Milk supplier plans to cut prices

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Milk supplier plans to cut prices

Seoul Dairy Cooperative said it will lower delivery prices of five products from Seoul Milk’s Na100% line, starting Oct. 1.

The company’s decision follows a price cut in June of 18 won ($0.016) on a liter of raw milk. “We expect the reduction to lower the consumer price of Na100% milks placed in discount chains by 40 won to maximum 100 won,” a source said.

The Korea National Council of Consumer Organizations criticized milk companies in July, including Seoul Milk, for not actively applying the reduced price of raw milk to its products. “Their response is slow compared to 2013, when companies raised product prices by 214 won only two months after raw milk prices increased by 106 won,” an organization official said.

In 2013, the Ministry of Agriculture, Food and Rural Affairs implemented a sliding price system for the milk industry, as milk farmers and dairy companies repeatedly disagreed on the price of raw milk. Since then, prices have been decided by the government according to the production cost and inflation rate.

There are mixed views on the system: critics say the reduced demand and rise in supply for milk are not being reflected in its consumer price, consequently ignoring the market.

Other milk companies seem to feel more pressure now that Seoul Milk, the industry’s No. 1 by market share, has finally decided to cut prices. “Apart from holding sales events at discount stores, we are looking into lowering our product prices as well,” said a Namyang Dairy Products spokesman.

Maeil Dairies also said they have been considering a price cut since June, but that the decision was taking some time due to the unfavorable market situation. According to the Diary Committee under the Ministry of Agriculture, Food and Rural Affairs, milk consumption per person in Korea was 26.6 kg in 2015, a 13 percent decrease from 30.8 kilograms in 2000.


BY YOO BOO-HYEOK [song.kyoungson@joongang.co.kr]

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