"Over 300 Dairy Farms Closed in 2 Years Due to Soaring Production Costs - Milk Management Committee"

The Milk Industry Promotion Committee (Chairman Lee Seung-ho) announced on the 9th that the rising production costs, including soaring feed prices, are exacerbating the difficulties in dairy farm management. According to statistics from the Dairy Promotion Association, the number of dairy farms last year was 4,600, a decrease of 133 farms (4.0%) compared to the previous year, and about 300 dairy farms have closed in the past two years. The dairy industry claims that the increase in farm closures is due to the inability to withstand management difficulties caused by the sharp rise in production costs such as feed expenses.

According to the "2022 Livestock Product Production Cost Survey Results" announced by Statistics Korea on May 26, 2023, the cost of milk production in 2022 was 958.71 KRW/L, an increase of 115.76 KRW (13.7%) compared to 2021. Of the increase in milk production costs (116 KRW), 84% was attributed to feed costs (an increase of 81 KRW, 70.1%) and byproduct imports (a decrease of 16 KRW, 13.9%).

The average price of compound feed for dairy cows rose by 22.9% from 525 KRW/kg in 2021 to 645 KRW/kg in 2022, while the farm gate price of dairy calves (one week old) dropped by 68.5% from 537,000 KRW in 2021 to 169,000 KRW in 2022.

Due to the sharp rise in production costs and a decrease in milk yield, the net profit per dairy cow in 2022 was 1,529,000 KRW, a decrease of 37.2% (904,000 KRW) compared to 2021.

As production costs such as feed prices rise sharply, closures are continuing mainly among small-scale farms, significantly shrinking the dairy production base. According to statistics from the Dairy Promotion Association, the number of dairy farms in 2022 was 4,600, a decrease of 133 farms (4.0%) compared to 4,733 farms in 2021. The number of dairy cows in 2022 was 390,000, down 11,000 heads (2.7%) from 401,000 heads in 2021. Additionally, raw milk production in 2022 was 1.98 million tons, a decrease of 50,000 tons (2.8%) compared to 2.03 million tons in 2021.