Estimated Value of Increased Pricing Accuracy for Fed Cattle

Grid pricing of fed cattle has gained popularity as one way to try to improve vertical coordination of the beef marketing system. Grid pricing eliminates much of the subsidization by producers with high quality cattle to those with low quality cattle when fed cattle are sold on an average live weight method. This study estimates this subsidy to be around $30/head. Therefore, fed cattle market efficiency can be substantially improved through the use of grid pricing systems