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Evidence of the Role of Marketing Arrangements and Valuation Methods in Improving Beef Quality

Author

Listed:
  • Muth, Mary K.
  • Liu, Yanyan
  • Koontz, Stephen
  • Lawrence, John D.

Abstract

Low and inconsistent beef quality has been blamed by some for the losses of beefï¾’s share of total meat consumption. Tighter vertical coordination through use of alternative marketing arrangements and more precise price signaling through use of different cattle valuation methods may help improve beef quality because these mechanisms facilitate information exchange enabling producers to respond better to consumer demand. For the congressionally mandated Livestock and Meat Marketing Study, we modeled differences in levels and variances of cattle quality associated with particular marketing arrangements and valuation methods using fed cattle purchase data from 29 large U.S. beef packing plants for October 2002 through March 2005. Results indicate fed cattle procured through marketing agreements and packer ownership had higher and more consistent quality compared to other types of arrangements. Auction market cattle quality was the most inconsistent. Fed cattle valued using carcass weight with a grid were associated with higher and more consistent quality.

Suggested Citation

  • Muth, Mary K. & Liu, Yanyan & Koontz, Stephen & Lawrence, John D., 1009. "Evidence of the Role of Marketing Arrangements and Valuation Methods in Improving Beef Quality," Staff General Research Papers Archive 13021, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:13021
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    References listed on IDEAS

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    1. Raper, Kellie Curry & Black, J. Roy & Hogberg, Michael & Hilker, James H., 2005. "Assessing Bottlenecks in Vertically Organized Beef Systems," Journal of Food Distribution Research, Food Distribution Research Society, vol. 36(01), March.
    2. Ted C. Schroeder & Clement E. Ward & James R. Mintert & Derrell S. Peel, 1998. "Value-Based Pricing of Fed Cattle: Challenges and Research Agenda," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(1), pages 125-134.
    3. 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.
    4. Schroeder, Ted & Jones, Rodney & Mintert, James & Barkley, Andrew, 1991. "The Impacts of Captive Supplies on the Fed Cattle Industry," Staff Papers 232404, Virginia Tech, Department of Agricultural and Applied Economics.
    5. Schroeter, John R. & Azzam, Azzeddine M., 1999. "Econometric Analysis of Fed Cattle Procurement in the Texas Panhandle," Staff General Research Papers Archive 11365, Iowa State University, Department of Economics.
    6. John R. Schroeter & Azzeddine Azzam, 2003. "Captive supplies and the spot market price of fed cattle: The plant-level relationship," Agribusiness, John Wiley & Sons, Ltd., vol. 19(4), pages 489-504.
    7. 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(02), December.
    8. Ward, Clement E. & Koontz, Stephen R. & Schroeder, Ted C., 1998. "Impacts From Captive Supplies On Fed Cattle Transaction Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(02), December.
    9. Whitley, John E., 2002. "The political economy of quality measurement: a case study of the USA slaughter cattle market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), December.
    10. Ted C. Schroeder & Rodney Jones & James Mintert & Andrew P. Barkley, 1993. "The Impact of Forward Contracting on Fed Cattle Transaction Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(2), pages 325-337.
    11. Azzeddine Azzam, 1998. "Captive Supplies, Market Conduct, and the Open-Market Price," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 76-83.
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    Cited by:

    1. Fausti, Scott W. & Diersen, Matthew A. & Qasmi, Bashir A. & Li, Jing, 2009. "Value-Based Marketing: A Dsicussion of Issues and Trends in the Slaughter Cattle Market," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 28(2).

    More about this item

    Keywords

    alternative marketing arrangements; fed cattle; beef quality; grid pricing;

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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