The deadline for setting raw milk prices has been pushed off to July 24 from the initial July 19 as dairy farmers and milk producers fail to narrow differences over the increase rate despite more than a month of negotiation.

Maeil Business Newspaper has learned that the sub-committee of the Korea Dairy Committee held a meeting on Wednesday and extended the deadline to decide on the raw milk price. The initial deadline was June 30 and was extended to July 19.

The sub-committee - consisting of the Korea Dairy Committee Chairman, three dairy farmers, and three officials from dairy companies are in discussion over a price increase ranging from 69 won ($0.055) to 104 won per liter.

Dairy farmers are insisting on raising the price of raw milk by the upper range of 104 won per liter, citing higher feed prices and postponed price increases during the pandemic. Dairy companies, on the other hand, argue that the price increase should be kept to a minimum.

Even with the smallest increase of 69 won per liter, the retail price of 1 liter of milk is expected to surpass 3,000 won from the current level of about 2,800 won.

This has raised concerns about a potential surge in overall food prices.

According to Statistics Korea, the year-on-year price increase of milk from January to June was already at a high level of 8~9 percent.

The dairy industry is also concerned about the potential consequences of a significant increase in raw milk prices.

As the additional costs burdened by dairy companies will be passed on to consumers, the industry needs to minimize the extent of the raw milk price increase.

This is even more so, given that the Ministry of Agriculture, Food, and Rural Affairs recently called on dairy companies to refrain from raising dairy product prices.

An official from a dairy company said that an increase of 100 won per liter would result in an additional cost of about 2 billion won per month.

Once the subcommittee determines the extent of raw milk price increase this month and gains approval from the Korea Dairy Committee’s board of directors, the new price will be implemented as early as next month.

However, if the negotiations continue on into the next month, further discussions will be required to determine when the price increase will be applied retroactively.

By Lee Hee-jo and Yoon Yeon-hae

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]