to import expansion or market opening.
Kim Han-ho, a professor of agricultural and resource economics at Seoul National University, said, "The method of bringing in grains cultivated directly overseas is an effective means of securing food security as it allows for control over the supply chain during crises," and added, "If the scope is broadened to include vegetable and fruit items like cabbage and apples, which have become unstable in domestic production due to climate change, it could maximize effectiveness."