Price negotiations with dairy companies stalled amid concern over milk shortage


Concerns over a nationwide milk shortage are escalating as farmers threatened to halt Wednesday’s milk supply to dairy companies, demanding a price increase.

The government continued on Tuesday last-minute efforts to mediate the price dispute between farmers and the dairy businesses.

With no agreement reached, the Korea Dairy and Beef Farmers Association vowed to push ahead with the supply stoppage of raw milk ― an estimated 5,200 tons ― for one day on Wednesday.

“The costs of cattle feed increased 80 percent, while production decreased more than 15 percent due to foot-and-mouth disease and heat wave,” the group said in a statement, demanding an increase of 174 won in the current 704 won per liter. “Nearly 1,000 farmhouses have closed their businesses. The 173 won increase is the minimum figure for survival.”

The group said it would continue its collective action “indefinitely” if the talks fail to meet their demands by the deadline on Friday.

Industry sources warned of another disruption in the nation’s milk supply, which has already been struggling following the severest foot-and-mouth outbreak in Korea’s history.

“(Supply suspension) should not happen. We cannot predict even how many farmhouses will join the collective action,” said an official of Seoul Milk, a major milk processing company.

“We would be able to adjust production if it ends as a one-day event. But a prolonged situation could be serious,” said an official of another dairy company.

As many dairy farmhouses were expected to join Wednesday’s suspension, dairy industries were busy checking their reserves and discussing follow-up measures.

Retailers also predicted that a temporary milk shortage would be unavoidable.

Early this year, the government culled about 36,000 milk cows to curb the rampant foot-and-mouth disease, prompting a 10-15 percent decrease in milk production.

A recent heat wave further reduced milk production by 5-10 percent compared to the same period last year.

“We can handle the current shortage during the summer vacation of schools. But the supply suspension will affect us too. We have no solution for now,” said an official of a local retailer.

“It would take two to three years for the decreased number of cows to recover back to normal. Until then, it seems unavoidable that temporary milk shortages repeat like this.”

However, industry watchers predicted a low possibility of a potential “milk crisis,” saying that a prolonged confrontation between farmers and producers would do no good for either.

They added summer season is considered a peak season for milk products.

The government, farmers’ association and processing companies hold talks on prices of raw milk every three years.

A series of meetings over the past month, however, ended without agreement. Citing the soaring costs of cattle feed and other materials, farmers have demanded a 174 won increase per liter, while businesses set the upper limit at 81 won.

By Lee Ji-yoon (jylee@heraldcorp.com)