Changing the 'Kkamkkami' Egg Trading Practice... Introducing Standard Trading Contracts Reflecting Actual Transaction Prices

Producer Group Price Announcement → Chukpumwon Investigates and Announces 'Sanji Transaction Prices'
Egg Supply and Price Forecast Range Expanded from '3 Months to Within 6 Months'

The government has decided to improve the farmgate price survey system and trading practices to enhance transparency in egg pricing.

The Ministry of Agriculture, Food and Rural Affairs announced on the 31st that it will improve the egg farmgate price survey system and opaque trading practices that have been ongoing for over 60 years.

Producer organizations have been announcing egg farmgate prices since the 1960s. A ministry official explained, "This method presents a hoped-for transaction price (a kind of negotiation reference price) rather than the actual transaction price between farmers and distributors," adding, "Producer organizations have continued this price announcement method under the pretext of protecting producers, who have weaker bargaining power compared to distributors."

Additionally, egg distributors have customarily used a so-called 'post-term discount payment' method, where the purchase amount is not finalized when buying eggs from farms but is settled 4 to 6 weeks later after considering the proportion of defective eggs found during sorting and the prices at which they sold to delivery companies.

A customer is purchasing eggs at a large supermarket in Seoul. Photo by Jinhyung Kang aymsdream@

The ministry views the producer organizations' price announcements and distributors' post-term trading practices as factors that have caused mutual distrust and hindered transparency in egg price formation and transactions. There have been external criticisms that price announcements accelerate price increases but slow down price decreases, and due to post-term trading, farmers have often faced uncertainty about the prices they receive for their products for some time. These price announcements and trading practices have ultimately made it impossible to form representative farmgate transaction prices, hindering the development of diverse egg distribution channels and increasing transaction costs.

Accordingly, since 2021, the ministry has discussed improvement plans with related organizations but failed to make progress due to significant differences in opinions. However, last year, it conducted a research project (September to December 2023) to establish a representative egg farmgate price survey system and held continuous consultations with related organizations (January to July 2024) to introduce a trading method based on mutual trust, resulting in the current improvement plan.

First, distributors will be required to use an 'Egg Standard Trading Contract' specifying actual transaction prices and inspection standards when trading with farms. This will be implemented through mutual agreement between farmers and distributors, with plans to institutionalize it through legal amendments in the future. The standard trading contract to be used in future transactions was drafted through consultations between producer and distribution organizations, and to promote its use, industry-targeted publicity will be strengthened, and incentives such as priority listing on online wholesale markets will be provided.

Transaction prices will be surveyed and announced by the Livestock Products Quality Evaluation Institute, and the producer organizations' price announcements will be abolished. To increase the representativeness of the surveyed prices, a scientifically based sample of a certain number of key farms and distributors will be selected by region, and actual farmgate transaction prices excluding post-term trades will be surveyed and announced daily. In the future, verification, supplementation, and advancement will be pursued through a consultative body composed of egg-related organizations and experts.

At the same time, observation will be strengthened so that producers and distributors can make rational farming and management decisions based on future supply and demand forecasts. Using information such as layer hen stocking data and egg traceability information, the observation period for egg supply and price forecasts will be expanded from the current within 3 months to within 6 months, provided monthly.

The ministry expects that these improvements in trading practices will enable the formation and presentation of representative egg farmgate prices, allowing producers and distributors to trade through various channels such as direct transactions, online, and auction markets, thereby reducing negotiation and transaction costs. Consumers will also be able to purchase eggs at more reasonable prices, and by utilizing various information collected during the survey process to enhance observation, stable egg supply and price management can be promoted.

Kim Jeong-wook, Director of Livestock Policy at the Ministry of Agriculture, Food and Rural Affairs, said, "We have improved the investigation and announcement of egg price information, which the public consumes daily, to be objective and transparent so that consumers can make rational choices," adding, "We will actively work with producer organizations and others to ensure stable egg supply management."

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