Open market works on beefResumption of U.S. beef imports after a three-year ban because of a mad cow outbreak in the United States has contributed positively to lowering and stabilizing consumer prices for stock farm products.
The Producer Price Index in July has gone up 0.2 percent compared to the previous month, according to data from the Bank of Korea, whereas stock farm product prices fell 3.1 percent over the same period.
Beef prices shed 3.1 percent while pork, a substitute for beef, lost 10.1 percent of its price.
With U.S. beef available to public consumers, prices of Australian beef also went down, not to mention Korean beef.
Pork consumers switched to beef, lowering the price and eventually pulling down the average.
This is the impact of an open market.
The drop in pork prices caused by the cheaper beef products is expected to provide major support to low-income households.
Beef prices are indeed lower than before, but it is still quite expensive to purchase for daily meals.
On the other hand, pork prices have fallen to a level where it became affordable, relatively, for most Korean households.
Demand for pork will continue to grow with lower prices that should stabilize.
The change in prices and demand after U.S. beef imported to the domestic market proves that the Korean economy is indeed a market-based system, and opening the market is leading to a more beneficial economic environment for consumers.
Allowing the open market to function freely has proven to be a benefit not only to the lower-income residents of the nation, but to all people at all income levels.
Expanding beef imports may have a negative impact on livestock farmers, and some of them may lose profits or even go out of business.
But the open market economy must be allowed to run its course.
This can also be an opportunity for the industry to gain more competitive power.
The Korean cattle industry has already held events with beef from Korean cattle at prices 20 percent lower than before joining the competition.
After the imports of U.S. beef were resumed, sales of Korean beef have increased.
Korean beef is not inferior to U.S. beef.
If better distribution channels are developed, and specialized products are developed, Korean beef has no reason to fear the challenge and the competition.