Abstract
A survey was conducted of the 15 largest beef processors to identify the mix of procurement practices being used and to understand reasons motivating recent processorproducer linkages. Processors are shifting away from cash-market live, fed-cattle trade, which represents only 36% of cattle procured by survey respondents in 1999. Processorowned cattle feeding represents only approximately 5%, where it has been for more than a decade. Various other forms of pricing such as carcass weight, grid, and formula represented the largest portion of purchases at 49%. Processors indicated the two most important reasons they get involved in contracts and marketing agreements with producers is to secure higher and more consistent quality cattle. Assuring food safety was also a motivation for linking more closely with cattle producers. In the future, processors felt these motivational factors would increase in importance. As cattle feeders explore grid pricing and alliance opportunities, it is important they understand why processors desire to enter into contracts and marketing agreements.
Highlights
The U.S beef industry is undergoing marked transitions in the way livestock and meat products are marketed and the way price discovery occurs
A survey was conducted of the 15 largest beef processors to identify the mix of procurement practices being used and to understand reasons motivating recent processorproducer linkages
Processors are shifting away from cash-market live, fed-cattle trade, which represents only 36% of cattle procured by survey respondents in 1999
Summary
The U.S beef industry is undergoing marked transitions in the way livestock and meat products are marketed and the way price discovery occurs. The once dominant negotiated cash markets are shifting to longterm contracts and marketing agreements. The purpose of this study was to determine current marketing and pricing methods being used by beef processors. The current and expected mix of pricing methods for fed cattle were estimated by the processors. Major motivating factors for changing beef processor-producer linkages were assessed
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