Research Reports
Analysis of High Potential Agricultural Export Market and Korea's Proper Responses -Centered around Russia-
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AuthorKim, Kyungphil
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Publication Date2008.11.01
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Original
Agricultural exports should be pursued actively in the era of market opening in order to improve the local agribusiness quality and strengthen its competitiveness. The purpose of this study is to understand the export status of Korean agricultural products to Russian Far East, an recent emerging export market with high potential for Korean agricultural products, to detect challenges and matters for improvement, and to finally find out measures to increase agricultural export to the market.
Korean strawberry, paprika, and tomato are purchased at department stores or large hypermarkets by top 10% income earners in Russian Far East. To the contrary, such products as Korean tangerine and rose have medium quality and are consumed by the general public at lower prices. Mostly, the Russian awareness of Korean agricultural products is weak but their preference is high.
A survey was conducted on exporters of Korean agricultural products to Russia. The survey showed that the main trouble is the instability in securing product volume depending on local prices of fruits and the difficulty in securing refrigerator containers. For fruit vegetables, it was found that marketing activity is insufficient; promotion and sales require high cost; and it is difficult to maintain fresh condition and marketability of produce. For horticultural products, the difficulty in securing export volume, insufficiency in screening and distribution facilities and the lack of facilities to produce high-quality horticultural products are found as obstacles to export.
The profit and loss status is volatile since the export to Russian Far East is in its infancy. However, we have learned lessons from previous success or failure that prior understanding of export feasibility, phased-in expansion of export volume, decision of export volume in consideration of market consumption size, and the export of high-quality agricultural products are essential. In addition, considering climate and natural features of the importing country, the areas for further effort include expanding the possibility of developing potential markets, development of various technologies to maintain fresh quality and marketability, maintenance of constant trust with local wholesalers and large retailers, continuous promotional endeavor to increase awareness of Korean agricultural products and sales activities and constant improvement of institutions putting an obstacle to export.
In order to expand export of agricultural products to Russian Far East, first of all, we need to direct efforts to enhancing competitiveness in quality and improving price competitiveness as a supplementary move. Competitiveness in terms of quality and price could be enhanced by improving production facilities, developing new technologies and improving logistical system, and the efforts to achieve this should be made continuously. Secondly, the export volume should be secured in a stable manner, and it can be achieved by systematically running a larger export organization and unifying contact points. From this perspective, the government's initiative entitled "Project for Fostering Agrifood Export Leadership Organization" is a timely project. Thirdly, the screening, transportation and storage of agricultural products at low temperature should be offered at the local transportation and distribution stage. To this end, it is essential to establish or rent and manage warehouses in Russian Far East. Fourthly, the consumers of Russian Far East have very little knowledge of the Korean agricultural products. To overcome this, more active PR, promotional and marketing activities are required. Fifthly, it is necessary to shorten the time taken for custom clearance which works as a non-tariff obstacle to market advance. The issue of long time taken for custom clearance doesn't affect Korea only. However, the government-level effort could simplify the clearance procedures. Sixthly, it needs to establish a corporate entity in the local market for market research, market trend reading, relation building and maintenance. When it connects between importers and exporters, the initial trades at the market entry could be more stable. Lastly, institutions that pose an obstacle to export expansion need to be addressed. In relation to this, the "Fair Trade Scheme for Exported Agrifood" and the "Project for Fostering Agrifood Export Leadership Organization" are already being pursued. Nevertheless, the existing institutions for which improvement efforts are under way or which have not been detected so far should be the subject of improvement by paying continuous attention.
Researchers: Kim Kyung-Phil, Kim Yean-Jung, Han Hye-Sung
E-mail address: kkphil@krei.re.kr, yjkim@krei.re.kr, funny1978@krei.re.kr
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