Does Muscle Matter? An Economic Evaluation of Live Cattle Characteristics

The Queensland Livestock Market Reporting Service (QLMRS) was established in 1980 by the livestock and Meat Authority of Queensland. Weekly reports on the major live cattle auctions in Queensland indicate the prices of different types of cattle, categorised by their age, sex, weight, fat score and type of feed. Previous research has suggested that differences in these characteristics account for only some of the price variation observed at cattle auctions. This paper investigates other characteristics not included in the QLMRS market reports which may be important in determining the price of cattle. Data on the standard QLMRS characteristics and on other potentially important characteristics have been collected by the authors for a large number of lots of live cattle sold at two different auction sites in Queensland. This paper analyses the contribution both of characteristics regularly reported by the QMLRS and of other characteristics not reported by the QLMRS to explaining the variation in prices observed at these auctions. Hedonic price models are estimated which provide estimates of the premiums and discounts associated with different levels of the characteristics for which data were collected. The paper highlights the limitations of current market reports and indicates that the inclusion of muscle score may add considerably to the information content of these reports. More generally, the analysis suggests that liveweight auctions may not represent an efficient price discovery mechanism for cattle.