“It’s difficult due to the low birth rate”… Dairy industry facing zero tariffs on dairy products in the U.S. and Europe
The size of the white milk market has been decreasing over the past three years due to the low birth rate trend.
Starting this year, there will be no tariff on dairy products… Dairy industry enters ‘survival of the fittest’ management
As tariffs on dairy products imported from the United States and Europe are completely abolished in 2026, the domestic dairy industry faces greater difficulties. The photo shows the milk display shelf at a Homeplus store in Seoul. /Reporter Son Won-tae
[더팩트 | 손원태 기자] In addition to the structural limitations of a declining youth population, the domestic dairy industry is in dire straits due to the zero-tariff measure on imported dairy products that will be implemented starting this year.
In a situation where the main consumer base is collapsing in the aftermath of low birth rates, foreign products with price competitiveness are flocking to the industry, and the industry is speeding up efforts to improve its structure for survival, such as business diversification and premiumization.
◆ Dairy industry highly dependent on domestic demand… Facing low growth due to low birth rate
According to Euromonitor on the 6th, the size of the domestic white milk market over the past three years has not been growing every year, reaching KRW 1.659 trillion in 2023, KRW 1.6295 trillion in 2024, and KRW 1.6069 trillion in 2025 (provisional value). Accordingly, the three domestic dairy companies (Seoul Milk, Maeil Dairy, and Namyang Dairy) are experiencing a long period of stagnation in their main business, milk.
The dairy industry, where milk and cheese are the main food groups, is a fresh food business due to the nature of the business, so the shelf life is shorter than that of other food groups. In addition, there is a high risk of product deterioration, so a difficult production process is required, and a lot of costs are invested in quality control, such as storing finished products in refrigerated conditions.
Accordingly, the dairy industry is structured to have a large proportion of domestic business. The proportion of overseas sales of the three domestic dairy companies does not exceed 10% of total sales. This means that the dairy industry is easily swayed by the domestic economy.
Meanwhile, the price of raw milk is skyrocketing due to abnormal weather conditions and high exchange rates, and the burden of milk raw materials is increasing day by day.
The biggest problem is that the domestic youth population, the main consumer of milk, is also decreasing. Last year, Korea’s total fertility rate (the average number of children a woman is expected to have in her lifetime) was 0.81, ranking last among member countries of the Organization for Economic Co-operation and Development (OECD).
As of 2024, the domestic youth population under the age of 14 is 5.42 million, a decrease of 200,000 compared to the previous year (5.62 million). The total population of Korea in 2024 is 51.82 million, of which the youth population ratio is about 10.5%. Only 1 in 10 people in Korea is a child, which is also one of the lowest in the OECD.
Due to this phenomenon, the domestic dairy industry faced stagnant performance last year. Seoul Milk Cooperative’s cumulative sales in the first half of last year were KRW 1.0307 trillion, a 3.3% decrease compared to the same period last year (KRW 1.0657 trillion). Namyang Dairy Products’ dairy business also recorded cumulative sales of KRW 654.6 billion in the third quarter of last year, down 4.8% compared to the same period last year (KRW 687.5 billion). Binggrae’s refrigerated product business, which operates dairy products, also recorded cumulative sales of KRW 444.4 billion in the third quarter of last year, down 5.3% compared to the same period last year (KRW 469.3 billion).
However, Maeil Dairies recorded 829.2 billion won in cumulative sales of its dairy processing business in the third quarter of last year, a slight increase of 1.1% from 820.1 billion won the previous year.
As tariffs on dairy products imported from the United States and Europe are completely abolished in 2026, the domestic dairy industry faces greater difficulties. The photo shows the production process of Seoul Milk Cooperative’s ‘A2+ Milk‘. /Seoul Milk Cooperative
◆ Starting this year, there will be no tariffs on dairy products from the U.S. and Europe… survival of the fittest dairy industry
In this situation, the domestic dairy industry faced another crisis: the elimination of tariffs on US and European dairy products as soon as the new year of 2026 arrived. Starting January 1 of this year, tariffs on dairy products from the United States and Europe will be further reduced in accordance with the implementation schedule of the Korea-US Free Trade Agreement (FTA) and the Korea-European Union (EU) FTA.
