The Estimation of the Demand Function of Pork Cuts

Abstract

This paper estimated the demand function of the cuts of pork by using the consumer panel and the weather data from the Korea Meteorological Administration with a log-log model and AIDS model. The results show that the price elasticity of demand for cuts of pork is high in the sequence of arm shoulder, leg, special cuts, tenderloin, blade shoulder. In contrast, spare rib, belly and loin are classified as low price elasticity of demand. The income elasticities of demand for leg and blade shoulder are 11% and 7.6% respectively. The loin is classified as inferior goods, because demand decreases when income increases. The results also demonstrate show that the demand increases highly in the sequence of loin, arm shoulder, spare rib, belly if housewife is older, and the demand of belly increases when family number increases. Belly substitutes every cut except spare rib, and tenderloin substitutes special cuts. Spare rib, on the other hand, does not substitute other cuts. In addition, job status, family member, husband job, purchasing place, consumer characteristic, eating-out times, purchasing time, and weather are statistically significant.

Correlation between the Korean pork grade system and the amount of pork primal cut estimated with AutoFom III

“…Pork price is set on different standards between producers and consumers. It is determined by the carcass grade into the producer and by various primal and commercial cut into the consumer [3,12]. In addition to the pig carcass grade system, it is necessary to estimate the amount of primal cut for determining the pork price.…”