Abstract
Almost 22 percent of the cash farm income from farming in the United States is derived from the sale of cattle. Much of the market information available to those who buy and sell cattle is based on animals meeting the federal grade standards for live animals. In this paper (a) a method is proposed for measuring the accuracy with which federal grade standards for beef cattle can be interpreted, (b) the accuracy with which seven graders estimated the grades of 497 cattle is reported, and (c) the risk incurred by buyers and sellers of live animals is evaluated. The results suggest that it is possible to save more than $50 million annually by eliminating the risk associated with the trading of live animals.
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