South Korean milk producers put off raising prices of their products in the face of mounting social pressure and moves by retailers, industry sources said Thursday.
Dairy companies have been pushing for adjusting prices, citing a spike in raw milk that they have to buy from producers. Companies such as Seoul Milk and Maeil Dairies had originally said they wanted to mark up prices by 9-10 percent, despite warnings by various consumer groups and the government. Government policymaker cautioned raising prices may exert negative repercussion on consumer prices.
Maeil planned to raise prices of its products as of Thursday, with Seoul Milk saying it would follow suit on Friday.
Companies had also said the rise takes into account higher labor and distribution costs and did not mean they were trying to make a profit at the expense of consumers.
The decision not to adjust prices came primarily after Nonghyup Hanaro Mart said it planned to shave their distribution margins to keep down prices for consumers. Such actions were followed by other large discount outlets such as Lotte Mart and E-Mart, which said they will maintain their present "lowest price" policy on milk with local convenience store chains like C&U and 7-Eleven joining the move by freezing prices.
"The concerted effort exerted pressure on milk makers and compelled some milk makers to reconsider raising prices, at least for the time being," said one business source, who declined to be identified.
Other industry insiders, however, speculated that because milk makers are actually buying raw milk at higher prices, it is only a matter of time before they will again move to mark up prices.
Despite the move not to raise prices, some consumer groups said
they will go ahead with organizing protests in Seoul to demand milk
makers renounce plans to mark up their products. (Yonhap News)
