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Grader Bias in Cattle Markets? Evidence from Iowa

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  • Philippe Marcoul
  • John Lawrence

Abstract

Live cattle are increasingly priced as an explicit function of U.S. Department of Agriculture yield and quality grades. Human graders visually inspect each slaughtered carcass and call grades in a matter of seconds as the carcass passes on a moving trolley. We examine whether there is systematic bias in grade calls using a sample of loads delivered to three different midwestern packing plants during 2000–2002. Overall, results indicate that indeed there is a bias, and that grading standards vary significantly across packing plants. Results also are consistent with a behavioral model where graders are more accurate when grading relatively low-quality carcasses. Copyright 2007, Oxford University Press.

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  • Philippe Marcoul & John Lawrence, 2007. "Grader Bias in Cattle Markets? Evidence from Iowa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 890-903.
  • Handle: RePEc:oup:ajagec:v:89:y:2007:i:4:p:890-903
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01026.x
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    9. Stéphan Marette & John Crespi, 2003. "Can Quality Certification Lead to Stable Cartels?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(1), pages 43-64, August.
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    Cited by:

    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.
    2. Jang, Ju Won & Ishdorj, Ariun & Anderson, David P., 2015. "Searching for the Possible Sources of Grader Bias in Beef Grading: A Non-parametric Approach," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205734, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    3. repec:cup:jagaec:v:49:y:2017:i:03:p:467-489_00 is not listed on IDEAS
    4. Ferrier, Peyton & Liu, Qihong, 2010. "Consumer sorting of vertically differentiated goods," Economics Letters, Elsevier, vol. 109(1), pages 11-13, October.
    5. 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.
    6. Jang, Ju Won & Ishdorj, Ariun & Anderson, David P. & Purevjav, Tsengeg & Dahlke, Garland, 2017. "Exploring The Existence Of Grader Bias In Beef Grading," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(03), pages 467-489, August.

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