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Quality Risk and Profitability in Cattle Production: A Multivariate Approach

Author

Listed:
  • Belasco, Eric J.
  • Schroeder, Ted C.
  • Goodwin, Barry K.

Abstract

This study evaluates quality, production, and price risk within the context of overall profit variability in fed cattle production. The approach used offers a flexible way to estimate a large system of equations with more than three jointly related censored outcomes. Trade-offs between quality and yield grade levels and production measures, such as average daily gain and feeding efficiency, are evaluated. Simulation procedures are used to assess the impact of quality risk on overall profit variability. Results make an important contribution to existing research by explaining why price signals through grid quality grade premiums may not generate intended producer responses.

Suggested Citation

  • Belasco, Eric J. & Schroeder, Ted C. & Goodwin, Barry K., 2010. "Quality Risk and Profitability in Cattle Production: A Multivariate Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), December.
  • Handle: RePEc:ags:jlaare:97854
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    File URL: http://purl.umn.edu/97854
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    Cited by:

    1. 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.

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