[Initial Moment] Imported Milk and Imported Beef

[Image source=Yonhap News]

As domestic milk prices rise and the prices of bread, cheese, and coffee beverages that use milk also increase, concerns about ‘milkflation’ are growing, drawing attention to cost-effective imported sterilized milk. Not only self-employed bakery and cafe operators but also general consumers and housewives raising children have started carefully comparing the taste and quality, believing that European or Australian milk cannot be worse than domestic milk.

Sterilized milk can be stored at room temperature for a long time without significant differences in nutritional components such as protein and calcium compared to regular milk. Above all, while regular milk is sold at a minimum of 2,000 to 2,500 KRW per 900 ml in the market, imported sterilized milk can be purchased online for 1,000 to 1,300 KRW per liter. Even with shipping costs, buying in bulk makes sterilized milk much cheaper, so consumers have no reason to insist on domestic milk only.

According to the Korea Customs Service, the import volume of sterilized milk in Korea increased nearly tenfold from 1,214 tons in 2016 to 11,413 tons last year. This year, the import volume of sterilized milk from January to August alone reached 14,275 tons, already surpassing last year’s total imports. Meanwhile, domestic milk consumption has been decreasing annually, with per capita annual white milk consumption dropping from 36.5 kg in 2001 to 31.8 kg in 2020. According to the Ministry of Agriculture, Food and Rural Affairs, out of 2.09 million tons of domestic raw milk produced last year, 1.86 million tons were consumed, and 230,000 tons were effectively discarded.

The reason prices rise despite supply exceeding demand lies in the pricing method for milk. To ensure stable raw milk supply, the government introduced the ‘Raw Milk Price Linkage System’ in 2013, allowing prices to increase regardless of market conditions if labor or feed costs rise, even if milk consumption decreases. This ultimately shifted the entire cost burden onto consumers. Moreover, when raw milk prices increase, manufacturing costs and distribution margins are added, causing retail milk prices to rise even more sharply than raw milk prices.

In a similar case, the beef grading system revised at the end of 2019 has also been criticized for encouraging price increases and ultimately harming consumer benefits. At that time, the government and livestock industry argued that relaxing the criteria for 1++ grade Hanwoo beef would increase supply, broaden consumer choices, and lower prices. However, despite a 50% increase in 1++ grade supply within a year, Hanwoo prices rose by more than 10%. This was because beef originally graded 1+ or 1 was upgraded to a higher grade, causing prices to rise accordingly.

As Hanwoo prices continued to soar, consumers turned to relatively cheaper imported beef. This year alone, beef imports have exceeded 330,000 tons, setting a record high. Imported chilled beef, which costs about one-third of Hanwoo but offers good quality, is rapidly replacing Hanwoo, revealing that government policies focused solely on premiumization rather than price competitiveness have backfired.

Both the dairy and livestock industries are facing difficulties due to low birth rates, reduced milk school meals caused by COVID-19, and increased production costs such as feed prices. However, with sufficient supply, consumers will not continue to pay higher prices indefinitely. Consumer tastes have diversified, substitutes such as imported products are readily available, and supply channels have expanded through online purchases via importers. Justifications such as protecting domestic farms or food security no longer hold.

When tariffs on all dairy products are abolished in 2026, more imported milk from Europe and the United States will enter the market at lower prices. Tariffs on U.S. beef will be removed in 2026, and Australian beef tariffs will be eliminated by 2028. It is necessary to reconsider a pricing system that prioritizes not producers or distributors but consumers, ensuring fairness and actual competitiveness.

/ Jo In-kyung, Deputy Head of Consumer Economy Department ikjo@