Domestic 'Milk Self-Sufficiency Rate' Hits All-Time Low... Rising Imported 'Sterilized Milk'

Domestic Milk Price 2.5 Times Higher Than Australia
Milk Price Exceeds 3000 Won Due to Production Cost Linkage System

Last year, the domestic milk self-sufficiency rate recorded an all-time low of 45.7%. Photo by Mun Ho-nam munonam@

[Asia Economy Intern Reporter Kim Gun-chan] Last year, South Korea's domestic milk self-sufficiency rate hit an all-time low, and there are forecasts that consumer prices for milk will exceed 3,000 won. As consumers turn to imported sterilized milk, which is cheaper than regular milk, the domestic sterilized milk market is expanding.

According to the Ministry of Agriculture, Food and Rural Affairs' data on the 'Domestic Milk Market Status and Market Share,' last year's domestic milk self-sufficiency rate was 45.7%, down 17.1 percentage points from 62.8% in 2012. This figure falls short of the target set in the 'Agriculture, Rural Areas, and Food Industry Development Plan,' which the ministry establishes every five years under the 'Framework Act on Agriculture, Rural Areas, and Food Industry.' The ministry has set this year's milk and dairy product self-sufficiency target at 54.5%.

The decline in domestic milk self-sufficiency is due to the lower price competitiveness of domestic raw milk (the raw material for milk) compared to imported raw milk. According to the dairy industry, the current domestic raw milk price is 1,100 won per liter (ℓ), which is 2.5 times higher than the 400?500 won per liter price of raw milk from Australia and New Zealand. Actual imported raw milk volume is also increasing. Last year, the imported raw milk volume was 2.414 million tons, nearly double the 1.248 million tons imported in 2012.

With the likelihood that domestic raw milk prices will be determined based on the production cost linkage system through this year, there are forecasts that consumer prices for milk will exceed 3,000 won. The production cost linkage system, introduced in 2013, sets raw milk prices according to dairy farmers' production costs and inflation.

The retail price of milk is expected to exceed 3,000 won due to the production cost linkage system.
[Image source=Yonhap News]

This year, domestic raw milk prices are expected to be set around 52 won per liter (±10%), combining the 18 won per liter production cost increase carried over from 2020 and the 34 won increase this year. Considering that last year consumer prices for milk rose by 21 won per liter, increasing by 150?200 won, this year’s price is expected to rise by about 300?500 won. As of the 21st, the average consumer price of milk nationwide is 2,628 won per liter. This is why there is a strong expectation that prices will surpass 3,000 won per liter.

Consequently, more consumers are turning to imported sterilized milk, which is cheaper than domestic milk. Sterilized milk differs from regular white milk (pasteurized milk), which is minimally sterilized at low temperatures to eliminate harmful bacteria and microorganisms. Sterilized milk is sterilized at a high temperature of around 150 degrees Celsius for about 2 to 5 seconds longer. As the name suggests, it is milk that has been aseptically packaged after eliminating all bacteria and microorganisms in the raw milk.

The biggest advantage of imported sterilized milk is its lower price compared to domestic regular milk. The price of 1L of Polish sterilized milk distributed in the market is around 1,500 won, about half the price of regular milk (Seoul Milk at 2,700 won). Another advantage is its much longer shelf life. Unlike regular milk, which has a short shelf life of about 11 to 15 days after production, sterilized milk has a minimum shelf life of six months. It is aseptically sealed in containers made of materials such as aluminum, reducing the possibility of spoilage or deterioration and allowing for room temperature storage.

Sterilized milk is being delivered to disaster victims affected by the wildfire in Gangwon Province, as well as to firefighters, volunteers, and other support personnel working hard on recovery efforts.

Kim, a worker in her 20s who has purchased sterilized milk, said, "I usually eat cereal for breakfast, but regular milk has a short shelf life, so I always worry about how much to buy each time." She added, "Sterilized milk has a long shelf life and is cheap, so I will continue to buy it frequently."

Professor Lee Eun-hee of Inha University's Department of Consumer Studies analyzes that it will be difficult for consumers to continue purchasing domestic regular milk, which is rising in price regardless of demand. Professor Lee said, "Since overall prices have risen, consumers are not in a position to buy expensive milk to support livestock farmers," adding, "Because imports of sterilized milk cannot be blocked, the number of consumers choosing sterilized milk will increase." She continued, "When consumers choose milk, their criteria are freshness, nutrition, and price. If there are no issues with freshness or nutrition, cheaper sterilized milk can become the consumers' top choice."

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