Abstract for: Why Do Cattle Prices Fluctuate?: Structural Characteristics and Simulation Works

Simulation works of market fluctuations have revealed that fluctuations occurred due to an imbalance between Korean cattle population and its appropriate level, and an imbalance between cattle prices, beef consumption amount, and number of cattle slaughtered. The simulation results presented that only the basic policy model would show a strong fluctuation in the price of cattle until 2018 due to such a feedback structure, and thereafter a somewhat weak fluctuation pattern until 2025. In addition, the findings of this study have revealed that if cattle population exceeded the appropriate level, the method of simultaneously reducing the population of all types of cattle in all stages of breeding would prove to be more desirable than the method of purely reducing the number of large fertile cows. Lastly, the findings have exposed the following point: there exists a very inelastic relationship between production-site cattle prices, cattle slaughter amount, and amount of beef consumption. To ameliorate these problems, the government's efforts should focus on improving the beef distribution structure to flexibly connect the cattle supply and price, and beef consumption, rather than pursuing a strategy with the focus on supply aspects such as reduction of the cattle population and encouragement of calf-breeding.