Latest South Korea Market Updates

Dairy: Milk Powder Products

The United States is one of the biggest importers of milk powder products for South Korea. As of 2016, the total import of U.S milk powder into Korea was around 38,774 ton, which is about 28% of the total import of milk powder. It is interesting fact for exporter that Korea fluid milk price is highest in the World. According to the Korea Agro-Fisheries & Food Trade Corp, in 2016, average retail price of local raw fluid milk was $2.2 (=2,549 KRW). Milk powder products are used as an ingredient for local production of dairy, confectionery and bakery products. Imported milk powder has played pivotal role in Korea by decreasing the cost for dairy food production.

Table1. Definition of Milk Powder Products

Table2. Milk powder products import from U.S by volume base on ton (metric ton) – 1/2

Source: Trade Data, Korea Customs Service, 2016

Table3. Milk powder products import from U.S by volume base on ton (metric ton) – 2/2

Source: Trade Data, Korea Customs Service, 2016

Among milk powder products, SMP, Whey powder, Whey Protein and Lactose show strong market demand in Korea by import volume. Past 3 years of U.S milk powder products import has been steady or slightly increased because of constant increasing volume of whey powder and lactose. Imported Lactose and Whey Protein from U.S take about more than 50% (in 2015, whey protein share was 44%) of the total import from the globe. Therefore, U.S Lactose and Whey Protein are playing a pivotal role for making local market price.

In 2015, local fluid raw milk was over produced which resulted in decreasing import of S(W)MP. However, the import of S(W)MP and S(W)MPP have been fluctuated depending on local S(W)MP stock. When the stock went down, import went up to cover the deficiency in the local stock. In addition to that South Korea imports S(W)MP from not only U.S but also Australia, New Zealand and Europe. As of July 2016, Whey powder, casein and lactose tariff were removed based on the EU-Korea FTA.

Although all these fluctuations, consumption of SMP is expected to continue to track closely with production, because production is heavily impacted by marketing quota policies.

In global level, all the milk powder products are growing slowly. The largest market is S(W)MPP {[S(W)MP+P1] +[S[(W)MP+P2]} and the most potential promising milk powder product is S(W)MP.

S(W)MP (Skim/Whole milk powder)

The general tariff for S(W)MP is very high which is 176%. S(W)MP should be imported trough WTO OR K- U.S FTA quota policy. As of 2017, import tariff for less than 5,628 metric tons of S(W)MP is 0 %. Under K-U.S signed contract, Korea is contributing to 3% increase of FTA quota and the import of S(W)MP.

The total import in 2015 was $ 53 million, and the U.S ($12 million), Australia ($11 million), France ($6.7 million), Germany ($6.0 million) and New Zealand ($3.0 million)

S(W)MPP (Skim/Whole Milk Powder Preparation)

The general tariff for mixed milk powder products are 18% for both S(W)MP+P1 and S(W)MP + P2. The average tariff for mixed milk powder products are 36%. However, thanks to the K-U.S FTA, it only applies 14% of U.S product and this is the lowest tariff rate compare to other K-FTA countries.

At the moment, European countries dominate mixed powder market in Korea such as Netherland, Germany, France and England. K-EU FTA applies 16% of tariff for the mixed products. The qualified of milk powders can be debased when it comes to mixed. However, it is about true fact that it brings up productivity by decreasing the cost of dairy products. U.S exporter should consider or pay more attention to rising South Korea mixed milk powder market.