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[Alpha Biz=(Chicago) Reporter Kim Jisun] There is a high possibility that the consumer price of 1ℓ of white milk will rise to KRW 3,000. This is because the increase in the price of raw materials, wonyut, has become a fait accompli. The government has launched a preliminary crackdown as concerns over "milk conditioning" (milk + inflation) have grown due to rising milk prices.
According to the Ministry of Agriculture, Food and Rural Affairs, the Dairy Promotion Association, which consists of dairy farmers and dairy industries, held negotiations to determine the extent of the increase in raw milk prices to be applied this year. The Dairy Promotion Association has continued 10 rounds of negotiations until the 24th, but has yet to narrow differences. A conclusion will be reached at the 11th round of negotiations scheduled for the 27th at the earliest.
The government believes it is inevitable to raise the price of raw milk this year. This is because the price of feed has risen significantly around the world due to the war between Russia and Ukraine and abnormal weather, increasing the burden on farms. In fact, the production cost of crude oil in farms last year was 570.34 won per ℓ, up 13.7% from a year earlier. "Considering that farmers have endured more than a year, a certain level of increase in milk prices is inevitable," said Kim Jung-wook, a livestock policy officer at the Ministry of Agriculture, Food and Rural Affairs.
According to the true price of the Korea Consumer Agency, the price of a pack of 1ℓ milk is currently around 2,800 won at large discount stores. At this rate, it is likely to exceed the 'psychological Maginot Line' of 3,000 won within the year.
The government has already contacted the industry and is cracking down on it in advance. The Ministry of Agriculture, Food and Rural Affairs met with about 10 milk companies including Seoul Milk, Maeil Dairy and Namyang Dairy on the 7th to ask them to refrain from price hikes, and will hold another closed-door meeting on the 28th.
In addition, we are considering rationalizing consumer prices by improving distribution structure. "In general, retailers such as large discount stores, convenience stores, and supermarkets set a distribution margin of more than 40% of the delivery price of white milk," policy officer Kim said. "In order to lower the price of white milk, there is room for improvement in the distribution sector such as distribution efficiency as well as producers and consumers."
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
