Consumer group asks for hike rationale

The Korea National Council of Consumer Organizations said yesterday it won’t negotiate with dairy companies pushing ahead with a 250 won ($0.22) per liter price hike unless they disclose details justifying the hike.

The organization held a meeting yesterday with its 10 affiliated consumer groups to discuss the dairy manufacturers’ plans to raise prices. After getting feedback from the groups, the organization said it needs solid justification for the price hike.

Consumer groups have continuously called for specifics to justify the increase since the price of raw milk has only risen 106 won per liter.

“Our role is to do everything we can so that consumers can make reasonable purchases,” said a spokesperson for the organization. “When we receive details justifying the hike from dairy manufacturers, we plan to release them to the media and let consumers decide whether the hikes are justifiable.”

The dairy industry said providing justification is impossible.

Maeil Dairy, the first to try to raise prices of milk, considered disclosing data explaining the hikes to the public, but later said it couldn’t release cost breakdowns because they are confidential.

When grounds for a price hike are released, the profit margins of retailers and manufacturers can be estimated.

Seoul Milk and Namyang Dairy are not even considering releasing any new data.

“Although the Korea National Council of Consumer Organizations requested justifications for the price hike, we are not considering making data public as it is confidential data,“ said a spokesperson for Seoul Milk. “We are looking into various ways to solve the problem without revealing the data.”

Dairy manufacturers, including Seoul Milk, are postponing negotiations with consumer organizations as they try to convince discount retailer Hanaro Mart to go along with the hikes.

Price increases for milk products scheduled last week were scuttled when Hanaro Mart said it would maintain all prices of milk products. It’s competitors followed suit.

Seoul Milk reportedly negotiated with Hanaro Mart Wednesday but did not reach an agreement.

After Aug. 1, the dairy companies said they need to raise prices because the price of raw milk increased 106 won per liter. The companies have complained that they have been losing around 100 million won every day since.

BY KIM JUNG-YOON [kjy@joongang.co.kr]