Thanks to the KORUS FTA, Koreans now have access to a greater variety of cheese and cheese products, even as prices decline. Image:

US Cheese Producers Meet High Demand in South Korea


US dairy exports to South Korea grew to over $417 million in 2014, and among those exports, cheese accounted for almost half, valued at $199 million. In 2011, before the US-Korea Free Trade Agreement (KORUS FTA) went into effect, the value of cheese exports to Korea was only $30 million. American cheese producers are thus enjoying a sales increase of around 575% since the FTA was implemented.

The KORUS FTA immediately abolished a 36% tariff on up to 7,000 metric tons of US cheese. Specifically for US cheddar cheese, the tariff will be eliminated on unlimited quantities in 2023, ten years after the agreement was signed. Remaining tariffs will be phased out over 15 years and all US cheese products will then have tariff-free access to the Korean market. A recent drought in New Zealand and poor weather conditions in Australia and Europe have reduced the supply of dairy products from those regions to Korea. With the various cheese tariffs reduced or eliminated, US cheese has been able to fill the supply gap.

The driving force behind the increasing sales trend is twofold. The FTA did make US cheese more affordable, but Koreans consumers have also developed an increased taste for cheese, driving the demand much higher. Young Koreans have an appetite for food items such as pizza, hamburgers and cheesecake. As a result, Korea has become the second-biggest importer of US cheese globally, only after Mexico. The growing market for organic dairy products is also welcome news for American dairy farmers. The Korean organic dairy market is projected to reach $419 million by 2017, and the share of that market held by US products is steadily increasing.

This trend is a boon across major dairy-exporting states, and especially to Idaho and Wisconsin. Korea now tops Idaho’s list of dairy export destinations, followed by Mexico and China. Thanks to the high demand in the Korean market, cheese for the first time became the state’s most-exported dairy product. For Wisconsin, Korea is the state’s third largest agriculture export destination, accounting for $202 million in 2014. Wisconsin’s agriculture exports to Korea increased by 32% in 2014, marking the fastest growth rate among all export destinations. A sharp increase in dairy export is credited for the gain.

Cheolwoo Lee is an Asan Academy intern at the East-West Center in Washington.