- Record dairy budget boosts pricing-system support and milk powder processing capacity.
- Farmers welcome the funding increase but say deeper reforms are needed.
- Industry wants safeguards against quota cuts and stronger support for domestic production.
Under the proposal approved by the cabinet on September 1, the government plans to increase support for the country’s differentiated milk pricing system from KRW43.1bn (US$31.5m) to KRW76bn.
It also intends to provide KRW900m in new funding for the construction of a public milk powder manufacturing facility, part of a broader KRW30bn project aimed at processing raw milk that goes unused during the winter months.
The Korean dairy industry welcomed the move, describing it as a significant step toward addressing long-standing concerns around farm profitability and sector stability.
“The budget increase is an encouraging measure that helps resolve long-standing issues facing the dairy industry,” the Korean Dairy and Beef Farmers Association said in a statement.
“We extend our sincere gratitude to government officials who listened to the voices of dairy farmers in preparing this budget proposal.”
However, it added that budget support alone will not resolve structural challenges facing the sector.
It called on the government to implement additional policy reforms to protect domestic dairy production.
“Dairy farmers across the country hope that this budget increase will help maintain the dairy production base and serve as a catalyst for resolving the supply-demand imbalances that inevitably arise during the winter season.”
Bold decisions needed
The funding boost comes as the sector continues to grapple with questions over the effectiveness of the differentiated pricing system introduced as part of broader dairy market reforms.
The government has pledged to expand support for domestic producers by securing dairy processors’ commitments to purchase 200,000 tonnes of raw milk.
However, farmers are concerned that support has previously fallen short and that some dairy processors have reduced quotas “arbitrarily”, leading to a loss of confidence among producers.
The association said the government “must make bold decisions to stabilise and strengthen the system”.
To prevent arbitrary quota reductions, the association recommended that the government establish sanctions to hold dairy processors accountable for unjustified cuts to production quotas.
It also called for a comprehensive overhaul of the differentiated pricing support structure.
“Government funding should not be used as a tool to reduce domestic production. Instead, policymakers must break the vicious cycle in which domestic production cuts lead to higher imports, which in turn lead to the erosion of the dairy production base.”
The trade body stressed the importance of the domestic dairy industry.
“The collapse of the dairy production base would not only harm dairy farmers but also trigger the decline of related upstream and downstream industries.”
It called on the authorities to engage with stakeholders on the ground, gather feedback from dairy farmers and establish detailed implementation plans.
“We hope the government will continue to communicate closely with stakeholders in the dairy sector and ensure the effectiveness of the system.”
