The Effect of Carcass Quality on the Grid versus Dressed Weight Carcass Revenue Differential

Our study investigates the fed cattle grid pricing system and its premium and discount incentive mechanism over time. We hypothesize that the influence of an animal's carcass quality attributes on a price grid's incentive mechanism can be revealed by evaluating the effect of carcass quality on an individual animal's grid determined carcass premium or discount. A pooled-crossed sectional data set containing carcass information on 604 fed steers evaluated weekly on the USDA-AMS publically reported price grid (National Carcass Premiums and Discounts for Slaughter Steers and Heifers) was constructed for the years 2001 to 2008 (238,000 observations). The empirical evidence suggests that carcass quality attributes price, select, and heavy weight have been gaining influence with respect to market valuation of individual animal's carcass characteristics.