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Profit Maximizing Behavior On the Fed Cattle Grid: The Value of Pre-harvest and Genetic Sorting with Implications for Aggregate Supply

Author

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  • Wang, Chia-Hsing
  • Roe, Brian E.

Abstract

We simulate the growth and quality changes for pens of cattle and derive the value of pre-harvest sorting and genetic selection under grid pricing in a deterministic setting featuring animals with heterogeneous growth and quality maturation paths. The key findings are: 1) both pre-harvest sorting and increased genetic uniformity could substantially affect an individual cattle feeder's net revenues; 2) one could expect higher marginal revenue gains from the genetic uniformity than from pre-market sorting; 3) both methods exhibit diminishing marginal returns and 4) aggregate beef supply may increase as improving uniformity typically leads to later optimal marketing dates and, hence, heavier animals at slaughter.

Suggested Citation

  • Wang, Chia-Hsing & Roe, Brian E., 2001. "Profit Maximizing Behavior On the Fed Cattle Grid: The Value of Pre-harvest and Genetic Sorting with Implications for Aggregate Supply," 2001 Annual meeting, August 5-8, Chicago, IL 20611, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea01:20611
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    File URL: http://ageconsearch.umn.edu/record/20611/files/sp01wa01.pdf
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    References listed on IDEAS

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    1. Dillon M. Feuz & Scott W. Fausti & John J. Wagner, 1993. "Analysis of the efficiency of four marketing methods for slaughter cattle," Agribusiness, John Wiley & Sons, Ltd., vol. 9(5), pages 453-463.
    2. Ward, Clement E. & Feuz, Dillon M. & Schroeder, Ted C., 1999. "Formula Pricing and Grid Pricing Fed Cattle: Implications for Price Discovery and Variability," Staff Papers 232528, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    3. Koontz, Stephen R. & Hoag, Dana L. & Walker, Jodine L. & Brethour, John R., 2000. "Returns To Market Timing And Sorting Of Fed Cattle," 2000 Conference, April 17-18 2000, Chicago, Illinois 18930, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
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    Keywords

    Livestock Production/Industries;

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