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G98-1352 Issues to Consider When Selling Cattle on a Grid or Formula
Historical Materials from University of Nebraska-Lincoln Extension
  • Dillon M. Feuz, University of Nebraska - Lincoln
Date of this Version
1-1-1998
Comments
© 1998, The Board of Regents of the University of Nebraska on behalf of the University of Nebraska–Lincoln Extension. All rights reserved.
Abstract

This NebGuide discusses issues and problems associated with matching cattle to the appropriate market.

Recently there has been a much greater emphasis on improving the quality and consistency of beef. Cattle producers, breed associations, feed suppliers and beef packers have initiated value based pricing methods. Grid pricing, formula pricing, and strategic alliances are examples of these new value based pricing methods. While these pricing methods may differ substantially in the carcass and management traits they seek to reward or penalize, they all have one common feature: price is established on each individual animal.

The goals of the new pricing methods are to price cattle based on their "true" value to consumers, reduce problems of inconsistency in the final product, and send appropriate market signals to producers. Pricing accuracy improves as pricing moves from a showlist to a specific pen to an individual head basis. However, price variation also increases when pricing on an individual head basis. Cattle are not created equal, or at least do not produce equal carcasses. Each has a different value.

Citation Information
Dillon M. Feuz. "G98-1352 Issues to Consider When Selling Cattle on a Grid or Formula" (1998)
Available at: http://works.bepress.com/dillon_feuz/112/