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Market Signals Transmitted by Grid Pricing

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

Abstract

Grid pricing improves the flow of information to producers, but market signals sent by grids may not be clearly understood. This study uses a two-stage Coefficients of Separate Determination process, four sets of fed cattle carcass data, and sensitivity analyses to identify market signals sent by grid pricing. Weight sends a stronger market signal than carcass quality characteristics such as quality and yield grade. Although grids are shaping production, market signals indicate that lower quality carcasses are penalized more than higher quality carcasses are rewarded. Sensitivity analyses suggest changes in quality and yield grade discounts have the greatest impact on market signals.

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File URL: http://purl.umn.edu/30980
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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 30 (2005)
Issue (Month): 03 (December)
Pages:

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Handle: RePEc:ags:jlaare:30980

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Web page: http://waeaonline.org/
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Related research

Keywords: beef cattle; Coefficients of Separate Determination; grid pricing; market signals; value-based marketing; Demand and Price Analysis;

References

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  1. Feuz, Dillon M., 1999. "Market Signals In Value-Based Pricing Premiums And Discounts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
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Citations

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Cited by:
  1. 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.
  2. 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.
  3. Dutton, Jennifer M. & Ward, Clement E. & Lusk, Jayson L., 2007. "Implicit Value of Retail Beef Brands and Retail Meat Product Attributes," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37571, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  4. Johnson, Heather C. & Ward, Clement E., 2006. "Impact of Beef Quality on Market Signals Transmitted by Grid Pricing," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(01), April.
  5. 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.
  6. 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.
  7. Vanek, Joseph K. & Watts, Myles J. & Brester, Gary W., 2008. "Carcass Quality and Genetic Selection in the Beef Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), December.
  8. Fausti, Scott & Qasmi, Bashir & Diersen, Matt, 2008. "Grid Marketing and Beef Carcass Quality: A Discussion of Issues and Trends," Staff Papers 080003, South Dakota State University, Department of Economics.
  9. Fausti, Scott W. & Qasmi, Bashir A. & Li, Jing, 2009. "Carcass Quality Volume and Grid Pricing: An Investigation of Cause and Effect," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46215, Southern Agricultural Economics Association.
  10. Parcell, Joseph L. & Schaefer, Daniel & Patterson, David J. & John, Mike & Kerley, Monty S. & Haden, Kent, 2008. "Assessing the Value of Coordinated Sire Genetics in a Synchronized AI Program," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37618, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  11. Parcell, Joseph L. & Franken, Jason R.V. & Schafer, Daniel & Patterson, David J. & John, Mike & Kerley, Monty S. & Haden, Kent, 2011. "Coordinating Sire Genetics in a Synchronized AI Program," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
  12. 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.

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