I was going to comment on this, but thought I would stick with a classic theme today given the senseless venom recently. From the Korea Times today:
Banana prices, are up 41 percent from a year ago at E-Mart, with 13 kilos costing about 20,000 won, or about 15 dollars… According to retailers, two factors played a large role in the increase in imported fruit prices…The plunge in the won was one. But recently, a “banana diet” fad has been sweeping Japan.
I guess one could blame the Japanese for high prices in Korea. Of course, as you may guess, my feeling is the reason a fruit Korea does not commercially produce is so expensive is bananas carry a 40% tariff. That’s right, Korea maintains a 40% tariff TO PROTECT FARMERS WHO DO NOT EVEN EXIST!
Meanwhile from the same article:
Oranges have become even more expensive. A 15-kilogram case costs 54,500 won, up 82 percent from a year ago… As for expensive oranges, a 30 percent reduction in harvests in California and other producing regions, coupled with a strong dollar, are key factors in price hikes.
Well it’s that, and an orange tariff that ranges between 50-144%, PLUS a quota system that only allows just so much citrus in a year, which limits supply and drives prices up further.
{ 29 comments… read them below or add one }
Flame away gents. Boy I am lucky I don’t come here for my self-esteem.
I don’t much about tariffs, but how can these high taxes be accepted by the people?
They probably don’t even know about them? How do people accept such high income taxes in Canada?
I mean taxes in general like GST and PST too.
Because bananas are not Korean. Try putting a levy on persimmons or jube jube’s and see how long it will last before they storm the palace.
In all fairness, Korea hardly has the monopoly on screwball taxes and tariffs.
Agriculture policy worldwide is pretty much just one giant flirtation with idiocy.
When you make your points obvious, and not like some inside joke between you and yourself, you actually dig up some interesting stuff.
And people accept ridiculously high tarrifs because they are a hidden tax, you can’t miss the 40% that comes from your pay packet in Australia. But it is easy to blame high prices on global market/ lackn of competition/ profiteering chaebols before looking at the tariffs.
@5 I wish that was the case:
Persimmons up to 50% tariff
Jujubes up to a 611% tariff
And I don’t want to look into it, but I think both are subject to a quota as well.
By the way, what’s up with the 45% tariff on Durians? That Korean Durian lobby must be pretty influential.
1. Great title!
2. The venom is not senseless at all.
3. It doesn’t matter that Korea has no banana crop … the tariff is on imported fruit to encourage consumption of Korean-grown fruit. In that sense IT IS PROTECTING FARMERS WHO DO EXIST.
You just can’t help yourself can you?
My common-sense explanation defeats your snarkiness.
I get the idea, but come on exactly how much would durian consumption impact the price of apples? Exactly what fruit is a substitution for the notorious durian? Again thought, I see your logical point.
What always gets my dander up is not just the scapegoating (its the Japanese! The Chinese!) its the fact that these are PERFECT opportunities for the government and FTA supporters to point out how an FTA will improve the lives of the Korean consumer. Yet nothing seems to be said about this important aspect.
Uh, so how does the tariff lead to a dramatic increase in the price of bananas and oranges? Has the tariff suddenly increased?
Since the article was about the INCREASING price of fruit, saying that fruit in Korea is already expensive misses the point.
Being anti-tariffs is fine with me. But your criticism of this article was wrong (yet again).
From a development perspective, Korea values savers, not consumers. The wealth of the nation is supposed to be deposited in banks and lent out to chaebol exporters. It is expressly NOT supposed to be walking around in people’s wallets for pissing away on any little bit of consumption that meets their fancy. That sort of behavior is for Americans and Europeans – the people who buy the chaebol’s export goods.
When you say ‘the Korean consumer’, you speak not of a force of growth, an engine of development, a free-thinking individual making personal value-maximizing choices in a free market and exercising democratic liberties in the arena of commerce; no, you speak of a destructive animal that must be kept caged for its own good, lest the nation-building enterprises of the patriotic chaebol be starved of desperately-needed capital.
With that, I bid thee all farewell for a couple of weeks. Sawatikaap!
Banana diet works. However, it is very dangerous. The diet could be lethal.
Many die after stepping on the Banana peel.
@13 I understand the math, and how propotionaly it all works out. If bananas were a $1 on the world market they retail for $1.40 (for the sake of argument). If the world price doubles, $2, the reail price is $2.80. There is no difference in the proportion of increase. I get that.
However we are not talking about a purely mathmatical construct, we are talking about at what physiological price level a good goes “cheap” to “expensive”. Or to put it in more economic terms as I understand them, at what margin does the demand curve approach a unity elasticity.
