This study analyzes the effects of the beef grading system reform implemented on December 1, 2019, focusing on its impact on the supply
and price of Hanwoo beef. Korea first introduced the beef grading system on a trial basis in 1993 and fully adopte...
This study analyzes the effects of the beef grading system reform implemented on December 1, 2019, focusing on its impact on the supply
and price of Hanwoo beef. Korea first introduced the beef grading system on a trial basis in 1993 and fully adopted it nationwide in 2000.
Under this system, all beef must be graded at the slaughterhouse, and ungraded beef cannot be distributed, as the regulation is strictly
enforced. The mandatory grading system was introduced ahead of market liberalization to provide consumers with objective information
about the quality of Hanwoo beef. By allowing higher grades to command premium prices in the market, the system aimed to encourage
producers to enhance quality and, in turn,stabilize the Hanwoo industry. Following the introduction of the beef grading and labeling system,
price gaps between quality grades widened and the proportion of higher-grade carcasses also increasedThese trends suggest that the
system helped differentiate domestic Hanwoo beef from imported products. As a result, the substitutability between Hanwoo and imported
beef declined. However, the system's emphasis on marbling encouraged extended grain-based feeding periods. This raised production costs and did not align with consumer preferences, which increasingly favor leaner beef. In response, the government revised the grading system
after collecting input from producers and consumers. The revised system took effect in December 2019. The reform lowered marbling
standards for the top two grades—1++ and 1+. Specifically, two of the three subcategories within marbling score level 7, which previously qualified only for grade 1+, became eligible for 1++. The new criteria also gave greater weight to other attributes such as meat and fat color.
Additionally, the yield grade standard was adjusted to reward carcasses expected to produce more retail beef. In response to consumer
feedback, the revised system required that marbling scores (7 to 9) be displayed explicitly on labels for beef graded as 1++. At the time,
the Ministry of Agriculture, Food and Rural Affairs stated that the revised standards would benefit producers by lowering marbling thresholds, shortening rearing periods, and reducing feed and production costs. Consumers were also expected to benefit from more transparent quality
information at the point of purchase, enabling better-informed choices and facilitating access to premium beef at more affordable prices.
In summary, the government expected the reform to increase 1++ beef supply, lower wholesale prices, and eventually reduce retail prices.
This study evaluates the outcomes of the 2019 reform, focusing on changes in wholesale prices, shipment age, and carcass weight. The
analysis used monthly data from 2015 to 2024, covering five years before and after the reform. Key indicators included grade appearance
found that extending shipment age to boost marbling often led to lower sales prices. Based on these findings, several policy
recommendations emerge. First, consumer preference for highly marbled beef remains strong, so quality differentiation policies should
continue. However, with the falling relative price of imports, policies should also support demand for leaner and affordable Hanwoo.
Introducing a tenderness labeling system, as seen in Australia and the U.S., could help. Second, to reduce production costs and improve
affordability, rearing periods should be shortened through efficient production methods. Best practices from high-performing farms should be shared, and incentives like low-carbon livestock certification should be offered to promote shorter feeding periods. Third, because grading
reforms alone have limited impact on price competitiveness, further government support for genetic improvement is necessary. This includes revising breeding bull selection criteria to prioritize daily weight gain and investing in cow breeding programs. Fourth, many consumers
mistakenly associate high marbling with better food safety. Public education campaigns are needed to improve understanding of thegrading
system and promote informed consumption. It should also be noted that, while the reform aimed to lower production costs and retail prices,
this study could not directly assess those outcomes due to data limitations. Future research should include case studies that explore retail
pricing and production cost changes in greater detail.