Cattle feeding and cow-calf operations are high investment, high risk farm enterprises. Except for those which are integrated, beef cattle enterprises are essentially marginal operations (Breimyer, p. 1). Seckler indicates that costs associated with transportation, buying and selling commission, shrinkage and death loss from the time the animal leaves the ranch until it reaches the packers are estimated between $10-$35 per head, depending on how far the animal is transported and how often it changes hands. Farris and Williams estimate the gain of an additional $10 of net return per head by integrating from the cow herd to the packer. In general, all evidence points toward significant external economies associated with vertical integration in beef production. The internal effect of forward integration on production efficiency, however, has not been adequately analyzed. Internally, production efficiency is influenced by size of operation and complementary use of resources. Thus, efficiency in beef cattle production is hypothesized as a function of size and system of operation. However, while a large number of studies show that significant economies are associated with size in all systems of beef operations, little research effort was designed to evaluate the effect of size and system on the production efficiency of beef cattle operations. Johnson and Eckert' s cost analyses of four feeding systems in Nebraska showed that both system and size affected feeding efficiency, with system being the more important variable. That study, using simple regression, tested the relationship between size and input-utilization efficiency separately for each input and for each feeding system. Kearl, analyzing net income for nine feeding systems, demonstrated that the breeding system which marketed the major part or all of their young cattle as yearlings had a slight advantage over the cow-calf system. In general, available empirical evidence relative to the effect of size and system on the production efficiency of beef cattle operations is inconclusive. The primary objective of this paper is to estimate production efficiency coefficients for three systems of beef cattle operations (cow-calf, cow-yearling, and completely integrated) and evaluate the effects of size and system on the efficiency of beef production.