The Economic Analysis of Corn Grain Optimization and Price Variation for Cattle on Feed in Texas

Braelyn Moltz, Mark Yu, Edward Osei, W. Brandon Smith and Brant Poe
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Braelyn Moltz: Department of Agricultural & Consumer Science, Tarleton State University, Stephenville, TX 76401, USA
Mark Yu: Department of Agricultural & Consumer Science, Tarleton State University, Stephenville, TX 76401, USA
W. Brandon Smith: Department of Animal Science, Tarleton State University, Stephenville, TX 76401, USA
Brant Poe: Department of Agricultural & Consumer Science, Tarleton State University, Stephenville, TX 76401, USA

Agriculture, 2019, vol. 9, issue 7, 1-12

Abstract: Cattle placed on feed is a practice to maximize the amount of meat produced before being sent to slaughter, which has become a major agricultural industry. The optimization of input quantities, especially corn, is crucial to maximize production efficiency and ultimately profit. The objective of this research is to determine the optimal corn grain production rate for cattle on feed in Texas and estimated profit maximization under various price ratios for corn grain and live cattle. Utilizing data from various United States Department of Agriculture (USDA) sources, various different input production levels and prices were collected. Statistical Analysis System (SAS), procedures were used to estimate the different production functions. Sensitivity analysis were performed for the optimal production of corn grain rate, and consequent profit under various combinations of corn and live cattle prices for the four different functions. Additionally, a continuous form curve for optimal corn grain production rates under various price ratios was developed. Results indicated that the cubic model was the most accurate based upon the R 2 value. However, the continuous form model created for the sensitivity analysis concluded that the quadratic was the most accurate model under the different price ratios. The results of the study can be a useful tool for the decision-making process for producers and policymakers.

Keywords: corn grain; optimization; cattle on feed; price variation (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2019
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