Global Economic Times

Zero-Tariff Import Surge Threatens South Korea’s Struggling Dairy Industry: Hwang Sujin Reporter / Updated : 2026-01-06 03:11:08

SEOUL — South Korea’s dairy industry is bracing for a "perfect storm" as zero-tariff benefits for imported milk take effect this year, coinciding with a steady decline in domestic milk consumption fueled by the nation’s record-low birth rate.

According to the Korea Customs Service, as of January 1, 2026, the 2.4% import tariff on American dairy products has been completely eliminated. European milk is set to follow suit, with its 2.2% tariff scheduled for removal in July. This marks the culmination of Free Trade Agreements (FTAs) signed over a decade ago with the EU and the U.S., which have gradually phased out duties that once averaged 36%.

The Price War: Imports Lead the Way The immediate impact is expected to be felt in consumer pricing. Imported sterilized (UHT) milk, primarily from Poland, Germany, and Australia, is already retailing at approximately 1,900 to 1,950 KRW per liter—roughly 35% cheaper than domestic fresh milk, such as Seoul Milk’s “Na 100%,” which sells for nearly 3,000 KRW. Industry experts predict that the removal of tariffs could further lower the price of imported milk by about 40 KRW per liter.

The popularity of imported UHT milk has skyrocketed. Import volumes surged nearly 40-fold from 1,214 tons in 2016 to over 48,000 tons in 2024. Consumers and small business owners are the primary drivers of this trend. For independent café owners and bakers facing rising costs for flour and coffee beans, the long shelf life (up to one year) and low price of imported milk offer a vital lifeline.

Domestic Industry in Crisis In contrast, South Korean dairy farmers are struggling with rising production costs. Unlike many countries where milk prices are determined by market demand, Korea’s "Production Cost-Based Pricing System" has kept domestic prices high, making it difficult for local brands to compete with cheap imports.

Furthermore, the demographic crisis is shrinking the consumer base. As the number of school-aged children—the primary consumers of white milk—decreases, per capita consumption of white milk has dropped from 26.6kg in 2021 to 25.3kg last year.

A Pivot Toward Value-Added Products To survive the "Milk Cold War," domestic dairy giants like Seoul Milk, Maeil Dairies, and Namyang Dairy are shifting their focus. Rather than competing solely on white milk, they are expanding into premium functional products, such as protein-enriched drinks, lactose-free options, and high-end desserts.

"The influx of zero-tariff imports is inevitable," said an industry analyst. "For the domestic dairy sector to survive, it must accelerate its transition from a volume-based market to a value-based one, focusing on freshness and specialized nutritional benefits that long-haul imports cannot provide."

As the "tariff wall" disappears, 2026 is expected to be a watershed year that will permanently reshape the landscape of South Korea’s dairy market.