Effects of a Beef Grade Change on Choice and Select Slaughter Cattle Prices

John M. Marsh

Review of Agricultural Economics, 1989, vol. 11, issue 2, 221-232

Abstract: Distributed lags are used to estimate the conditional price effects of quality grade substitution and ungraded beef on USDA Choice and Select grade slaughter cattle. The results show that Choice beef production and ungraded production demonstrate large class price effects. When revising USDA Choice grade to accommodate reduced marbling, potential reclassification of ungraded beef plays a major role. The results show a decrease in Choice price with a slight increase in Select price and a reduction in the price premium paid for Choice steers. Overall, grade modifications emphasizing leaner beef would not necessarily benefit cattle producers unless there was a compensating change in demand and/or a reduction in feeding costs.

Date: 1989
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