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TRADE – FTA between South Korea and Colombia will benefit Colombian coffee growers

BOGOTA, Colombia – The Colombian Coffee Growers Federation (FNC) expressed its support of the Free Trade Agreement between Colombia and South Korea in a communication addressed to the Colombian Minister of Commerce Industry and Tourism.

Since a high portion of Colombia’s coffee is exported to more than 80 countries around the world, FTAs are seen by Colombian coffee growers as opportunities to broaden their access to different markets in more competitive conditions.

The agreement with South Korea will provide diverse possibilities of Colombian coffee access to one of Asia’s most dynamic markets. Tariff removal will strengthen the presence of Colombian coffee in Korea’s market, which is expected to significantly increase consumption in the upcoming years.

In addition to standard green coffee, Colombia currently exports specialty and industrialized coffees to Korea. Additionally, several Colombian brands, such as Juan Valdez Café, are present in the Korean market through coffee shops and supermarkets.

According to Luis G. Muñoz, CEO of the FNC, “Korea currently consumes a total of 1.7 million bags of coffee. In 2013, Colombian coffee accounted for 15% of Korea’s total coffee consumption. The FTA will help us restore competitiveness against other countries that have already established FTAs with Korea.”

The core aspects of the FTA regarding the Colombian coffee sector include:

Access to markets:

  • The 2% tariff on green coffee will be removed immediately.
  • The 8% tariff on roasted coffee will be removed within three years.
  • The 8% tariff on instant coffee and coffee preparations will be removed over a period between 0 and 3 years.
  • Norms requiring the use of origin coffees for export, with preference for roasted or instant coffees, were defined.

Coffee Market in Korea:

  • In 2013 Colombia exported more than 244,000 60 kilo coffee bags.
  • In 2013, coffee consumption in South Korea reached a total of 1.7 million green coffee bags. An average annual domestic consumption growth of 2.8% is expected until year 2016.

Instant coffee consumption is predominant in the domestic market.

However, driven by the specialty and gourmet coffee market, roasted and ground coffee consumption is expected to increase at a higher rate (annual average of 3.6%) than instant coffee (annual average of 2.8%).