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South Korea Gets Fresh with Oregon
by John Schmitz

After years of wrangling back and forth, Oregon blueberry growers and shippers who meet certain food safety and phytosanitary requirements will have the green light in 2012 to ship fresh product into South Korea, a country that until now has been accepting frozen but not fresh berries from the U.S.

Oregon is the first and the only state in the country to be granted entry for the fresh crop.

One significant condition attached to the agreement is that South Korea be allowed to have its inspectors visit Oregon packing houses and growing fields next year to make sure they are meeting stringent export requirements.

“It’s a huge potential, one we will definitely be looking at seriously,” said Jeff Malensky, vice president of international sales for packer/shipper Oregon Berry Packing Company in Hillsboro. “This market has the potential of being right there in line with what’s going on in Japan. That Oregon is right on the front lines is very fortunate.

“What we like about this is that South Koreans already eat blueberries, be it the frozen type, so the interest is already there,” Malensky said. “(Also), Korean people have good disposable income. So you already have two very good parts of the puzzle together. The opening of this market, that was the last piece.”

IMPORTANT MARKET

Malensky said that South Korea, at this stage, is probably more valuable to the Oregon blueberry industry than nearly any other export markets that have opened recently or are bound to open in the near future. Korea, compared to the very good but mature export market in Japan, presents a great opportunity because of the huge potential there, Malensky said.

Even though the South Korean population is about a third less than Japan’s, South Korea’s consumption of other fresh fruit imports, such as cherries, is similar to Japan’s, Malensky said. He expects that fresh blueberries “will fall right in line.”

Malensky said that logisticswise, South Korea is also an easy market to service, with flights out of Portland and Seattle. “It fits very nicely.”
As for the phytosanitary and food safety protocols, which include “chain of custody” labeling that allows clamshells to be traced to specific fields, South Korea is a more restrictive market than other Pacific Rim countries, Malensky said, but well worth the effort and costs.

How these costs and a stiff South Korean tariff will influence retail prices and thus consumer acceptance is yet to be seen, Malensky said. Figuring into this are domestic prices paid for fresh product, which in 2011 were the highest ever.

Malensky said that as is the case with Japan, Korean consumers are very picky. “You have to make sure you ship the right varieties.”

California International marketing expert/consultant Tom Payne, who has been dealing with the South Koreans for 20 years, said that the push to get fresh Oregon blueberries into South Korea has been going on since around the turn of the millennium.

Payne said that one reason fresh Oregon blueberries will be welcomed in South Korea is that their season is so short—about three weeks—with many small growers, most of whom farm only two to four acres. “They don’t have a lot of land. Some fields are inside rice paddies. There aren’t enough fresh blueberries even for them to whet their appetites. This will really ignite things and make them happen over there.”

Payne noted that even established blueberry growers in South Korea do not see Oregon fresh berries as a threat. “The really good growers are welcoming blueberries from the United States. It’ll increase (South Korean) appetites for (South) Korean-grown product.”

The only sour note about the South Korean agreement is a diminishing 45 percent tariff on Oregon-grown fresh blueberries, a tariff that will slowly decline to zero over the next 10 years.

Even with the tariff, however, Korean-grown blueberries “are quite expensive anyway,” Payne said.

He estimates that it may be awhile before South Korea opens its doors to other fresh market blueberries in the U.S. and Canada. “We’re going to let it sit for a couple years and then evaluate. It’s going to be a pull from that side.”

CHINA NEXT

Payne said that efforts are now under way to open China to U.S. fresh blueberries. “We’re approaching China and also Australia. (The) Oregon guys are probably the most keyed in and most successful as far as being able to work in China.”

Even though some offshore fresh blueberries are currently transshipped into China, opening up that country to direct, fresh shipments presents huge potential, Payne said.

When asked how long it would be before direct shipments of fresh blueberries are allowed, Payne did not want to speculate. “They always tell us ten years, but we made an end run in India and did it in 25 days.”
That was back in 2008, when Oregon became the first U.S. state to make fresh shipments to India, according to Payne.

Payne said that China is now a huge consumer of American products with blueberries as ingredients, such as pie fillings, and that frozen berries “are very successfully going in.”

There are a lot of blueberries grown in China, and at one time most of those exported to Japan, Payne said. But that has ceased. “All the blueberries stay in China, with not a single one going out and they have started importing.”

The key to China trade, Payne said, is “well-connected fresh importers there speaking up to their government and greasing the skids so that our efforts are accelerated.”

Malensky said that should China’s fresh import market open to its full potential, it would dwarf South Korea and Japan, adding that more affluent consumers there are paying up to $9 for a 4.4-ounce clamshell of Chinese-grown berries.

Like Malensky, Payne credits Oregon Blueberry Commission administrator Bryan Ostlund, and to a lesser extent others, with being the prime movers behind South Korea’s acceptance of fresh Oregon blueberries. “What Bryan and growers up there did was quite extraordinary. They really had to do a lot of work. I’m not sure other states would be willing to step up and do that,” Payne said.

“He’s the person who has really pushed this ball forward,” Malensky said. “He was the point guard.”

Oregon Blueberry Commission • P.O. Box 3366 • Salem, Oregon 97302
Paid for by the Oregon Blueberry Commission, an agency of the State of Oregon.