Hike in milk price put off by pressure

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Hike in milk price put off by pressure

A price increase in milk products has been temporarily suspended after negative reactions from consumers, the government and large retailers.

The nation’s leading milk producers - Seoul Milk, Maeil Dairy and Dongwon F&B - said last Thursday they would not raise the price of milk products after large discount stores decided to retail them at existing prices due to the government’s pressure and a backlash from consumer organizations.

Stiff competition among discount chains also played a role in the decision.

At first, E-Mart, Homeplus and Lotte Mart planned to raise the prices of 40 milk products by Maeil Dairy, including the 1-liter Maeil ESL White Milk, by 10.6 percent from 2,350 won ($2.11) to 2,600 won on Thursday.

But after discount retailer Hanaro Mart said it would maintain the prices of all milk products, the situation changed. Each discount store chain restored the old prices.

Then Maeil Dairy announced it will hold its price hike for the time being.

Seoul Milk and Dongwon F&B also said they will tentatively suspend their price hikes considering market conditions.

E-Mart, Homeplus and Lotte Mart announced they will give refunds to consumers who purchased products at increased prices Thursday morning.

The top dairy companies said they will need to raise prices down the line. Since Aug. 1, when the price of raw milk increased 106 won per liter, the diary companies have complained that they are losing around 100 million won every day.

The dairy manufacturers, retailers and consumer groups met last Friday to exchange views.

Meanwhile, the Korea National Council of Consumer Organization suggested the dairy industry hold “shared growth” meetings of consumers, manufacturers, retailers, government officials and outsiders.

The organization said raising the price of milk by 250 won per liter is unfair when the price of raw milk only rose 106 won.

“There should be a price policy that not only considers manufacturers but also consumers,” said Kim Yeon-hwa, the chairwoman of the consumer organization. “If the dairy companies are in a really difficult situation, we should seek a win-win strategy in which the retailers and consumers can share the burden together.”

According to retail industry yesterday, sales of milk have stayed almost the same since Aug. 1, when the price hike was forecasted.

BY KIM JUNG-YOON and KOO HEE-RYEONG [kjy@joongang.co.kr]
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