Impact of Beef Quality on Market Signals Transmitted by Grid Pricing

Heather C. Johnson and Clement E. Ward

Journal of Agricultural and Applied Economics, 2006, vol. 38, issue 1, 77-90

Abstract: Value-based marketing is shaping cattle production; however, market signals differ dramatically depending on carcass quality. This study applies a two-stage coefficients of separate determination procedure to four regional fed cattle datasets sorted by grid value and by carcass quality attributes. Weight is the strongest signal sent when higher valued cattle and better quality cattle are sold on a grid. Quality characteristics send stronger signals when lower valued cattle and poorer quality cattle are sold on a grid. Producers of lower quality cattle can potentially gain $52 to $149 per head by improving quality and $113 to $150 per head by adding weight.

Date: 2006
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