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Korea's milk industry is facing a crisis. A price hike is inevitable as consumption is falling off while production costs are rising. Industry officials worry that higher milk prices will further squash consumption and undermine the industry as a whole.
The crisis originates from soaring fodder prices, which have shot up 40~50 percent since last year. After strong protests by dairy farmers, the Korea Dairy and Beef Farmers Association and milk companies on Saturday agreed to raise the supply price of unpasteurized milk by 20.5 percent, which will affect the market price by as early as next month. A milk manufacturing firm official said, "A price hike is inevitable for milk companies as all related costs went up across the board. But we're pondering how much to raise the price lest consumption should dwindle."
The fundamental issue is the ever decreasing consumption of milk. The Korea Dairy Committee says consumption has declined every year since a peak of 1.8 million tons in 2003. The situation hurts both producers and manufacturers. The number of dairy farms in Korea has plunged from 13,000 in 2000 to 7,600 this year. A price rise in these circumstances will likely push down consumption even more.
According to Shinsegae E-mart, an increase of W100 in the price of a liter of Seoul Milk in early July cut consumption by 6 percent. E-mart believes an increase of another W300~400 will reduce consumption by more than 10 percent. Consumers are also unhappy. "We drink a liter of milk every day at home," said a Mrs. Park (46), while grocery shopping at Yongsan E-mart. "But if the price goes up, we'll reduce the amount."
(englishnews@chosun.com )
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