U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Animal Feeds 40
Assessment
The U.S.-Korea FTA would likely result in increased overall U.S. exports of animal feeds
to Korea. The increase, however, is unlikely to have a significant effect on U.S. soybean
meal exports because the modest tariff reduction would not likely improve U.S.
competitiveness substantially. The U.S. soybean-crushing industry could experience
relatively greater benefit from improved market access for U.S. meat exports to Korea under
the FTA as these increased exports would generate greater domestic demand for meal
consumption. Other animal feeds, such as prepared feeds, pet foods, and DDGS, should
experience relatively greater export gains as the United States is already a leading supplier
to Korea and this competitive position should be further enhanced through the immediate
removal of almost all of these tariffs under the FTA (table 3.3).
As a result of its small arable land mass, Korea is very dependent on imports of animal feed
for its domestic livestock and poultry sectors, which have grown significantly as Korean
consumption patterns have changed over the past several decades as a result of increased
affluence. According to the USDA, Korea’s consumption of beef, pork, and poultry each has
increased in the range of 100 to 400 percent during the period 1990–2006. 41 USDA projects
continued increases in Korea’s consumption of these meats, in the range of 14 to 47 percent
over the period 2007 through 2016, which would further increase the demand for imported
animal feeds. 42
Soybean meal 43 is the leading vegetable protein source used in the manufacture of compound
animal feeds in Korea. 44 Soybean meal imports from the United States have been relatively
small and have declined 24 percent since 2002 (table 3.3) as imports from Argentina, Brazil,
and India have become increasingly price competitive (table 3.4). The removal of a
1.8 percent tariff as a result of the FTA is unlikely to significantly improve the price
competitiveness of the United States compared to these competing suppliers. Of greater
potential importance is the effect of increased market access for U.S. meat exports to Korea.
Increased meat exports and production would likely increase the use of U.S.-produced
soybean meal as livestock feed, which accounts for 98 percent of total domestic soybean
meal consumption in the United States. 45
40 Products of chap. 23 of the HTS. This assessment will cover the leading U.S. exports to Korea for this
chapter, which include soybean meal, mixed feeds, pet foods, and distiller’s dried grains with solubles
(DDGS). The products covered in this assessment represent approximately 27 percent of U.S. exports to
Korea in the GTAP “vegetable oils and fats,” approximately 10 percent of U.S. exports to Korea in the
GTAP “beverages and tobacco products,” and approximately 5 percent of U.S. exports to Korea in the “food
products n.e.c.” sectors, and represent less than 1 percent of U.S. imports from Korea in the GTAP “food
products n.e.c.” sector, for 2006.
41 USDA, FAS, “Production, Supply, and Distribution Online.”
42 USDA, WAOB, “USDA Agricultural Projections to 2016,” February 2007.
43 HTS 2304.00 Oil cake and other solid residues, whether or not ground or in the form of pellets,
resulting from the extraction of soybean oil.
44 USDA, FAS, “Korea Oilseeds and Products Annual 2007,” February 26, 2007, 20.
45 USDA, ERS, “Briefing Room on Soybeans and Oil Crops—Background.”
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