The Economic Impacts of Farm Animal Housing Restrictions: The Mandatory Group Housing for Sows in South Korea

Abstract

Beginning January 1, 2030, South Korea will mandate group housing for sows in the domestic hog production. The purpose of this article is to examine the economic implications of the new sow housing regulations on the hog and pork industry in South Korea. This article developes an economic simulation model to quantify the regulation impacts within a calibrated equilibrium framework. With three scenarios differentiated by the regulation costs in production, the simulated outcomes indicate that the regulations will result in a 2% to 11% increase in hog prices, a 1% to 5% decrease in domestic hog quantities, and a 0.5% to 3% decrease in hog producer surplus in South Korea. An increase of 10% in the willingness to pay for domestic pork would be sufficient to offset the loss in producer surplus caused by the regulations, in the scenario with relatively high incremental regulation costs of production.