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Carcass Quality Volume and Grid Pricing: An Investigation of Cause and Effect

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  • Fausti, Scott W.
  • Qasmi, Bashir A.
  • Li, Jing

Abstract

The relationship between publically reported weekly grid premiums and discounts for specific carcass characteristics and the percentage of those characteristics reflected in total weekly slaughter volume (i.e., proportional slaughter volume) is investigated. Granger Causality and multi-lag VAR models were used to investigate if grid premiums and discounts were efficiently transmitting market signals to producers with respect to carcass quality attributes. The empirical evidence indicates that there is little evidence to suggest that grid prices are providing efficient price signals to buyers and sellers with respect to market valuation of desirable and undesirable beef carcass characteristics.

Suggested Citation

  • Fausti, Scott W. & Qasmi, Bashir A. & Li, Jing, 2009. "Carcass Quality Volume and Grid Pricing: An Investigation of Cause and Effect," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46215, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saeana:46215
    DOI: 10.22004/ag.econ.46215
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    References listed on IDEAS

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    1. 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, vol. 1(1), pages 1-18.
    2. 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(2), pages 1-15, December.
    3. 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(3), pages 1-19, December.
    4. 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.
    5. Taylor, Justin & Cates, Sheryl C & Karns, Shawn A & Lawrence, John D. & Koontz, Stephen R. & Muth, Mary K., 2007. "Alternative Marketing Arrangements in the Beef Industry: Definition, Use, and Motives," Staff General Research Papers Archive 12907, Iowa State University, Department of Economics.
    6. Granger, C. W. J. & Newbold, Paul, 1986. "Forecasting Economic Time Series," Elsevier Monographs, Elsevier, edition 2, number 9780122951831 edited by Shell, Karl.
    7. Feuz, Dillon M., 1999. "Market Signals In Value Based Pricing Premiums And Discounts," 1999 Annual Meeting, July 11-14, 1999, Fargo, ND 35739, Western Agricultural Economics Association.
    8. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
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    Cited by:

    1. 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.

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    Keywords

    Demand and Price Analysis; Livestock Production/Industries; Marketing;
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