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Grader Bias in Cattle Markets? Evidence from Iowa

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Author Info
Hueth, Brent
Marcoul, Philippe
Lawrence, John D.

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Abstract

Participants in U.S. markets for live cattle increasingly rely on federal grading standards to price slaughtered animals. This change is due to the growing prominence of “grid” pricing mechanisms that specify explicit premiums and discounts contingent on an animal's graded quality class. Although there have been recent changes in the way cattle are priced, the technology for sorting animals into quality classes has changed very little: human graders visually inspect each slaughtered carcass and call a “quality” and “yield”grade in a matter of seconds as the carcass passes on a moving trolley. There is anecdotal evidence of systematic bias in these called grades across time and regions within U.S. markets, and this paper empirically examines whether such claim is supported in a sample of loads delivered to three different Iowa packing plants during the years 2000-02. Keywords: cattle markets, grader bias, quality measurement.

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Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11465.

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Date of creation: 02 Mar 2004
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Publication status: Published in American Journal of Agricultural Economics, November 2007, Vol. 89, No. 4, pp. 890-903.
Handle: RePEc:isu:genres:11465

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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. [Downloadable!]
  2. Chalfant, James A. & James, Jennifer S. & Lavoie, Nathalie & Sexton, Richard J., 1999. "Asymmetric Grading Error And Adverse Selection: Lemons In The California Prune Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July. [Downloadable!]
  3. Stéphan Marette & John Crespi, 2003. "Can Quality Certification Lead to Stable Cartels?," Review of Industrial Organization, Springer, vol. 23(1), pages 43-64, August. [Downloadable!] (restricted)
  4. Diaz, Edgar F. Pebe & Brorsen, B. Wade & Anderson, Kim B. & Richter, Francisca G.-C. & Kenkel, Phil, 2002. "The Effect Of Rounding On The Probability Distribution Of Regrading In The U.S. Peanut Industry," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 20(1). [Downloadable!]
  5. Freebairn, J.W., 1973. "The Value Of Information Provided By A Uniform Grading System," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 17(02), August. [Downloadable!]
  6. Luis Garicano & Ignacio Palacios-Huerta & Canice Prendergast, 2005. "Favoritism Under Social Pressure," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 208-216, 05. [Downloadable!] (restricted)
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  7. Bruce Gardner, 2003. "U.S. Food Quality Standards: Fix for Market Failure or Costly Anachronism?," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(3), pages 725-730, 08. [Downloadable!] (restricted)
  8. Chalfant, James A & Sexton, Richard J, 2002. " Marketing Orders, Grading Errors, and Price Discrimination," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(1), pages 53-66, February. [Downloadable!] (restricted)
  9. Espinosa, Juan A. & Goodwin, Barry K., 1991. "Hedonic Price Estimation For Kansas Wheat Characteristics," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(01), July. [Downloadable!]
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  1. Ibarburu, Maro A. & Lawrence, John D. & Busby, Darrell, 2007. "Economics of Increased Beef Grader Accuracy," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37558, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management. [Downloadable!]
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