Impact of Less-preferred Cuts Inventory on the Belly Price of Pork

The pork market in South Korea shows a strong preference for pork belly, leading to a consumption bias. The consumption bias has become prominent as Korean meat-based dietary culture has evolved around the practice of roasting meat. This consumption bias can cause an excessive increase in inventory of the less-preferred cuts like the pork hind leg, worsening the profitability of intermediate distributors, thereby driving up the price of the pork belly, putting the economic burden on consumers, and reducing the profits of pig farmers. In this research, an empirical analysis was carried out utilizing the ARDL/ARDL-EC model. The aim was to ascertain whether the rise in inventory of less-preferred cuts, propelled by the consumption bias, has an impact on pork belly prices to increase. Our results show that a significant correlation between the increase in inventory of the pork hind leg, the less-preferred cuts and the increase of the prices of the pork belly, the preferred cuts. Considering the distribution structure of Korean pork market, it seems that the intermediate distributors set the price high by passing on the inventory costs to the pork belly price, when profitability is anticipated to decline due to an increase in inventory of the less-preferred cuts.