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Market Signals in Value-Based Pricing Premiums and Discounts
Dillon M. Feuz
Journal of Agricultural and Resource Economics
Vol. 24, No. 2 (December 1999), pp. 327-341
Published by: Western Agricultural Economics Association
Stable URL: http://www.jstor.org/stable/40987026
Page Count: 15
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There is concern in the beef industry that present marketing practices may be impeding the transmission of economic signals from consumers to producers. Presently, fed cattle may be sold on a show list, pen-by-pen, or on an individual head basis, and may be priced using live weight, dressed weight, or grid or formula pricing. Market signals are more likely to reach producers if cattle are priced individually. Current value-based pricing issues are discussed. Three grid pricing systems are evaluated over six marketing dates using data from 5,520 head of fed cattle. Each of the grids do send the anticipated pricing signals in that marbling and leanness are rewarded. However, the magnitudes of the price signals vary over time and across grids.
Journal of Agricultural and Resource Economics © 1999 Western Agricultural Economics Association