E-Mart backs out of chicken price increase

E-Mart, Korea’s largest discount retailer, decided to lower raw chicken prices on Friday after the government asked the retail chain to refrain from raising prices if possible.

It is the second time this month that the government has directly intervened in price changes related to chicken as the poultry industry is still reeling from the effects of a nasty bird flu outbreak early this winter.

On Thursday, E-Mart raised the price of 1 kilogram (2.2 pounds) of raw chicken from 5,180 won ($4.61) to 5,980 won at its 147 branches across the country, citing rising producer prices at farms. It was the first price increase in 40 days.

Then on Friday, the retail chain announced it would back away from the price hike.

“The government has asked us to cooperate in staying away from raising chicken prices, and we agreed with the government’s policies to stabilize market prices while various uncertainties remain in the country due to the bird flu outbreak and Brazil’s poultry scandal,” an E-Mart representative said, referring to government claims that meat imported from Brazil were tainted. “We also decided to lower prices since chicken prices might rise at other retailers as well if we start to do so,” the spokesperson said. “Furthermore, we understand the hardships that poultry farms are facing and the situation with weak domestic consumer sentiment.”

E-Mart, though, had been selling chicken for the lowest price among the country’s three top discount chains. The price of one kilogram of raw chicken was 6,490 won at Homeplus and 7,500 won at Lotte Mart.

The poultry industry is uneasy about the government’s increasing intervention in the market. BBQ Chicken, Korea’s biggest chicken restaurant chain, planned to raise prices this week but backtracked after the government threatened tax investigations. The Ministry of Agriculture, Food and Rural Affairs earlier this month said the government will consider having chicken restaurant chains undergo tax inspections to find out whether their price increases were justified.

The announcement was made after BBQ Chicken said it would raise chicken prices by 9 to 10 percent.

BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]