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Value Based Marketing For Fed Cattle: A Discussion Of The Issues

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  • Fausti, Scott W.
  • Feuz, Dillon M.
  • Wagner, John J.

Abstract

The U.S. beef industry has been struggling with the erosion of domestic market share relative to pork and poultry for several decades. Many factors may have contributed to this shrinkage, including the industrial organization of the domestic beef industry. A discussion of the institutional structure of beef production in the U.S., and the cash market for fed cattle, as possible contributing factors to the decline in beef's competitive position is provided. In the literature, a consensus agrees that average pricing of fed cattle in the cash market has contributed to beef's diminished competitive position. One solution to the average pricing problem which has gained widespread support is the idea of implementing a value based marketing system (VBMS); to replace the current cash marketing system. The value based marketing concept and the probability of it successfully supplanting the current cash marketing system for fed cattle is discussed and evaluated. A comparative empirical analysis of a VBMS relative to the current cash marketing system is reported. Evidence suggests that the ability of a VBMS to supplant the current cash marketing system will be dependent on the premium and discount structure.

Suggested Citation

  • Fausti, Scott W. & Feuz, Dillon M. & Wagner, John J., 1998. "Value Based Marketing For Fed Cattle: A Discussion Of The Issues," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 1(1), pages 1-18.
    • Handle: RePEc:ags:ifaamr:34320
    DOI: 10.22004/ag.econ.34320
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    References listed on IDEAS

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    1. Purcell, Wayne D., 1998. "A Primer on Beef Demand," Staff Papers 232526, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    2. Scott W. Fausti & Dillon M. Feuz, 1995. "Production Uncertainty and Factor Price Disparity in the Slaughter Cattle Market: Theory and Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 533-540.
    3. Feuz, Dillon M. & Fausti, Scott W. & Wagner, John J., 1995. "Risk And Market Participant Behavior In The U.S. Slaughter-Cattle Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(1), pages 1-10, July.
    4. Dillon M. Feuz & Scott W. Fausti & John J. Wagner, 1993. "Analysis of the efficiency of four marketing methods for slaughter cattle," Agribusiness, John Wiley & Sons, Ltd., vol. 9(5), pages 453-463.
    5. Unknown, 1997. "Price Discovery in Concentrated Livestock Markets: Issues, Answers, Future Directions," Research Institute on Livestock Pricing 232724, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
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    Keywords

    Livestock Production/Industries; Marketing;

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