RATIONALIZING TIME SERIES DIFFERENCES BETWEEN COW-CALF AND FEEDER RETURNS

Huan Zhao and David A. Hennessy

No 49486, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association

Abstract: This paper tries to justify the observation of different return patterns in the upstream and downstream sectors of US beef production. It builds a dynamic rational expectation model separating the cow-calf and feeding sector with the former sector being the residual claimer. The model shows that the cow-calf operation has positively autocorrelated return pattern while the feeding operation return only reflects random shock. Empirical study shows that 85.4% of the Ricardian rent is passed through to the upstream sector, and the downstream sector can only claim the unexpected return resulting from random shocks.

Keywords: Ricardian rent; cow-calf return; supply chain; Agribusiness; Agricultural Finance; Farm Management; Industrial Organization; Livestock Production/Industries (search for similar items in EconPapers)
Date: Written

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