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SEOUL, KOREA- As the government puts a brake on milk prices, milk suppliers and supermarket operators are fretting over the mounting loss. That's because they are unable to pass the higher raw milk price effective on August 1 on to consumers. Major milk brands such as Seoul Milk, Namyang Dairy Products, and Maeil Milk complained they are incurring 200 million won of losses a day from the price control. Large retail outlets, already squeezed from the government's imposition of the twice-a-month closure rule, are worried about the prospect of falling profitability.
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Friday, August 2nd, 2013
On August 1, Dongwon F&B, the company selling milk brands such as Cow & Milk and Denmark Milk, said it would postpone a plan to raise milk prices by 7.5 percent. Other milk producers including Seoul Milk and Namyang Dairy haven't been able to announce their plan to raise prices. Only Maeil Milk has announced earlier that it would increase its milk prices by 10.6 percent from the 8th.
Consumer price policy makers at the Ministry of Strategy and Finance convened on July 30 representatives of large retail stores such as E-Mart, Lotte Mart, and Home Plus and asked to minimize the milk price rise level. Although the government officials said the meeting was simply for "market coordination" purposes, the representatives said it was a clear case of the government pressuring private-sector operators in their pricing decisions. The main reason for milk producers to raise their prices was the per-liter raw milk price was raised 12.7 percent to 940 won from 834 won.