Previously, the government agreed to lower the average tariff rate on dairy products, which was 36%, over a long period of time when concluding FTAs with the EU in 2011 and the United States in 2012. Afterwards, tariffs on U.S. dairy products gradually decreased to 7.2% in 2023, 4.8% in 2024, and 2.4% in 2025, and were completely abolished this year. Tariffs on European dairy products also decreased every year from 9.0% in 2023 to 4.5% in 2024 and 2.2% in 2025, but virtually disappeared this year, entering the 0% range.
Australia and New Zealand, famous for their dairy farming industries, are also currently reducing tariffs on dairy products. These countries are imposing a 10% tariff on dairy products as of last year, but Australia will go tariff-free in 2033 and New Zealand in 2034.
As the entry barrier for foreign dairy products into the country is lowered, the amount of sterilized milk imported is increasing every year. According to the Korea Customs Service, the amount of sterilized milk imported over the past three years has increased to 37,361 tons in 2023, 48,671 tons in 2024, and 45,720 tons from January to November 2025. Domestic dairy products lag behind the price competitiveness of imported dairy products due to the burden of raw materials and quality control. The dairy industry, which is facing a crisis of low birth rate and low growth, is now in a situation where it must be price competitive with imported dairy products.
Accordingly, the domestic dairy industry entered into survival of the fittest management. First of all, Seoul Milk is a member association of the National Agricultural Cooperative Federation and a cooperative made up of dairy farmers, so there are restrictions on developing new businesses other than its main business, dairy. Seoul Milk is working hard to create a premium product, ‘A2+ Milk’, to overcome the overall reality of the domestic dairy industry. Considering that 6 out of 10 Koreans suffer from lactose intolerance, such as colic, we create premium milk that is effective for digestion.
Seoul Milk’s A2+ milk is isolated and collected from cows with the A2 genetic trait and contains only 100% A2 protein. A2 protein is similar to human breast milk, so it is effective for absorption and digestion in the body. Seoul Milk has established a strategy to expand its main milk consumer base from the youth population to adults by increasing the production of A2+ milk.
As tariffs on dairy products imported from the United States and Europe are completely abolished in 2026, the domestic dairy industry faces greater difficulties. The photo shows Maeil Dairy Cafe brand ‘Paul Bassett’ store. /Maeil Dairy Products
Maeil Dairy Products is developing a restaurant business, including cafe ‘Paul Bassett’, Chinese restaurant ‘Crystal Jade’, and Italian restaurant ‘The Kitchen Ilporno’ through M’s Seed, an affiliate company that conducts the restaurant business. Recently, it acquired ‘Mildo’, a famous bakery in Seongsu-dong, Seoul, through M’s Bakers, a subsidiary engaged in the dessert business. Furthermore, it established M’s Beverage, a joint venture with Japan’s Sapporo International, and introduced a store based on Sapporo Beer. It helped diversify the business from its main business, milk, to restaurants.
Namyang Dairy is incorporating health trends into its milk-based product lines, including its fermented milk, protein drinks, and processed milk. These products are low-sugar, zero-sugar, and ultra-high protein, focusing on the ‘healthy pleasure’ craze that pursues taste and health at the same time. Binggrae also began exporting ice cream company-wide, receiving Halal certification for Melona and Carp Samanco. Vegetable melona was also customized to target Western countries such as the United States and Europe.
An industry official predicted, “If imported dairy products enter the market without tariffs, it will inevitably have an impact on the domestic dairy market,” but added, “As sterilized milk is mainly imported, we need to wait and see whether it will have a short-term impact on the market.”
He added, “We will likely focus on increasing the premium product line or further improving the quality competitiveness of domestic milk,” adding, “We will pursue an expansion strategy into dessert products such as fermented milk, cheese, and ice cream based on dairy products.”
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