July 25, 2008


Korea's dairy industry in crisis on high production costs, low milk consumption


Korean industry officials are concerned that an unavoidable price hike on milk due to falling consumption and rising production costs will further diminish milk consumption and throw the industry into disarray.


The Korea Dairy and Beef Farmers Assiciation and milk companies on Saturday (July 19) have decided to raise supply prices of unpasteurized milk by 20.5 percent, and market prices are expected to rise accordingly by as early as next month.


The cause of the crisis stems from soaring fodder prices, which have increased by 40 to 50 percent since last year.


According to discount store E-mart, an increase of 10 cents for a litre of Seoul Milk in early July cut consumption by 6 percent. E-mart believes an increase of another 30 to 40 cents will reduce consumption by more than 10 percent.


Korean milk consumption has been decreasing in recent years. The Korea Dairy Committee said consumption has declined every year since a peak of 1.8 million tonnes in 2003, leading to a 42-percent drop in the number of dairy farms to 7,600 this year from 13,000 in 2000.

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