In my last column I covered the Japan leg of a 10-day trade mission in Asia. After tasting the best ramen and okonomoyaki (a cabbage pancake topped with meat) that Osaka had to offer, we flew to Seoul, South Korea.
We attended a briefing at the Canadian embassy where we learned that Koreans tend to be brand conscious and price sensitive buyers. The embassy staff were excited about the imminent ratification of the Canada-Korea Free Trade Agreement. The agreement eliminated 82 per cent of tariffs immediately and 98 per cent of tariffs will be reduced over time.
We learned some interesting facts about Korean demographics lifestyle. Twenty-five per cent of Korean households have only one person and by 2020, 16 per cent of Koreans will be over 65 years old. (In Canada’s 2011 Census, 14.8 per cent of the population was found to be 65 or older.)
According to the embassy staff, there is one restaurant in Seoul for every 100 people. By comparison, in North America, there is about one restaurant for every 300 people. We ate at just a handful of these many restaurants during our time in Seoul. Some of them only seat half a dozen people and sometimes there are four in a row that look like they’re serving the exact same thing. It makes you wonder how customers choose one over the other and how any of them make money.
- More Grainews: Part 1 of Sara’s trade mission to Asia
The second day in Seoul was our trade show. As in Japan, the Alberta government provided interpreters for each exporter. Our interpreter that day was Sunny, but before long, we were calling in embassy staff to assist, as there were so many interested buyers at our booth.
In Japan, buyers would study our booth from a reserved distance before they came up and talked to us. In Korea, if the interpreter and I were talking to one buyer, that wouldn’t stop another party from coming up immediately initiating a conversation with Curtis.
Grain traders, feed buyers and food processors expressed interest in flax (fortunately Korea doesn’t have the same kind of import restrictions as in Japan), feed grains, oats, barley for tea and pulses (apparently a Korean pop-star recently blogged about having lentils for breakfast).
Throughout the years that our company has exported rye seed to Korea, we have received several visits to our farm and seed plant from the Korean buyers. They are deeply interested not only in seeing our rye crops and the facility where the seed is cleaned, treated and bagged, but in all of our crops and in the various machines we use to plant and harvest it. Several buyers at the Korean trade show also expressed interest in visiting our farm.
One buyer said he was looking to secure 50,000 metric tonnes of feed barley, but he wanted “to meet the farmer who grew it.” When I said he might have to meet a dozen farmers to supply that kind of demand, he said yes, “I will come to your farm and you can organize the meeting.” The “farm to fork” movement is certainly alive and well in South Korea.
Since returning home I have been engaged in a number of email conversations with buyers I met at the trade show and some people who received my contact information from the embassy. I have a lot to learn as our previous export business and freight forwarding was handled by our broker.
If we make a deal, our grain would be travelaling by shipping container. Freight is relatively cheap for containers going from North America to Asia, since many containers travel here from Asia full of goods and have to return empty. The expensive part is actually the land transportation of the container. It costs about $30 per tonne to have a 40-foot container make the 260 kilometre round trip from Calgary to our loading facility and back to the rail yard. For a small shipper like ourselves, it then costs about $140 per tonne to have that container transported 8,600 kilometres from Calgary to Busan, Korea.
Economies of scale are the backbone of global shipping and I’m sure my rate from the steamship company would be much more favourable if I was shipping hundreds or thousands of containers a month. And, price is not the only factor. Availability is also integral. A steamship company might provide a good rate, but if they seldom spot containers in our area, we may be stymied.
At this point in the process, shipping grain overseas seems risky, confusing and a long way from reality. I know it won’t happen overnight and it may require some more overseas travel, but I am enjoying the challenge.