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Date of Release: May 13, 2008
Phone : 02-774-4050 / Fax: 02-774-4090
Contact: Lee Jeong-su, Secretary General
Lee Eun-ji, organizer
Price of Flour in Korea Must Drop!
On May 2, the Korea National Council of Consumer Organizations (Hereafter KNCCO; Chairperson: Kim Cheon-ju) held a meeting with representatives from Dong Ah, Daehan and CJ and the heads of customer organizations to discuss how to stabilize flour prices.
During the meeting, flour companies claimed that, due to the increases in the price of flour since 2008 and an exchange rate increase, they have had no choice but to raise the price of flour. To customer organizations’ argument that the international wheat price is falling, they said that they will watch whether the price drops in the fourth quarter of 2008, when current future prices will be reflected in the market.
In March 2008, the international wheat price at the Chicago Board of Trade rose to KRW 1,102/bushel, but dropped in April and May. Compared to the end of 2007, the international wheat price dropped by 11.7%, or by 109 cents/bushel from 912 cents/bushel to 818 cents/bushel. It also dropped by KRW 41 compared to April. When the exchange rate is taken into consideration, the price dropped by 4.5%, or by KRW 385 from KRW 8,299/bushel to 8,614/bushel.
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『International Wheat Price』 |
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(From Chicago Board of Trade) |
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|
Dec. 2006 |
May 2007 |
Dec. 2007 |
Mar. 2008 |
Apr. 2008 |
May 6, 2008 |
Compared to May. 2007 |
Compared to Dec. 2007 |
|
International Wheat Price |
(Cent/Bushel) |
500 |
491 |
927 |
1,102 |
886 |
818 |
(66.6%) |
(▽11.7%) |
|
(KRW/Bushel) |
4,630 |
4,557 |
8,614 |
10,793 |
8,746 |
8,229 |
(80.6%) |
(▽4.5%) |
|
Flour (Consumer Price Index) |
102 |
108 |
131 |
176 |
178 |
- |
65%* |
- |
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* Based on the consumer price index in April 2008. |
The flour companies claimed that they did their best to lower costs when the price of wheat rose from January to March 2008. However, an increase in the international wheat price was reflected in flour prices in late 2007.
While the international wheat price has dropped since April 2008, and given that there are factors which may lower costs in the future, it is not reasonable for companies to continue raising their prices. In the meeting held on May 5, consumer organizations requested the companies in question to submit written reports on how to lower flour prices.
The meeting was planned to provide both consumers and flour companies with a chance to understand why flour prices are going up. However, there is no satisfactory explanation for the price increase. Notably, Daehan did not provide any supporting data on the price increase and did not explain why. And then, on May 6, the day after the meeting, Daehan announced a price increase.
If a flour company raises the price of flour by KRW 10, then a distribution company will raise its price by KRW 100 and a restaurant in turn raises its price by KRW 300 ~500. In return for what flour companies have received from their consumers for over 60 years, they should not raise the price of flour.
Since distributors as well as flour companies should be involved in stabilizing prices, the KNCCO will survey the differences between the flour manufacturers’ price and the distributors’ price and figure out solutions to stabilize consumer prices. |
