Milk companies mull price hikes

A customer shops for milk at a large discount store in Seoul on Thursday. (Yonhap)

Korean milk companies said Friday they are reviewing plans to increase the prices of their products, following the Korea Dairy Committee's recent decision to raise the price of raw milk by the largest rate in ten years.

"We are going over plans to raise the price of our fresh milk products, as the price of raw milk outweighs all other factors that help determine the price of the end product, including pasteurization, labor and distribution costs and such," said an official from a local dairy company on the condition of anonymity.

"As of now, the details are still under discussion," he added.

However, he added that the company is not likely to increase the price of dairy products anytime soon, as there is currently pressure from the government to keep the prices of daily necessities down.

"Up until last year, if the price of raw milk rose, dairy companies hiked their prices almost immediately. However, considering the current trend in the retail industry, it is likely that it will be difficult for dairy product industries to scale up their prices," another dairy industry official told The Korea Herald, adding that no specific comments can be made as of now regarding the prices of milk products.

Korean dairy companies' review of the prices of their dairy products comes as the Korea Dairy Committee decided to raise the price of two types of raw milk Thursday.

The price of raw milk used in fresh dairy products such as milk was raised by 88 won (6 cents) to 1,084 won per liter. The price of raw milk used for processed dairy products such as cheese increased by 87 won to 887 won per liter.

The new prices will be applied in October.

This year's price increase rate of raw milk records the largest rate increase since 2013 -- when the Food Ministry decided to implement a policy to annually hold a meeting to negotiate the price of raw milk, in a bid to flexibly reflect the changing production cost of raw milk on raw milk prices. In 2013, the price of raw milk had been increased by 106 won for both types of raw milk.

Last year, when the price of raw milk used in fresh milk products rose by 49 won per liter, milk companies raised the price of milk by some 10 percent.

As a result, a week later, a slew of domestic dairy firms raised the prices of their products.

Maeil Dairies scaled up the price of its 900 milliliters of milk by 9.6 percent from 2,610 won to 2,860 won. Prices of Dongwon F&B's 900 milliliters of milk also rose by 11.2 percent, from 2,240 won to 2,490 won (11.2 percent). The price of one liter of milk sold at large discount stores by the Seoul Milk Cooperative rose by an average of 6.6 percent.

By Lee Yoon-seo(yoonseo.3348@heraldcorp.com)