Report Highlights: 

Korea’s total citrus production for Marketing Year (MY) 2014/15 is forecast at 688,000 metric tons (MT), 2.4 percent higher than the 672,000 MT of MY 2013/14, as total area for Unshu oranges in MY 2014/15 is forecast to remain stable at 20,570 hectares (HA). Unshu orange exports for MY 2014/15 are forecast at 3,500 MT, a similar level to the previous marketing year, while fresh orange imports are forecast at 120,000 MT for MY 2014/15, about 19,500 MT higher than the 100,457 MT of MY 2013/14. In MY2014/15, lemon imports are expected to remain stable at 13,000 MT, similar to the previous marketing year, while grapefruit imports for MY 2014/15 are forecast to increase to 20,000 MT due to increased demand and price competitiveness. And, frozen concentrated orange juice (FCOJ) imports are expected to rebound to 15,000 MT in MY 2014/15 mainly due to the settlement of origin verification for U.S. FCOJ under the rules of the KORUS FTA.

PRODUCTION 

Korea’s total citrus production for Marketing Year (MY) 2014/15 is forecast at 688,000 metric tons (MT), 2.4 percent higher than the 672,000 MT of MY 2013/14. The production increase is mainly due to lower physiological fruit drop during the flowering and fruit growing periods compared to the average year. As well, an abundance of rainfall during the fruit growing period after July caused a fruit thickening ratio. In addition, continued production of late varieties also resulted in higher output than the previous marketing year. 

Unshu oranges grown in open fields, which covers about 82 percent of total citrus production in Korea, is forecast at 569,000 MT in MY 2014/15, 2.7 percent (about 4,900 MT) higher than the previous marketing year. However, the marketable fruit ratio for MY 2014/15 is expected to be 66.1 percent, which is the lowest ratio over the past five years due to an increase of wind damaged fruits resulted from storms and typhoons in early June during the fruit growing period. As a consequence, the Jeju citrus industry is expected to increase the quantity bound for tangerine concentrate processing with damaged fruits in order to maintain a stable market price for quality fruit. 

Total area for Jeju Unshu oranges for MY 2014/15 is forecast at 20,570 hectares (HA), about 7 HA lower than the 20,577 HA of MY 2013/14 due to continued closure of some citrus farms and a shift in the cropping pattern to late varieties from open field Unshu production. The Jeju citrus industry can maintain stable citrus production all year round through voluntary citrus area reduction with a plan to reduce citrus area to 20,000 HA by 2017. 

Late Varieties Production Increase 

Open field Unshu production in Jeju has maintained around 500,000 – 550,000 MT per season since MY 2009/10, and greenhouse Unshu production is stable at approximately 19,500-21,000 MT as well. On the other hand, late varieties production has increased to 63,963 MT in MY 2013/14, which is 118 percent higher than the 29,247 MT of MY 2006/07. Late varieties production in MY 2013/14 amounts to 9.5 percent of total citrus production. 

Late varieties production increased rapidly among other Unshu oranges as a result of intensive investment through provision of FTA support funds by the Jeju provincial government for many open field Unshu farms in order to shift to protected cultivation (rain shelter greenhouse). Increased consumer awareness for late varieties and lower retail prices created an increase in demand. Generally, late varieties are marketed between late January and early June, so they compete against domestic strawberries in January while going against imported fresh oranges from March 1st under the preferential duty rate of the KORUS FTA. 

In MY 2014/15, utilization of Unshu oranges for concentrate production is forecast at 110,000 MT, 13 percent higher than the previous marketing year. Higher volume is mainly due to an increased quantity of non-marketable fruits caused by wind damage during the summer season. About 92,600 MT of Unshu orange were utilized for concentrate processing in MY 2013/14, which is 67 percent higher than the previous marketing year due to increased production of small fruits (classified as non-marketable fruit) resulted from fall drought in 2013. 

Reclassification of Marketable Fruit Size 

The Jeju citrus industry reclassified the size of marketable Unshu oranges in October 2014 with five new size classifications to be applied beginning September 2015. As a result of revised classification, a certain amount of small fruit, which was previously classified as non-marketable fruit at the current classification, will be included as marketable fruit from MY 2015/16. Reclassification reflects the current market trend, as consumers prefer to buy smaller Unshu oranges rather than big sizes. In addition, the Jeju citrus industry set up a new optimal production level for open field Unshu oranges at 550,000 MT down from 580,000 MT based on changed market demand. Marketing orders by the central government for Unshu oranges will be implemented when there is a 10 percent oversupply above the optimal production level. At that time, the biggest size (2L) of Unshu oranges will be excluded as marketable fruit and will be utilized for concentrate production. 

