9/11, a quarantine officer entered a makeshift inspection station inside the KOFOOD warehouse located in the Silverwater area on the outskirts of Sydney. The officer checked quarantine equipment such as a microscope and a magnifying glass, then recorded the relevant information on paper. KOFOOD CEO Kim Yang-hee said, "Quarantine is scheduled for agricultural products loaded in a container that will arrive next week," adding, "The officer visited to do advance preparations before the quarantine."
KOFOOD is a small-to-mid-sized importer specializing in Korean agricultural products. It has been 12 years since Kim and the family, who immigrated to Australia 20 years ago, founded and have been running the company. Its main items are mushrooms. KOFOOD is said to be the biggest importer of Korean mushrooms in Australia. It imports king oyster, enoki, shiitake, and beech mushrooms. Beech mushrooms had their import restrictions lifted last year.
Recently, along with pears, Korean rice has also become a major item. The annual import value of Korean agricultural products that KOFOOD brings in is about 10 billion won. Although Korean agricultural products are more than twice as expensive in the market as Chinese agricultural products, demand remains steady, Kim explained.
Kim said, "High quality and safety are the strengths of Korean agricultural products," adding, "The globally popular K-culture also seems to be leading to greater trust in K-agricultural products. As local rice prices in Australia have surged recently, demand for Korean rice is also increasing."
◇ Quarantine procedures and expense that weaken price competitiveness
What tasks are needed to expand exports of Korean agricultural products? Kim picked improving quarantine procedures as the first task. Kim said, "Even though the condition of Korean agricultural products coming in by container is much better, the quarantine process is conducted more strictly than for Chinese products."
At the makeshift inspection station inside KOFOOD's warehouse, quarantine is conducted not only on agricultural products imported by KOFOOD, but also on agricultural products inside containers brought in by other buyer companies.
Kim said there are significant differences in quarantine procedures for Korean versus Chinese agricultural products. "For containers coming from Korea, 10 boxes are opened as samples, and if there is a problem with even one product, it must undergo re-quarantine," Kim said. "In that case, it must either undergo re-conditioning and be re-inspected, or be backshipped (recalled)." Kim added, "In contrast, Chinese products complete quarantine simply by submitting quarantine records sent from the local site."
This is because when China and Australia signed a free trade agreement (FTA), they agreed to simplify quarantine and customs inspection procedures related to agricultural products and to ease sanitary and phytosanitary measures (SPS). Under this agreement, Australia and China recognize each other if an equivalent level of safety is ensured, even if their standards differ. They also agreed that the importing country will not make excessive inspection or documentation demands.
Although the Korea-Australia FTA also includes SPS provisions, the level is not the same as the China-Australia FTA, according to a local official.
Kim said these quarantine procedures are one of the factors raising the import cost of Korean agricultural products. "In Korea, quarantine is conducted by a government agency, so importers do not pay a separate expense, as I understand it," Kim said, adding, "In Australia, private companies carry out the quarantine procedures, and the inspection expense is considerable."
"It costs $200 per hour per quarantine officer, and when one container is opened, three people conduct inspections for about seven hours," Kim said. "So the quarantine fee alone per container comes to more than 4 million won."
◇ Chinese goods mimicking Korean products… "We need to strengthen K-branding"
Kim also expressed concern that Chinese products are using Korean-style packaging and Hangul trademarks to market themselves as if they were Korean products.
Pointing to a product labeled in Hangul as "Hangoeul pear" at KMALL09, a specialty store for Korean products in Sydney, Kim said, "It looks like a Korean pear, but it's a Chinese pear," adding, "The indication 'Product of China,' meaning it is Chinese, is printed at the bottom of the box where it's not visible."
Kim said, "There seems to be demand for smaller packaging, such as sets of three, rather than by the box, so we changed the packaging and supplied it starting last year, but now I see Chinese companies are copying the packaging," adding, "They benchmark extremely well."
Many Chinese products with Hangul packaging were found at KMALL09 that day. "As K-culture has gained a premium, preference for Korean products has risen," Kim said. "More products are using Hangul packaging to exploit this consumer psychology."
Kim said, "The government and the industry need to work together to establish mechanisms to protect the K-brand," adding, "I propose clearly marking 'Product of Korea' on fresh-produce boxes or exteriors and branding this at the national level."
Kim emphasized, "The quality of Chinese agricultural products has also improved considerably. To secure market advantage, our agricultural products must also raise their quality," adding, "I would like to see more active breeding of export varieties tailored to foreign tastes."
☞ Joint project: Ministry of Agriculture, Food and Rural Affairs · Korea Rural Economic Institute (KREI) · ChosunBiz