Rising milk prices prompt Korean consumers to embrace imported milk

[Photo by Yonhap]

As raw milk prices are set to surge significantly from October, concerns over ‘milkflation’ are once again on the rise in South Korea. In response, local consumers are increasingly turning to affordable imported Ultra-High Temperature (UHT) milk. The dairy industry fears that the ongoing hike in milk prices may erode the competitiveness of domestic dairy products.

According to agricultural ministry data on Sunday, the imports of UHT milk for the first six months of this year soared by 46.1 percent compared to a year ago reaching about $15.31 million. The of imports also increased by 25.2 percent, totaling 18,379 tons. The import value has shown a steep upward trend over the past few years, with a mere $7.96 million in 2020 escalating to over $23.3 million in 2022. Market watchers predict it may surpass $30 million this year.

Among the imported UHT milk, Poland firmly holds the dominant position in Korea, capturing 75.1 percent of the market share as of last year. Following Poland are Germany (10 percent), Italy (7.7 percent), and Australia (5.3 percent), trailing far behind.

With domestic milk prices being expensive, the demand for imported UHT milk is likely to keep rising. As a result of the negotiation for raw milk prices concluded on July 27, the price of raw milk used for drinking, such as white milk, is set to increase by 8.8 percent from 996 won ($0.78) to 1,084 won per liter. This means that large supermarkets’ white milk products are expected to exceed 3,000 won per liter. The price of raw milk used for processed products like cheese and powdered milk will also rise by 87 won or 10.9 percent from the current 800 won to 887 won per liter.

On the other hand, imported UHT milk can be purchased at around half the price of domestic products, typically in the 1,500 won range per liter. Although some consumers find imported milk to be less flavorful and lacking in probiotics compared to domestic products, the number of consumers seeking imported UHT milk is steadily increasing. The advantage of UHT milk lies in its longer shelf life, lasting up to a year due to the pasteurization process.

Lower dairy tariffs in the U.S. and European Union (EU) starting in 2026 are expected to reduce the price of imported pasteurized milk even further than it is now.

Industry insiders assert that while a milk price increase seems inevitable due to rising raw milk costs, they are committed to restraining such hikes for now to avoid incurring losses. Nevertheless, they remain cautious as they acknowledge that while domestic milk currently outperforms imports in terms of quality, the long-term price competitiveness of domestic dairy products may be at risk.