Australia the flavour for corn snack growth
GroundCover™ Issue: 113 | Author: Catherine Norwood
South Koreans love Australian maize. The taste and quality have made it a winner in the country’s expanding corn snack-food market, with converts including the international confectionery conglomerates Lotte and Frito-Lay.
One of the most enthusiastic advocates of Australian maize is Un Hwan Yum, senior managing director of Dong Il Grain, South Korea’s largest dry miller of maize, which produces hominy and grits for breakfast cereals and snack foods, as well as cornflour.
In 2006 Mr Yum made a strategic business decision to source as much maize as possible from Australia, competing on quality, rather than price, and also on Australia’s GMO-free status.
He says “rightly or wrongly” many consumers in Korea regard GM foods as “Frankenstein” foods. National regulations might allow a three per cent tolerance for unintentional contamination with GM grains, but many consumers have zero tolerance. South Korea has had mandatory GM content labelling laws since 2000.
All this means that about 90 per cent of the 60,000 tonnes of maize Mr Yum mills each year is sourced from Australia, with the remainder coming from South America’s non-GM stocks.
“Since I have been using almost exclusively Australian corn the market for corn snacks has expanded,” Mr Yum says. “Consumers have recognised the difference, the good taste.”
Mr Yum targets the Pioneer® hybrid grit variety 32P55, which makes up most of his Australian shipments.
Dong Il Grain’s main customer is Lotte, which produces the popular Kko Kal corn snack. Lotte also has a joint venture with Frito-Lay (part of PepsiCo) producing Doritos corn chips and other snack foods in South Korea.
Mr Yum is confident the market for corn products will continue to grow. He says the main target of snack foods is the youth market. While South Korea currently has almost zero population growth, government policies are now in place to encourage families to have more children.
Social policies to lift the birthrate and the increasing wealth of consumers are both positives for his market, as corn products are traditionally more expensive than wheat-based products, and consumption increases with wealth.
“At the moment, 70 per cent of snack foods are wheat-based products and 30 per cent are corn. I think that could be 50:50 if I can persuade my end users to develop more corn-based products,” he says.
Having increased milling capacity from 30,000t in 1996 when he acquired Dong Il Grain, to 60,000t in 2013, Mr Yum will further expand capacity to 75,000t within the next year. However, he says one of his most significant, ongoing issues is securing a stable supply of maize from Australia, even with a price premium on offer.
Infrastructure issues in both Australia and South Korea also add to his costs. Most Australian exports arrive by container because of difficulties securing bulk deliveries, including access to loading facilities at ports.
Once containers arrive in South Korea it costs an extra $20 to $25/t to take them from the country’s only container port at Busan, cross-country to Ansan where the Dong Il Grain factory is located. A container port is being built at the nearby Incheon Port but is still several years from completion.
Mr Yum is a regular visitor to Australia, trying to persuade northern region growers to plant maize, rather than cotton or sorghum. “As long as growers can produce maize, they will be able to sell it,” he says.
President of the Maize Association of Australia Harley Bligh – who regularly sells into the Korean market – says the decision to grow maize is not as simple as having a buyer, or even a good price.
“Almost all maize in Australia is irrigated, and as an irrigator I have to look at the return per megalitre of water used,” he says. “The best return is not always from maize, particularly when cotton is an option.” But he says there is potential to expand maize plantings in areas such as northern Victoria, where it is too cold for cotton.
South Korea is also not the only market for Australian maize. Mr Bligh says a study funded by the GRDC and the Queensland Department of Agriculture, Fisheries and Forestry identified strong niche food markets for GMO-free maize in Japan, South Korea and potentially in Taiwan.
The maize wet-milling market is far larger than the dry-milling market. In South Korea 96 per cent, or 1.92 million tonnes, of food-grade maize imported annually is used for wet milling. This includes both GM and non-GM maize, and produces most of the country’s sugar supplies, as South Korea does not have a sugarcane industry.
Dry milling tempers maize in water for up three hours before grinding begins, to separate the grain germ and endosperm, and produces dry products such as grits and flour. Wet milling soaks maize for up to 36 hours in water and sulfur dioxide, breaking down grain enzymes. This process produces a wider variety of products including corn oil and starch. However, this wet milling is not the market Australia is targeting.
“Particularly in South Korea and Japan, they are very conscious of their food and the source of food and what’s happening in their food chain, which augers well for us,” Mr Bligh says.
“North Asia is confident of our GMO-free status, and Australian varieties are not US varieties adapted to Australia. They are hybrids produced locally, mostly by Pacific Seeds and Pioneer, who bring germplasm from all over the world to breed for our conditions. The resulting hybrids are harder than US varieties, which is better suited to the dry-milling process.”
Mr Bligh says the high Australian dollar has been an impediment to developing export markets, as has been managing seasonal production variations. If there is a supply shortage, most of this is consumed by the domestic feed market.
However, he says, the Maize Association of Australia will keep working to build production and to build a stable, high-value niche market for Australian growers.
More information:Harley Bligh,
GRDC Project Code GTA10785
Region National, North, Overseas, South