Research Reports
A Study on Beef Industry and Development Strategy
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AuthorWoo, Byungjoon
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Publication Date2009.10.01
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Original
The main purpose of this study is to find competitiveness in the Korean beef industry and a future development strategy which can respond to recent changes. To do so, this study analyzes and focuses on the structure of the Korean beef market instead of taking up the conventional production-oriented approach.
In the process, this study seeks to find ways of enhancing social welfare by understanding the structure and specific principles and behaviors of the beef market. This study defines the development of domestic beef industry as an increase in social welfare or a reduction of social welfare losses caused by imperfect competition. This study categorizes the beef industry in three important stages of production, retail, and consumption.
In the production stage, providing high quality meat and securing stable beef supply are key factors to success. Management of good breeding cows and beef cattle plays an important role in succeeding. To strengthen such activities, the government introduced the “Korean beef sales outlet" project. However, approximately 200 Korean beef (Hanwoo) brands are already on the market after being raised at regional breeding and fattening farms. Thus, focusing on the already exiting beef brands to expand market power will be a more realistic approach.
The beef market is reckoned as an incomplete market. As such, reducing the distributors’ margin could reduce the net social welfare loss. To accomplish this, the nature of the beef market must be changed to a fully competitive market. Therefore, the introduction of brand shops and restaurants is expected to play a positive role. In addition, introducing a large livestock processing and distribution company can result in the reduction of the retail margin as it handles all the beef logistics process from slaughter to processing, packaging, and distribution.
According to surveys, consumers as yet do not fully trust the safety of U.S. beef. However, consumers’ preference can easily be changed in any time. This change in consumer preference will reduce Hanwoo consumption. To avoid such situation, taste, hygiene, and quality of domestic beef must be superior to imported beef.
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