Abstract
Grid pricing of fed cattle, from a pricing accuracy standpoint, is arguably superior to either live weight or dressed (carcass) weight pricing (Feuz; Ward and Lee; Schroeder, and Graff). Grid pricing could be called carcass merit (and demerit) pricing. The incentive and disincentive mechanism embodied in a grid pricing system is a function of the grid’s premium and discount structure. However, the incentive structure has been criticized as an obstacle preventing many slaughter cattle producers from selecting grid pricing (Fausti and Qasmi). In a grid pricing scheme, each animal is priced separately based on that animal’s own carcass characteristics. Grids typically have premiums and discounts associated with USDA quality and yield grades, carcass weights, and less- or non-merchantable carcasses. Historically, Prime quality grade carcasses receive a price premium which has been fairly constant over time (Ward, Feuz, and Schroeder). Choice is the benchmark grade. The Choice-Select discount (i.e., price difference) is a focal point for grid pricing and has been rather volatile over time. The Select-Standard discount is nearly a linear combination of the Choice-Select discount.
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