Members of the South Chungcheong branch of the Korea Dairy & Beef Farmers Association pour out milk into a basin at a protest in front of the South Chungcheong Provincial Office, July 11. Korea Times file

By Lee Kyung-min

Fears of a milk supply disruption are mounting, fueled by an impasse between the government and dairy farmers over a move to lower the prices of milk supplied to the confectionery and coffee-making industries, according to officials and the farmers' association, Friday.

The Ministry of Agriculture, Food and Rural Affairs seeks to revise the current supplier-friendly price methods, a move dairy farmers characterized as "irresponsible railroading with total disregard of the far-reaching implications for the agricultural business."

The ministry says milk prices remain elevated despite sinking market demand, due in large part to price setting methods tied to production costs, long embraced and demanded by farmers.

Farmers are refusing to accept the ministry's plan to lower the per-liter price of milk for processed dairy product makers to 800 won ($0.62), down from 1,100 won, a level farmers currently charge for retail and wholesale milk products.

They also oppose the ministry's plan to provide processed milk product makers 200 won in government subsidies for every 1 liter purchase. They dismiss the government's claim that the lower input costs will create demand, backed by many consumers favoring locally produced dairy products over imported ones.

Deadlocked negotiations

The ministry said negotiations between representatives of the Korea Dairy & Beef Farmers Association will be halted, Thursday, citing "a lack of trust on both sides."

"It is meaningless to continue talks when the relationship between the two negotiating parties is defined by distrust," the ministry said in a statement. "We will not resume negotiations until after the trust issue is fully resolved," it added.

The deadlock fans concerns of a rapid fall in the self-sufficiency ratio of raw milk production over the past two decades.

The percentage fell to 48.1 percent in 2020 from 77.3 percent in 2001. The number of dairy farms slumped to 4,929, down 61.1 percent from 12,827 over the same period. The number of livestock decreased to 410,000, down 25.2 percent from 548,000. Per-capita milk consumption in the same period fell to 31.8 kilograms in 2020, down 12.9 percent from 36.5 kilograms in 2001.

In contrast, the figure for processed dairy products including cheese, butter and ice cream rose to 83.9 kilograms over the period, up 31.3 percent from 63.9 kilograms.

The rising demand for processed milk products led to local milk production sinking to a total of 2.03 million tons in 2021 from 2.34 million tons in 2001. It pushed up imported milk to 2.51 million tons from 650,000 tons during the same period.