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Impact of Beef Quality on Market Signals Transmitted by Grid Pricing

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Author Info

  • 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.

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Bibliographic Info

Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 01 (April)
Pages:

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Handle: RePEc:ags:joaaec:43750

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Web page: http://www.saea.org/jaae/jaae.htm
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Related research

Keywords: beef; cattle; carcass; quality; coefficients of separate determination; incentives; market signals; value-based marketing; Livestock Production/Industries; Marketing; Q11; Q13;

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References

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  1. Johnson, Heather C. & Ward, Clement E., 2005. "Market Signals Transmitted by Grid Pricing," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(03), December.
  2. 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 (IAMA), vol. 1(01).
  3. Forristall, Cody & May, Gary J. & Lawrence, John D., 2002. "Assessing the Cost of Beef Quality," Staff General Research Papers 2101, Iowa State University, Department of Economics.
  4. Unnevehr, Laurian J. & Bard, Sharon K., 1993. "Beef Quality: Will Consumers Pay For Less Fat?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(02), December.
  5. McDonald, R. Allen & Schroeder, Ted C., 2003. "Fed Cattle Profit Determinants Under Grid Pricing," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 35(01), April.
  6. Greer, Heather C. & Trapp, James N., 2000. "Impact Of Alternative Grid Pricing Structures On Cattle Marketing Decisions," 2000 Conference, April 17-18 2000, Chicago, Illinois 18926, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  7. Forristall, Cody & May, Gary J. & Lawrence, John D., 2002. "Assessing The Cost Of Beef Quality," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19060, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  8. Lawrence, John D. & Forristall, Cody & May, Gary, 2002. "Assessing the Cost of Beef Quality," Staff General Research Papers 10467, Iowa State University, Department of Economics.
  9. 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.
  10. John D. Jackson, 1997. "Effects of Health Information and Generic Advertising on U.S. Meat Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 13-23.
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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," Staff Papers 080005, South Dakota State University, Department of Economics.
  2. Koontz, Stephen R. & Hoag, Dana L. & Brethour, John R. & Walker, Jodine L., 2008. "Production Inefficiency in Fed Cattle Marketing and the Value of Sorting Pens into Alternative Marketing Groups Using Ultrasound Technology," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(03), December.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

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