Global Dairy Price Index rose to 148.7, the highest in 2 years and 4 months.
Prices have risen 23.2% YoY and 4.0% MoM after bottoming at 112.0 in September 2023.
Declining milk production in Oceania is the main driver of higher prices.
South Korea’s dairy self-sufficiency rate is 44%, making it heavily reliant on imports.
A weak won (₩1,450/USD) is further increasing import costs.
Food manufacturers are reviewing price hikes due to rising dairy, packaging, and processing costs.
Opinion
The combination of surging dairy prices and currency fluctuations is exacerbating cost pressures on South Korea’s food industry. With packaging and processing costs also rising, companies are likely to face continued pricing pressures, potentially leading to higher consumer prices.
Core Sell Point
If dairy price inflation and currency depreciation persist, South Korean food manufacturers may struggle with profitability, while higher prices could impact consumer demand.
Rising global dairy prices are increasing cost pressures on South Korea’s food industry. According to the United Nations Food and Agriculture Organization (FAO), the Global Dairy Price Index reached 148.7 last month, the highest level since October 2022 (149.2). After hitting a low of 112.0 in September 2023, dairy prices have surged 23.2% year-over-year and 4.0% month-over-month.
The primary driver behind this price increase is declining milk production in Oceania. Given that South Korea’s dairy self-sufficiency rate is only 44%, the industry remains heavily dependent on imports for essential dairy products like cheese and cream. Furthermore, the Korean won remains weak at around 1,450 per U.S. dollar, raising import costs even further.
As a result, domestic food manufacturers are considering price hikes. Industry insiders report that in addition to rising dairy costs, companies are also facing higher packaging and processing expenses, particularly for products containing coffee and cocoa, which are already experiencing cost inflation.
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