August 13, 2011

Negotiations on raw milk price fail in South Korea

Discussions on raw milk prices between South Korean livestock farmers and milk companies ended up in failure on Friday (Aug 12), but farmers decided to start offering raw milk anyway.

The Korea Dairy and Beef Farmers Association (KDBFA), speaking for livestock farmers, said three days of talks failed to narrow the differences between farmers and dairy firms, confirming its demand was not accepted by milk companies.

Dairy farmers initially claimed that the price of raw milk should rise by KRW173 (US$0.16) per litre to KRW877 (US$0.81), but said it could accept an increase of KRW145 (US$0.13). Farmers have argued that they were saddled with debts as supply prices of raw milk have been frozen for the past three years despite a 30% jump in feed costs since 2008.

In contrast, milk companies said they could raise their purchase price by a maximum of KRW130 (US$0.12), up from their original demand for a KRW81 (US$0.07) increase. Dairy firms have insisted that a sharp increase in raw milk prices would lift overall prices of dairy products, which would trigger weaker consumption.

Meanwhile, the KDBFA decided to start offering raw milk, ending their three-day halt of milk shipments.