"After Ramen, Flour Next"…Industry 'Perplexed' by Double Pressure of Price Cuts

Government to Hold Meeting with Milling Companies on 26th
Discussing International Wheat Price Trends and Current Issues...

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho publicly expressed the opinion that "it would be good if ramen prices were lowered," and a week later, the government requested a meeting with the flour milling industry, creating pressure from both sides to reduce prices. The flour milling industry supplies wheat, one of the raw materials for ramen, to the market. The government's position is that since international wheat prices have fallen, the prices of ramen and its raw materials should also decrease. However, the related industries are in a difficult position, saying there are many additional factors to consider.

Citizens are shopping at a large supermarket in downtown Seoul.

According to the related industry on the 24th, the Ministry of Agriculture, Food and Rural Affairs plans to hold a meeting with major domestic flour milling companies on the 26th to discuss trends in international wheat prices, industry issues, and suggestions. About 10 companies have been invited to attend, and the specific participants will be finalized after discussions. Both the government and the industry are drawing a line, stating that the purpose of this meeting is not to immediately agree on lowering flour prices.

Earlier, on the 18th, Deputy Prime Minister Choo appeared on KBS's Sunday Diagnosis and said, "Companies raised prices significantly in September and October last year, but the current international wheat price has dropped by about 50% compared to then," adding, "I hope companies appropriately lower prices in line with the decrease in wheat prices." In response, the ramen industry said, "The price of wheat supplied through flour milling companies still remains high regardless of the international market price," and "It is not easy to lower prices." It is expected that the flour milling companies' stance will be heard at the meeting.

According to the Korea Agro-Fisheries & Food Trade Corporation's Food Industry Statistical Information, the average international wheat price this month was $239 per ton based on soft red winter wheat (SRW), down about 43% from $419 in May last year. Also, according to the Korea Customs Service's export-import trade statistics, the import price of milling wheat over the past year peaked at 681 KRW per kilogram in September last year and fell to 562 KRW per kilogram last month. However, this is still higher than the level in early last year, which was in the high 400 KRW range per kilogram. A flour milling industry official explained, "Domestic millers procured raw materials purchased at high futures prices in the second half of last year with a 3-6 month lag, so the supply was secured in the first half of this year," adding, "Even if raw material prices fall immediately, the recent flour prices do not reflect the reduction right away."

The ramen industry also finds it difficult to lower product prices based solely on international wheat prices. An industry official said, "Not only wheat flour but also other raw materials for ramen such as starch, agricultural products, and energy prices continue to rise," adding, "Even after raising product prices last year, the situation remains challenging, and the government's continued demand for price cuts is causing great concern."