Economic analysis of an image-based beef carcass yield estimation system in Korea

Authors: WAKHOLI, COLLINS - Chungnam National University; NABWIRE, SHONA - Chungnam National University; KIM, JUNTAE - Chungnam National University; BAE, JEONG - Chonnam National University; BAEK, INSUCK - Orise Fellow; Kim, Moon; CHO, BYOUNG-KWAN - Chungnam National University

Submitted to: Animals
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 12/20/2021
Publication Date: 12/21/2021
Citation: Wakholi, C., Nabwire, S., Kim, J., Bae, J.H., Baek, I., Kim, M.S., Cho, B. 2021. Economic analysis of an image-based beef carcass yield estimation system in Korea. Animals. 12:7. https://doi.org/10.3390/ani12010007.
DOI: https://doi.org/10.3390/ani12010007

Interpretive Summary: Carcass grading is a vital process in the slaughterhouse and is used to quantify the overall value of carcasses. Often done manually by a team of grading experts, the process is subject to human limitations which results in inconsistencies and limited operation speed. In light of this, an automatic beef carcass yield estimation system capable of predicting 23 key yield parameters was developed. Since analysis of the economic impact of such a new system is vital prior to its real-world use, this study presents a cost-benefit analysis conducted for the deployment of the new beef carcass yield estimation system in an average South Korean slaughterhouse. The results showed that the benefits of using the system outweigh the costs of purchase and operation, making the endeavor economically viable. The developed method and the results of the economic impact analysis will benefit meat processors seeking to improve methods of carcass grading in slaughterhouse operations.

Technical Abstract: To minimize production costs, reduce mistakes, and improve consistency, modern-day slaughter-houses have turned to automated technologies for operations such as cutting, deboning, etc. One of the most vital operations in the slaughterhouse is carcass grading, usually done manually by grading staff, which creates a bottleneck in terms of production speed and consistency. To speed up the carcass grading process, we developed an online system that uses image analysis and sta-tistical tools to estimate up to 23 key yield parameters. A thorough economic analysis is required to aid slaughterhouses in making informed decisions about the risks and benefits of investing in the system. We therefore conducted an economic analysis of the system using a cost–benefit anal-ysis (the methods considered were net present value (NPV), internal rate of return (IRR), and benefit/cost ratio (BCR)) and sensitivity analysis. The benefits considered for analysis include labor cost reduction and gross margin improvement arising from optimizing breeding practices with the use of the data obtained from the system. The cost–benefit analysis of the system resulted in an NPV of approximately 310.9 million KRW, a BCR of 1.72, and IRR of 22.28%, which means the benefits outweigh the costs in the long term.