To go back to our sample banana figures, I would speculate, given the KT’s characterization the article, that such a “cheap/expensive” point is somewhere between $1.40 and $2.80. To make it easy, lets say this give us 140 possible points. A majority of those points (around 60%) are above the world clearing price. Which gives us a 60% chance that the “cheap/expensive” is above the world price. Er go, more likely than not, the tariff makes the bananas now “expensive” to the average Korean.
One word- substitutes. Yes there are no banana farmers in Korea, but bananas are a substitute for Korean grown fruits like those little yellow melons.
Cheap bananas equal less purchases of those Asian pears and melons. I know when Koreans come stateside they buy bananas like there’s no tomorrow stuff their kids faces with them telling them that they are so lucky they can eat bananas because they are so expensive in Korea or some crap like that so maybe those Korean pear and melon farmers have something to fear…
So THEY can piss it away,literally, in the form of 500,000KRW of bad whiskey swilled in a room salon after having been poured over some obliging agassi’s genitals.
Delish. But watch out for the pubes! They stick to the back of your throat. Talk about a choking hazard.
And it’s 700,000KRW nowadays.
And there used to be banana farmers on Jeju. Stubby, tasteless things grown in diesel-heated vinyl greenhouses. A tour of the farm was part of the 3-night 2-day Jeju package. Talk about a sparkling getaway. And they cost $2 each. The banana that is. Not the farmer. Or the getaway.
The substitute for durian is liquid ass. Pour it over your custard. What’s the tariff on that?
quota you say…hmmmmmmm… taht’ll explain the lack of limes.
seouldout, you say there “used to be” bananas from Jeju; don’t they still? i could’ve sworn i’ve seen little bundles of pricey rotting bananas in Hanaro-Mart, but don’t quote me on that… if they’re not producing anymore, why not?
This has nothing to do with non-existent exports. Actually, I recall that in the 70′s the import of bananas were tied to apple exports, making the price of bananas temendously more expensive than they are now. Perhaps this is the same logic that applies today.
I’d like to know why it’s easy to find bananas from the Philippines in Eastern Canada that are still green, but not so in South Korea.
“but bananas are a substitute for Korean grown fruits like those little yellow melons”
Melons aren’t a substitute for bananas, though (no pun intended…get your mind out of the gutter).
@ seouliva: Goodness, I hope Jeju farmers are out of the banana market.
In the late 80s and early 90s bananas cost $2. Each. One-third a banana would be the center piece of the room salon’s fruit anju plate, and the guest of honor was given that third of a banana. Nifty.
These were black market bananas, often smuggled off the bases. There were also toothless grannies who, when not sucking the skin off of grapes for Bong Bong juice, were professional ferry riders, regularly traveling the Busan – Japan circuit. The grannies smuggled in what the market wanted: Sony walkmen, Nikon lenses, manga, and bananas. Each granny was permitted to carry in two bunches. Can you believe it? Smuggling bananas…that’s uniquely Korean.
Due to tariff and non-tariff barriers the market was quite distorted, and Jeju farmers – with the encouragement and cash of the gov’t – jumped into the fray to provide equally expensive bananas. “What the heck, we’ve got the world’s most expensive rice, let’s make the cheapest fruit insanely expensive too” was the conventional wisdom of the day. And of course they were called urinara banana. Pineapples too. Surprise, these were called urinara pineapple. National pride taken to absurdity
Jump forward a few years, and Korea had to “liberalize” to be a founding member of the WTO. Korea’s grand concession to freer trade was (Can you guess it? Can ya?) bananas. “Aigo, the betrayal!” wailed Jeju banana growers as they beat their chests and set themselves alight. Of course it’s been more than decade since the WTO’s formation, and Korea taxes bananas 40%. If the price of Philippine bananas rises further there may be a few Jeju farmers tempted to dust off and fire up their diesel heaters. You may yet still taste the pride of Jeju.
Ain’t that bananas?
“In the late 80s and early 90s bananas cost $2. Each. One-third a banana would be the center piece of the room salon’s fruit anju plate, and the guest of honor was given that third of a banana. Nifty.”
My wife told me about how her friends were green with envy when my mother-in-law had bought a dozen bananas. She placed the bananas where they were in clear view of anyone who entered their home.
“These were black market bananas, often smuggled off the bases. There were also toothless grannies who, when not sucking the skin off of grapes for Bong Bong juice, were professional ferry riders, regularly traveling the Busan – Japan circuit.”
I don’t know how busy the ferries are nowadays, but this was still common a few years ago.
Pity the avocado isn’t highly appreciated in Korea. What are they? 10,000KRW each?
Mangoes! They’re sweet, cheap, and Koreans love ‘em. Tax the bejeezus out of them. Betcha a low-end cell phone costs less than a mango.
nice post.
Mangos: 30%
Avocados: 30%
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