Pricing system for milk will change next year

Industry

Published: 16 Sep. 2022, 18:26

Pricing system for milk will change next year

The Korea Dairy Committee holds a meeting Friday, agreeing to amend the pricing system for raw milk. [YONHAP]

The Korea Dairy Committee agreed to amend the raw milk pricing system next year, which will lower processed dairy prices.

Originally, the raw milk price was determined every two years by adding 90 to 110 percent of any production cost increase to the previous price. The system was criticized for pushing up dairy prices, even though demand for milk was dropping along with Korea’s birthrate. The price of raw milk in 2021 was 947 won ($0.68) per liter, up 21 won, or 2.26 percent, from the year before.

At a board of directors meeting Friday, the committee announced that raw milk used to make processed dairy products and that used to make milk for drinking will be priced differently starting next year.

The committee said raw milk for processed dairy products will be cheaper than drinking milk in an attempt to tame surging food prices. Although specific prices weren’t announced Friday, the price of raw milk used to make drinking milk is expected to remain similar to current levels.

Next year’s prices will be determined on Sept. 20 following discussions by a consultative group of dairy farmers, dairy companies and the government.

The new pricing system was suggested by the government in 2020, but the Korea Dairy & Beef Farmers Association opposed a change. Farmers claimed that lowering prices would hurt them as they struggling with rising feed costs.

“Despite the change, Chung Hwang-keun, minister of agriculture, food and rural affairs, promised to minimize any damage to dairy farmers, and we hope to engage in meaningful talks with the government to enhance production stability for the dairy industry,” said Lee Seung-ho, president of the farmers association.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]