Previous research has not addressed the impacts of alternative supply conditions on price discovery and pricing choice. This study estimated models with data from an experimental market, the Fed Cattle Market Simulator, encompassing live weight, dressed weight, and grid pricing under two alternative supply scenarios. Significance of variables explaining transaction price variation and pricing choice differed between the two supply periods. Overall results were close to expectations. Higher quality cattle marketed with a grid brought higher prices in both supply periods. Having lower quality cattle in either supply period increased the probability of cattle being marketed (purchased) on a live weight basis.

Because of the significant investment in the mandatory price reporting program (MPR) by the USDA and by packers, it is important to understand what producers believe about its effectiveness. This study reports results from a survey of feedyards located primarily in Kansas, Nebraska, Texas, and Iowa. Results indicate a diversity of opinion regarding MPR effectiveness. On average producers are neutral to negative regarding the value of MPR to them. Interestingly, feedlot characteristics appear to have little systematic relationship to the manager's perceptions regarding the usefulness of MPR.

Recently, the U.S. Supreme Court considered whether the mandatory fees imposed by the beef checkoff violates the First Amendment. As a precaution, many states began forming voluntary beef checkoffs, where funds would be raised through voluntary contributions. This study conducted a survey of Oklahoma cattle producers to determine what type ofvoluntary checkoff design would receive the greatest support. The most popular checkoff placed a large emphasis on advertising and a slightly lower checkoff fee. The survey also tested the ability of a provision point mechanism to limit free-riding. The mechanism was not as effective as in other studies which used laboratory experiments.

Preconditioning is not new but has received considerable attention in recent years. This research addresses two questions. Are buyers of preconditioned feeder calves paying a price premium close to the performance benefits expected from preconditioning? Is there information asymmetry in the value to the buyers compared with the premium they pay? Buyers paid a price premium but less than the expected performance gains. Thus, the hypothesis of asymmetry of information between buyers and sellers could not be confirmed.

Marketing agreements between meatpacking and cattle feeding firms have created concerns about their effects on fed cattle prices. Profit-sharing marketing agreements were imposed onto a simulated fed cattle market. Price level and variability differences with and without agreements, between agreement participants and nonparticipants, during agreement and nonagreement periods, and between participants receiving and not receiving a monetary incentive were evaluated. Prices and variability for nonagreement cattle were higher during the agreement periods. Marketing agreement participants realized lower, less variable prices than nonparticipating firms. Monetary incentives did not affect price levels but increased price variability.

Increased use of noncash-price procurement methods has concerned cattlemen for the past several years. This research estimated impacts of captive supplies on transaction prices for fed cattle. Negative relationships were found between transaction prices and percentage deliveries from the inventory of forward contracted and marketing agreement cattle. However, impacts from the absolute size of the total captive supply inventory were not significant. Price differences were found among procurement methods with forward contract prices being much lower. On balance, captive supplies had small but often negative effects on fed cattle transaction prices.

Federal budgetary pressures raise questions regarding the importance of public market information. This study assesses the impact of price discovery and production efficiency of reducing public price and quantity information. The amount and type of information provided to Fed Cattle Market Simulator (FCMS) participants was varied by periodically withholding current and weekly summary information according to a predetermined experimental design. Results show that reducing information increased price variance and decreased marketing efficiency; that is, more cattle were delivered at weights deviating from 1,150 pounds- the least-cost marketing weight in the simulator. These factors, which increase costs, make the industry less competitive.

