Korean Journal of Agricultural Science ISSN:2466-2402(Print) 2466-2410(Online) 농업과학연구

The food processing industry uses agricultural, livestock, and fishery products as raw materials to produce processed foods, serving as a major consumer of these products and a key contributor to their added value. Since 2008, the Ministry of Agriculture, Food and Rural Affairs has been fostering Korea’s food manufacturing industry, which now has a market size of 83.1 trillion Korean won. The food processing industry is subdivided into various sectors according to product categories, with each sub-sector exhibiting distinct structural characteristics. While certain sub-sectors are marked by a high degree of oligopoly, others are characterized by a competitive market structure involving a large number of firms. Given that the structural differences among sub-sectors of the food processing industry are critical factors in the formulation of relevant policies, it is necessary to conduct research that analyzes these structures and derives policy implications. The purpose of this study is to analyze the structural characteristics of sub-sectors within Korea’s food processing industry and to derive policy implications. Specifically, the study collects data on firm concentration, total sales, and total exports by sub-sector, and examines changes over time as well as interrelationships among key variables. The results derived from the econometric model analysis are as follows. First, the trend analysis of firm concentration across sub-sectors indicates that concentration levels have declined in most sub-sectors, while the overall industry size has increased. This suggests that Korea’s food processing sub-sectors are experiencing growth driven by the entry of new firms. Second, an econometric analysis was conducted to examine the correlation between industry concentration and total industry size (measured by sales). The results show that, in many sub-sectors, concentration levels and industry size tend to move in opposite directions. This provides more concrete evidence supporting the earlier observation. In conclusion, the growth structure of Korea’s food manufacturing sub-sectors can be evaluated as generally positive. This is because a weakening of market concentration reduces social losses associated with the excess profits of monopolistic or oligopolistic firms. Therefore, the government should strengthen policies that promote greater competition within the sub-sectors of the food manufacturing industry.