Major food companies have agreed to accept higher supply prices from small and medium-sized enterprises (SMEs) for packaging containers. The move comes as rising synthetic resin costs — the key raw material for packaging — driven by the Middle East crisis have increased cost burdens on SME suppliers, prompting the food industry to join mutual growth efforts.
According to the "Plastics Industry Social Dialogue Body for Responding to Surging Petrochemical Raw Material Prices and Promoting Mutual Cooperation," led by the ruling Democratic Party of Korea, food industry representatives attended a meeting held on the afternoon of the 2nd and expressed their willingness to accept higher supply prices. A total of nine entities, including CJ, SPC, the National Agricultural Cooperative Federation, and the Public Procurement Service, agreed to participate. Rep. Song Jae-bong of the Democratic Party said, "They expressed their intention to reflect the rise in raw material costs in supply prices."
The government plans to offer incentives to companies that join the mutual growth pact. "We plan to pursue measures such as awards for outstanding companies to positively enhance their corporate image, as well as exemptions from fact-finding inspections," Rep. Song explained.
The Democratic Party had previously proposed raising packaging supply prices to the food industry, highlighting the difficulties facing packaging container manufacturers at its Special Committee on Economic Response to the Middle East Crisis. At the time, Rep. Kim Nam-geun of the Democratic Party said, "Large corporations that receive containers for products such as instant noodles, bread, and side dishes have refused to raise supply payments, claiming the cost increases are a temporary wartime phenomenon, deepening the crisis for small and mid-sized plastics companies."
The Democratic Party plans to expand the mutual growth pact to the home appliance industry, as synthetic resins are also used in appliance packaging. A Democratic Party official said, "This will help alleviate the recurring problems of cost pass-through and trade imbalances during periods of surging oil prices, and institutionally establish a foundation for mutual cooperation between large petrochemical firms and small plastics manufacturers, as well as between small plastics manufacturers and large buyer companies."
The Democratic Party also plans to hold a party-level mutual growth pact ceremony. A party floor leadership official explained, "Next week, we will hold a mutual growth pact ceremony together with floor leader Han Byeong-do, covering not only the food industry but also the home appliance industry."