Government and Consumer Group Pressure Plus Imported Product Onslaught... Dairy Industry Faces 'Triple Hardship'

Drinking Milk Raw Milk 88 Won per Liter, Processed Milk 87 Won↑
Price Increase Inevitable Considering Production and Distribution Costs
Careful Consideration of Appropriate Level Amid Inflation Concerns

The dairy industry, having received the agreed-upon basic price plan for raw milk (原乳), has entered a period of deliberation over how much of this increase should be reflected in product prices. With the government repeatedly urging the food industry to curb price hikes to control inflation and consumer groups criticizing excessive price increases, cautious maneuvering is expected to continue. The market is also expanding with imported sterilized milk priced at about half the cost of domestic products, placing the industry under a 'triple burden.'

A customer is selecting milk at Seoul Hanaro Mart. Photo by Heo Younghan younghan@

According to related industry sources on the 29th, the Dairy Promotion Committee subcommittee, composed of dairy farmers and dairy industry representatives, reached a tentative agreement during the 11th meeting of the raw milk basic price adjustment negotiation subcommittee held late on the 27th to raise the basic price of raw milk used for drinking milk products such as fresh milk and fermented milk by 88 KRW per liter starting in October. This comes 49 days after the first meeting on the 9th of last month. The basic price of raw milk used for processed dairy products such as cheese, condensed milk, and powdered milk will increase by 87 KRW. This increase is the second largest since the introduction of the raw milk price linkage system in 2013, when the increase was 106 KRW.

If the raw milk basic price increase proposal passes the Dairy Promotion Committee board meeting scheduled for the 10th of next month, it will be applied from October 1. Dairy companies are likely to reflect the increase in product prices with a delay of about 2 to 3 weeks, considering distribution stages. Currently, the consumer price of fresh milk from major dairy companies is formed in the high 2,000 KRW range per liter at large supermarkets, and it is expected to exceed 3,000 KRW for the first time.

Dairy companies collectively stated, "Based on the agreed increase in the basic price of raw milk, we plan to set product prices within a range that minimizes the burden on consumers." Nevertheless, they maintain that an increase exceeding the basic raw milk price is inevitable due to overall rises in costs related to production and distribution until the product reaches consumers.

On the other hand, the government is requesting the industry to refrain from excessive price hikes due to concerns about food price inflation. Just the day before, the Ministry of Agriculture, Food and Rural Affairs met with the dairy industry and urged, "Please actively cooperate to ensure that the increase in raw milk prices does not lead to excessive price hikes in fresh milk." The government is also pressuring to prevent price increases in processed foods using milk as an ingredient, such as ice cream, bread, and snacks, stating that the impact of rising raw milk prices on these products is limited. This is because general frozen desserts contain little to no dairy products, and the proportion of dairy used in bread and snacks is only about 1 to 5%. The Korea Consumer Organization recently issued a statement criticizing major dairy manufacturers for raising product prices two to three times higher than the increase in the basic raw milk price, thereby doubling the burden on consumers, and warned against pursuing company profits through excessive price hikes.

Meanwhile, as the import volume of relatively cheaper foreign milk has significantly increased, consumers are turning their attention to these products. Interest in imported sterilized milk has grown. According to customs export-import trade statistics, milk import value in the first half of this year was 15.31 million USD (approximately 19.7 billion KRW), a 46.1% increase compared to 10.48 million USD during the same period last year. In terms of import volume, it was 18,346 tons, up 25.3% from 14,639 tons in the previous year. Both import value and volume have roughly doubled compared to the first half of 2021 (6.74 million USD, 9,283 tons) over two years. Polish sterilized milk, which accounts for 88% of imported milk, is priced at about 1,300 to 1,600 KRW per liter at supermarkets, roughly half the price of domestic fresh milk.

A dairy industry official emphasized, "Milk consumption is steadily decreasing, and if product prices rise too much, consumers will turn away even more. We have no choice but to carefully consider various variables until an appropriate price level is determined."

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