Countdown to Milk Price Increase... Domino Effect Expected on Bread, Snacks, and Ice Cream Prices

Ministry of Agriculture, Food and Rural Affairs: "Last year's board meeting discussed both dairy system improvement and price increase"
"No progress in system improvement... Board meeting should be reconvened to reconsider timing of increase"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] It is expected that raw milk prices will realistically increase within this month. This follows a decision made by the Dairy Promotion Board last year, raising the likelihood of a domino effect on prices of related processed products such as bread, snacks, and ice cream. The government holds the position that since the dairy system measures planned alongside the price increase have not even been discussed yet, the board should reconvene to coordinate the timing of the increase.

According to the food industry on the 12th, the Dairy Promotion Board decided last July to raise the raw milk price to 947 KRW per liter, an increase of 21 KRW, effective from the 1st of this month. Considering the industry practice of paying raw milk fees around the 20th of each month, the actually increased raw milk price is expected to be reflected from next week onward. However, the Dairy Promotion Board, which decided on the price increase, has not yet notified each milk company of the raised price.

The government, concerned about inflation, insists that the timing of the price increase should be reconsidered through the board meeting. The Ministry of Agriculture, Food and Rural Affairs attempted persuasion at the Dairy Promotion Board subcommittee meeting held on the 4th, and on the 6th, it reportedly made a similar request to the heads of nationwide dairy cooperatives. A ministry official explained, "When the raw milk price increase was decided last year, it was agreed to discuss improvements to the current dairy system and structure together. However, after one year, there has been no progress in related discussions, so a reconsideration of the price increase is necessary." The official added, "We also need to take into account that people are going through a difficult phase due to COVID-19 and rising prices."

The government hopes to convene the board as soon as possible to discuss the related matters, but there is no scheduled date yet. Among the 15 members of the Dairy Promotion Board, only one government official attends as a director and cannot issue binding guidelines or recommendations. Moreover, among the 15 directors, at least 10 must attend for a quorum, and 7 of these members represent dairy producers, making it difficult to seek cooperation.

If the board does not reconvene, the raw milk price will increase as decided last year. In this case, prices of bread, snacks, ice cream, coffee, and other products made from milk are also expected to rise consecutively. An industry insider explained, "Since milk is a fresh food, unless powdered milk is used, prices of related dairy processed products will increase in real time. With all raw material prices, including milk prices, on the rise, processing companies and small business owners have no other viable options."

Price increases in everyday food and beverage items are appearing consecutively not only in dairy products but also in other livestock products such as eggs and chicken, as well as vegetables, fruits, and seafood. According to the Korea Agro-Fisheries & Food Trade Corporation (aT), despite the government's efforts to expand imported egg supply, the price of eggs (special grade, medium quality, 30 pieces) is 7,077 KRW, 38% higher than the same period last year (5,174 KRW). Chicken (medium quality, 1 kg) is 5,643 KRW, up 14% from last year (4,932 KRW), and mackerel (medium quality, 1 fish), known as the "people's fish," is 3,485 KRW, about 17% higher than last year (2,988 KRW).

This content was produced with the assistance of AI translation services.