Reorganization of Meat Business Sector Within This Year... Accounts for 11.43% of Total Sales
Gimcheon Farm Production Facility Liquidation Causes "Massive Impact" on Livestock Farmers in Gyeongbuk Region
[Asia Economy Reporter Lim Hye-seon] Difficulties are expected in the restructuring of Lotte Food's meat business. This is due to strong opposition from some livestock farmers.
According to the food industry on the 27th, Lotte Food announced earlier this month that it will cease production and sales of its meat business by the end of this year. This decision is due to continuous poor business performance and low growth potential caused by the sensitivity of the business environment. Lotte Food's meat business handles fresh meat such as beef and pork. It is sold under brands like Porkwell and Teukseon Am Dwaeji. The sales amount to be discontinued is 19.649 billion KRW, accounting for 11.43% of last year's total sales. Lotte Food stated that although a short-term decrease in sales is expected, mid- to long-term improvements in profitability and financial structure are anticipated through growth in other business areas. The company plans to focus on food ingredients, ice cream, and home meal replacement (HMR) businesses.
With the suspension of the meat business, the related production facilities at the Gimcheon plant will be dismantled. In response, livestock farmers in the Gyeongbuk region criticized, saying, "The unilateral notice has put the foundation of the local livestock industry at risk." Lotte Food's business partners include about 120 pig farms in the Gyeongbuk area, which accounts for 2% of the nationwide pig farms (6,300 farms). The average daily number of pigs shipped from these farms is approximately 1,500 heads.
The farmers stated, "If the Lotte Food slaughterhouse in Gimcheon closes, the farms will lose their business partners without any countermeasures and suffer huge damage," adding, "Sufficient time is needed until the change of shipping destinations is completed, and we request a two-year grace period before closure." Along with this, a "Press Conference to Defend the Korean Pork Industry and Secure the Right to Survival," condemning Lotte's behavior of neglecting corporate social responsibility solely for economic reasons, will be held in front of Lotte Food headquarters on the 28th.
Regarding this, Lotte Food expressed a difficult stance. While they are actively cooperating to develop new sales channels, they said they cannot change the direction of business restructuring. A Lotte Food representative said, "We fully understand the farmers' position," adding, "We will do our best to open new business partners, but we cannot accept delaying the business restructuring schedule."
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