Economic Analysis of the Use of VCS2000 for Pork Carcass Meat Yield Grading in Korea

SIMPLE SUMMARY: Koreans consume more pork meat among the various meats, and as the consumption of pork meat increases, the amount of slaughtering is also increasing. Accordingly, the Korean government is sizing up and modernizing slaughterhouses to expedite the slaughter and to increase the safety of livestock products. The labor-intensive slaughter industry is undergoing major changes due to the COVID-19 pandemic, which will speed up the automation of slaughterhouses. Various automation devices are also being introduced in Korea, and currently the Korean government is introducing a pork meat yield grading machine to increase the accuracy of judgments based on the increasing slaughter volume. However, because such equipment is quite expensive, it is not easy to introduce, and a detailed study on the utility of the related equipment and an economic feasibility analysis has not been conducted. Therefore, in this study, we tried to prove the validity of the introduction of the equipment through the effectiveness study and economic analysis of the automatic meat yield grading machine, and a plan to increase the economic effect was considered. ABSTRACT: Currently, the pork industry is incorporating in-line automation with the aim of increasing the slaughtered pork carcass throughput while monitoring quality and safety. In Korea, 21 parameters (such as back-fat thickness and carcass weight) are used for quality grading of pork carcasses. Recently, the VCS2000 system—an automatic meat yield grading machine system—was introduced to enhance grading efficiency and therefore increase pork carcass production. The VCS2000 system is able to predict pork carcass yield based on image analysis. This study also conducted an economic analysis of the system using a cost—benefit analysis. The subsection items of the cost-benefit analysis considered were net present value (NPV), internal rate of return (IRR), and benefit/cost ratio (BC ratio), and each method was verified through sensitivity analysis. For our analysis, the benefits were grouped into three categories: the benefits of reducing labor costs, the benefits of improving meat yield production, and the benefits of reducing pig feed consumption through optimization. The cost-benefit analysis of the system resulted in an NPV of approximately 615.6 million Korean won, an IRR of 13.52%, and a B/C ratio of 1.65.