On the 7th, Homeplus urged the Korea Association of Agricultural and Livestock Cooperatives to assist, noting that first-tier suppliers and agricultural farms are struggling due to excessive demands from certain large corporate partners.
On the 3rd, the Korea Association of Agricultural and Livestock Cooperatives (composed of 22 agricultural and livestock organizations) issued a statement saying, “Delays in Homeplus's payment settlements are expanding damages to the agricultural and livestock industry.” Homeplus rebutted, stating, “This is not true.”
It claimed that assistance from large corporate partners and related organizations such as Seoul Milk and NongHyup is needed to prevent further harm to small second-tier suppliers and farms.
During a press conference on March 14, Homeplus revealed, “The payment of commercial claims that was halted due to rehabilitation procedures is being sequentially processed starting from March 7. We cannot pay all claims at once, so we will first settle payments for small business owners and then begin partitioning repayments for large corporations from June.” This schedule has been shared with all partners.
However, some large corporate partners, including Seoul Milk, demanded, “Pay the full amount of rehabilitation claims immediately,” or “Prepay the product costs in cash.”
As Homeplus was unable to accommodate this, deliveries were halted or the transaction scale was reduced. Large corporations related to agricultural and livestock products obtain raw materials from second-tier suppliers and farms, but the reduction in deliveries leads to a decrease in their supplies, causing damages to be shifted onto second-tier suppliers.
Homeplus communicated its plan to Seoul Milk, stating, “After settling payments for small business owners, we will begin partitioning the rehabilitation claims from June,” while public claims are currently being paid regularly. Seoul Milk, insisting on cash prepayments, halted deliveries starting from the 20th of last month. Consequently, the processing volume for livestock farms supplying raw milk has decreased, and sales for suppliers of ancillary materials have also dropped.
NongHyup Economic Holdings has no unpaid rehabilitation claims and is making regular payments, yet has drastically reduced the credit limits citing “uncertainty.” This primarily affects rice items, which has led to a decrease in transactions for local NongHyup firms, resulting in expected income losses for rice farmers.
Homeplus criticized, “In a situation where the livelihoods of 20,000 employees and thousands of farmers and partners are at stake, some large corporations are not cooperating towards normalization but only looking to prioritize their own interests. By stopping deliveries when their demands are not met, they are making it difficult for second-tier suppliers and farms.” It has been claimed that the delivery stoppage by Seoul Milk has continued for two weeks, harming dairy farmers and agents.
In response, Homeplus requested that the Korea Association of Agricultural and Livestock Cooperatives persuade large corporate partners. A Homeplus official stated, “Working together to normalize quickly is the way to reduce damages. We expect the association to make proactive decisions.”
A Seoul Milk official stated, “The stoppage of deliveries from Homeplus is an unavoidable decision due to concerns over unprocessed payments (credit risk). It is regrettable that the issue of farmers' damages is being emphasized to shape public opinion differently from the essence, and the Seoul Milk Cooperative did not demand full cash payment for rehabilitation claims.”