K-Food's Export Growth Under Pressure Due to US Trade Difficulties

Referring to agri-food products excluding seafood, K-Food Plus exports reached a record USD 13.03 billion in 2024, a 6.1% increase year-on-year (YoY), according to a recent press release from the Ministry of Agriculture, Food and Rural Affairs (MAFRA). Agri-food products alone accounted for USD 9.98 billion, a significant 9% rise from 2023, marking nine consecutive years of growth. Driven by increased demand for processed foods like ramyeon and the global cultural wave boosting Korean cuisine, overall success of Korean sports is faced against complex international trade tensions and constant tariff changes.

Record Growth and Key Markets for K-Food

Key drivers of this export success include strong growth in ramyeon, with exports reaching USD 1.25 billion in 2024, up 31.1% YoY; processed rice products at USD 299.2 million, up 38.4% YoY; and kimchi at USD 163.6 million, a 5.2% YoY increase that marked an all-time high. The United States (US) notably became the largest importer of Korean agri-food products in 2024. Exports reached USD 1.59 billion, a 21.2% YoY increase. This growth was fueled by strong demand for ramyeon, biscuits, confectionery, and processed rice items, often amplified by social media trends and greater penetration into large-scale retail stores. Exports to Europe also saw a substantial rise of 25.1% YoY, achieving USD 680.8 million in 2024.

Figure 1. Import value trend of Pasta from South Korea to the US

Source: Tridge

This growth is occurring despite current volatility in global trade. Since US businesses are feeling pressure to import goods during tariff pauses, this is a situation that Korean exporters might leverage. While the general threat of tariffs is a long-term concern for South Korean exporters, temporary tariff pauses by the US can create short-term opportunities. During these pauses, US businesses may rush to import goods to avoid future tariffs, creating a surge in demand. Alert Korean exporters can leverage this by quickly fulfilling these orders, potentially offering attractive short-term deals, or establishing new trade relationships, even as they remain wary of the broader, more persistent challenges posed by an unstable tariff environment.

However, the broader environment is characterized by trade tensions and inflation pressure, and the potential for shifts in US tariff policies. While the MAFRA release highlights expanded market access to 207 countries in 2024, a jump from 199 countries in 2023, the impact of tariffs, particularly in key markets such as the US, remains a critical consideration. For instance, while K-Food saw significant gains in the US, any re-imposition or escalation of tariffs could dampen this momentum by affecting price competitiveness.

Global Trade Uncertainties and Stocks Volatility

The ongoing uncertainty regarding US tariffs has led to increased volatility and cautious investor sentiment in the Korean stock market, particularly affecting shares of companies heavily reliant on exports. After the tariff announcement, in W1 of Apr-25, stock prices for several South Korean food companies fell. Haitai Confectionery closed down 3.43% to USD 4.09 (KRW 5,630), and Dongwon Industries ended 2.82% lower at USD 21.51 (KRW 29,600) on a trading day. Lotte Wellfood experienced a 2.43% decline, and Dongsuh's stock dropped by 1.94%. Additionally, Daesang and OTOKI both saw their stock prices decrease by approximately 1%. 

In an effort to ease the situation, the Korean government is preparing preventive measures such as financial support to relieve pressure on domestic food companies. In recent events, a Korean delegation visited the US, aiming to negotiate biopharmaceuticals and automotive industry trade, accompanied by the Korean Ministry of Agriculture to strengthen Korean food exports further. This comes as a swift response given the recent negative impact on Korean companies on the stock market.

Korea's strategy of diversifying export items and markets, including new focus areas like the Middle East and Latin America, appears prudent in mitigating risks associated with over-reliance on specific markets or the adverse effects of targeted tariffs. The success of items like vegan kimchi and room-temperature storable kimchi in new markets further illustrates an adaptive strategy to meet diverse consumer demands and navigate complex logistical or regulatory environments, which trade policies and tariffs can indirectly influence.

In conclusion, while K-Food's global appeal and strategic market expansion drive impressive export figures, the industry must remain vigilant and agile in response to fluctuating global trade policies and potential tariff impacts, particularly from major partners like the US.