Economics of Increased Beef Grader Accuracy

Maro A. Ibarburu, John D. Lawrence and Darrell Busby

No 37558, 2007 Conference, April 16-17, 2007, Chicago, Illinois from NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: Carcass data from more than 38,000 cattle was used to compare the called and measured yield grade in two different periods: before and after the slaughter plant incorporated another grader in the line to improve grading accuracy. The study shows that the graders accuracy significantly increased. The higher accuracy affected all yield grades, but most notably resulted in more called yield grade 4 and 5 carcasses. This analysis will develop insight of what will be the effect of instrument grading that will be more accurate than previously called grades.The results are expressed as the conditional distribution of the called yield grade for a given value of the measured yield grade. The pricing grid currently used by the industry was used to analyze the effect of the graders errors on the expected values of the premiums on both periods and by yield grade. The results show that the company has an incentive to improve accuracy of grading. Simulating the results of measured vs. called yield grade over prices at the time and a standard industry grid showed that the plant can benefit by $1.32 per head by increasing grading accuracy.

Pages: 9
Date: 2007-04
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nccsci:37558

DOI: 10.22004/ag.econ.37558

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