Green House Unshu Orange Production 

In MY2014/15 season, greenhouse Unshu orange production is forecast at 19,600 MT, almost no change compared to the 19,555 MT in MY 2013/14. As traditional summer fruits like watermelon and oriental melon had a lower quality (lower sugar content) during the summer season, greenhouse Unshu oranges could command a better price with increased demand. 

TRADE 

Unshu orange exports for MY 2014/15 are forecast at 3,500 MT, a similar level to the previous marketing year. As the Jeju citrus industry experienced a favorable domestic market price for the past 3 years with an optimal production level and quality fruits, not many farms were interested in joining the citrus export program. Moreover, export to the U.S. is expected to decrease as result of delayed unloading processes caused by labor issues at West coast ports at the end of 2014. 

FRESH ORANGES 

Fresh orange imports are forecast at 120,000 MT for MY 2014/15, about 19,500 MT higher than the 100,457 MT of MY 2013/14. The increase is mainly due to a recovered supply of U.S. oranges from California and a favorable duty rate of 15 percent for 2015 under the KORUS FTA. However, domestic observers are slightly pessimistic about orange imports rebounding to the peak level of 170,000 MT in MY 2011/2012 due to the fact that the imported fruit market has diversified as Korea has implemented many FTA agreements since 2003 which gives Korean consumers a choice of diversified fruit like table grapes, cherry, mango, lemon and grapefruit. On the other hand, oranges and bananas, which were traditionally recognized as imported fruit for Korean consumers before the first FTA in 2003, decreased their market share significantly to 48 percent in 2013 from 71 percent in 2003. Mango imports, mainly from Thailand and the Philippines, and recognized as an exotic fruit with an expensive price, reached 9,757 MT during the first 10 months of 2014 compared to 6,154MT in all of 2013. 

In MY 2013/14 season, fresh orange imports decreased significantly to 100,457 MT, 34 percent (about 50,000 MT) lower than the previous marketing year mainly due to damaging cold weather in California during early December 2013, and stagnant consumption in the overall Korean economy caused by a ferry accident in April which cast a pall over the country for more than 3 months. 

LEMON AND GRAPEFRUIT 

In MY2014/15, lemon imports are expected to remain stable at 13,000 MT, which is similar to the previous marketing year due to limited supply from the U.S coupled with an increased import price, while Chilean lemons are expected to increase their share with a more competitive price. Lemon imports have increased with lemonade sales during the summer season and Korea imported 13,470 MT of fresh lemons in MY 2013/14 season, up 8.6 percent from the previous marketing year. Chilean fresh lemons are expected to increase their volume significantly to 2,454 MT in MY2013/14 from 1,130 MT in MY 2012/13, while the U.S. maintained at 11,000 MT as a result of increased import prices caused by higher demand in China. 

Grapefruit imports for MY 2014/15 are forecast to increase to 20,000 MT as it’s expected to be more competitively priced compared to lemons along with an anticipated demand for grapefruit ade during the summer season. In MY 2013/14, grapefruit imports totaled 18,108 MT, 59 percent higher than the previous marketing year. As lemon prices increased, more competitively-priced grapefruit was used for ade purpose by cafes. 

Frozen Concentrated Orange Juice (FCOJ) Market Situation 

Korea’s frozen concentrated orange juice (FCOJ) imports are expected to rebound to 15,000 MT in MY 2014/15 season with an expected consumption recovery and settlement of origin verification for U.S. FCOJ under the rules of the KORUS FTA. In MY2013/14, FCOJ imports, mainly from the U.S. with zero duty under the KORUS FTA, decreased significantly by 41 percent to 13,446 MT from 22,817MT in MY 2012/13 due to the following reasons: 1) the Korean beverage market diversified into various beverages like sparkling (carbonated) water and teas, while fruit juice products, including orange juice, decreased gradually as more consumers preferred drinks with less sugar content due to health concerns; and 2) Korea suffered from stagnant consumption in the overall economy for more than 3 months since a tragic ferry accident in April 2014 cast a pall over the nation killing hundreds – many of them high school students