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Impact of Beef Quality on Market Signals Transmitted by Grid Pricing

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  • Johnson, Heather C.
  • Ward, Clement E.

Abstract

Value-based marketing is shaping cattle production; however, market signals differ dramatically depending on carcass quality. This study applies a two-stage coefficients of separate determination procedure to four regional fed cattle datasets sorted by grid value and by carcass quality attributes. Weight is the strongest signal sent when higher valued cattle and better quality cattle are sold on a grid. Quality characteristics send stronger signals when lower valued cattle and poorer quality cattle are sold on a grid. Producers of lower quality cattle can potentially gain $52 to $149 per head by improving quality and $113 to $150 per head by adding weight.

Suggested Citation

  • Johnson, Heather C. & Ward, Clement E., 2006. "Impact of Beef Quality on Market Signals Transmitted by Grid Pricing," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(1), pages 77-90, April.
    • Handle: RePEc:cup:jagaec:v:38:y:2006:i:01:p:77-90_02
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    Citations

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    1. Fausti, Scott W. & Wang, Gerald & Diersen, Matthew A. & Qasmi, Bashir A., 2012. "Pricing Fed Cattle on a Grid: An Analysis of the Incentive Mechanism over Time," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119670, Southern Agricultural Economics Association.
    2. Reagan, Tyler J. & Anderson, David P. & Ishdorj, Ariun, 2016. "An Economic Analysis of the Price Discount for Over Thirty Months of Age Cattle," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229754, Southern Agricultural Economics Association.
    3. Hogan, Robert J., Jr. & Carlberg, Jared G. & Ward, Clement E. & Peel, Derrell S., 2012. "Factors Affecting Quality Grade Discounts for Fed Cattle," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119814, Southern Agricultural Economics Association.
    4. Scott W. Fausti & Zhiguang Wang & Bashir A. Qasmi & Matthew A. Diersen, 2014. "Risk and marketing behavior: pricing fed cattle on a grid," Agricultural Economics, International Association of Agricultural Economists, vol. 45(5), pages 601-612, September.
    5. Ward, Clement E. & Carlberg, Jared G. & Brocklebank, Andrea, 2007. "Comparing Canadian and U.S. Cattle Feeding Pricing Practices and Perceptions of Pricing Issues," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 8, pages 1-12, December.
    6. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A., 2008. "The Efficacy of the Grid Marketing Channel for Fed Cattle," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6884, Southern Agricultural Economics Association.
    7. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A., 2008. "The Efficacy of the Grid Marketing Channel for Fed Cattle," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6884, Southern Agricultural Economics Association.
    8. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A. & Stockton, Matthew C. & Adamson, Bill, 2013. "The Effect of Carcass Quality on the Grid versus Dressed Weight Carcass Revenue Differential," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142983, Southern Agricultural Economics Association.
    9. Fausti, Scott W. & Qasmi, Bashir A. & Li, Jing, 2010. "Grid Pricing: An Empirical Investigation of Market Signal Clarity," Economics Staff Papers 93253, South Dakota State University, Department of Economics.
    10. Link, David J. & Almas, Lal K. & Brown, Michael S. & Lawrence, Ty E., 2011. "The Beneficial Impact of Sorting Heavy Cattle at Re-Implant," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98732, Southern Agricultural Economics Association.
    11. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A & Adamson, Bill, 2014. "Grid Valuation of Beef Carcass Quality: Market Power and Market Trends," Economics Staff Papers 171423, South Dakota State University, Department of Economics.
    12. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A., 2008. "Grid Marketing and Beef Carcass Quality: A Discussion of Issues and Trends," Economics Staff Papers 37149, South Dakota State University, Department of Economics.

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