A comprehensive analysis by agricultural economists at Kansas State University (K-State) has shed light on the positive effects of grid pricing in the cattle industry. Livestock economist, Ted Schroeder, explains that grid pricing values cattle based on carcass merit. This could include aspects like quality grade, weight preferences, and specific brand programs.
Many cattle sold this way have a marketing agreement with packers. These agreements provide a base price with added premiums or discounts depending on the delivered cattle's quality. Schroeder emphasizes the purpose behind these agreements and grid pricing: to align consumer preferences for top-tier beef with the values of fed cattle at farms.
The beef sector has seen a significant increase in cattle graded as 'Choice' and higher over the past two decades, thanks to the adoption of marketing agreements. This has led to higher prices for producers and better beef quality for consumers in retail stores, according to a graduate student of K-State's agricultural economics.
Schroeder offers guidance for producers pondering over entering into a marketing agreement. It's essential to study different grid options and align them with one's cattle strategies. He advises that knowing one's cattle type and appropriate feeding management is vital. The goal is to ensure the grid system used either elevates profits or minimizes losses.
The study "Fed Cattle and Beef Premiums and Discounts" is available on AgManager.info, maintained by K-State's Department of Agricultural Economics for a comprehensive analysis.
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Categories: Kansas, Livestock, Beef Cattle