Will the beef and pork subsectors integrate vertically as completely as poultry? This paper compares several aspects of the three subsectors. Pork will continue vertically integrating similar to poultry. Beef is the least vertically integrated to date and has the most barriers to overcome to vertically integrate further. 1 Vertical Integration Comparison: Beef, Pork, and Poultry There has been much discussion regarding the vertical structure and evolutionary changes in the beef and pork subsectors. Frequently those changes are compared with the poultry subsector. The growth of contract integration and mega-sized hog production units which resemble poultry operations have raised questions regarding whether or not the pork subsector will integrate vertically as completely as the poultry subsector has. Declining beef demand, packer concentration, packer-controlled supplies, and the advent of strategic alliances in the beef subsector have raised questions whether or not vertical integration in the beef subsector is desirable or possible and whether vertical integration is an answer to its many problems. This paper compares several structural aspects of the beef, pork, and poultry subsectors. The intent is to provide a broad perspective on structural differences and the likelihood of continued structural differences between the three subsectors. A comparison of vertical integration in the beef, pork, and poultry subsectors is necessarily an apples to oranges comparison. Integration in poultry vastly exceeds that of pork and beef. Therefore, in many cases, what is observed about poultry is the result of integration. In the early 1950s, vertical integration was recommended if the poultry subsector was to expand and remain profitable (Baum 1951). Vertical Integration Definition and Motives Vertical integration involves participation of one firm in two adjacent stages in the vertical marketing channel from producers to consumers (Carlton and Perloff 1994). 2 Coase (1937) made the distinction between coordination internally within the firm or externally via market prices. Mighell and Jones (1963) included vertical integration as one type of vertical coordination, along with market prices. There are two primary types of vertical integration: contract integration and ownership integration. Contract integration involves a firm at one production-processing-distribution stage contracting with one or more firms at an adjacent stage for specific services and/or products. Both parties may own some but not all of the necessary resources (Blaich 1960). Numerous variations of contract integration have existed for decades (Roy 1963). Ownership integration differs in that the integrating firm owns most/all key resources in both adjacent productionprocessing-distribution stages. Vertical integration motives can be identified in several ways (Carlton and Perloff 1994; Torgeson 1983), and include: (1) decrease transaction costs; (2) decrease risk and uncertainty; (3) assure input or output supplies; (4) correct market failures; (5) counter market power at an adjacent stage; (6) create or extend market power; and (7) avoid government restrictions, regulations or taxes. In essence, vertical integration occurs when perceived benefits from vertically integrating exceed expected costs. Production Characteristics: Beef, Pork, and Poultry Biological Production Cycle and Genetic Base The conception to market period for beef, pork, and poultry varies widely (Table 1). The importance of the biological process to vertical integration involves the speed biological changes such as genetic improvements can be made, which affects the incentives and disincentives for vertically integrating. 3 The genetic base for poultry is relatively narrow. Only a few breeds or genetic lines, i.e., fewer than ten, are used and they ultimately provide the vast majority of final products. Genetic changes can be made quickly in poultry because of the shorter biological process and because from the hatching process, one hen produces many more offspring in a short time than for either a cow or sow. The genetic base for hogs has narrowed considerably in recent years. There has been rapid growth in specialized firms that provide breeding stock for larger hog operations. This narrowing of the genetic base results from a combination of factors. One is the move toward value-based marketing and pricing of hogs. Another is the shorter biological process for hogs compared with cattle. Genetic changes can be made more quickly and through larger litters can influence more offspring in a single breeding cycle than with cattle. In the beef subsector, we observe a contrary trend. Rather than the genetic base narrowing, it is widening. Cattlemen are attempting to create new breeds, some of which are called composite breeds created through consistent, planned crossbreeding programs. However, a cow produces only one calf per year and it takes about 24 months to learn whether or not the breeding process resulted in beef with more or less desirable eating characteristics. As a result, making significant product quality improvements based on genetic changes is slow and a disincentive to vertical integration. Technology can impact the speed of genetic changes. Artificial insemination and embryo transfers can speed the process somewhat for pork and beef. However, costs are too high for large-scale use, especially for beef, and higher costs reduce the incentive to 4 vertically integrate. Subsector Stages, Geographic Concentration, and Operation Size and Specialization The poultry subsector has two primary production stages. Fewer production stages contribute to the ease of managing a vertically integrated production process and reduce transaction costs between subsector stages. Poultry production is geographically concentrated in the southeastern U.S. Poultry operations, largely as a result of integration, are specialized units. While operation size varies, many are relatively large, intensely managed operations. The pork subsector also has two primary production stages. Two decades ago, most hog operations were integrated farrowing-finishing operations. There has been a trend toward larger, more specialized farrowing and finishing operations in recent years, especially in vertically integrated firms. This results from capitalizing on economies of size and improved management in specialized operations. Hog production has traditionally been geographically concentrated in Iowa and surrounding corn belt states. However, pork production has increased sharply in North Carolina and mid-Atlantic states as well as in Oklahoma and southern plains states. Thus, the geographic concentration in pork production has broadened somewhat. The growth areas in hog production are those areas which are more accepting of vertically integrated systems, culturally and legally, partly due to the presence of integrated poultry operations in those areas. Cattle production is again distinctly different than poultry or pork production. The production process for cattle consists of a third production stage, one more than for poultry or pork. That additional production stage increases the transactions costs for the 5 subsector. Each stage also has different resources and management needs and thus increases the difficulty in managing a vertically integrated beef production unit. Beef has a significant land and forage requirement. Cattle stocker operations are diverse and frequently not concentrated in the same geographic regions as cow-calf production. Cattle feeding has increased in geographic concentration and involves some of the same states where there are numerous stocker operations. However, because of the geographic dispersion combined with an added production stage, the beef subsector incurs significant transactions costs moving animals from geographically dispersed cow-calf operations, to more geographically-concentrated stocker areas and to still more geographicallyconcentrated cattle feeding areas. A large number of cow herds are small, with less than 30 cows per operation. Stocker operations are larger, usually combining calves from several cow-calf operations into a larger production unit. Cattle feeding has experienced greater consolidation of feeding capacity in fewer, but larger firms. Implications for integration are interrelated with other factors discussed above. A large, specialized production unit can be managed more efficiently than many, smaller, diverse production operations. Specialization and larger size units in poultry are partly the result of integration. Such units capitalize on more specialized management and economies of size. Assuming the poultry model can be applied to pork, then the trend toward increasingly larger and more specialized operations in hog production will lead to further integration. Vertical integration in the beef subsector will occur more slowly than for either poultry or pork, due in part to the difficulty of organizing and managing smaller, highly diverse production units. Incorporated with that are the disadvantages cited above 6 for the beef subsector, i.e. longer biological process, diverse genetic base, an added production stage, and more geographically dispersed production. Vertical Integration Incentives Value-Added Products, New Product Development, and Brand Marketing Greater profit opportunities exist with value-added, differentiated, branded meat products than with commodity-type products sold in the traditional fresh form. Studies show that product differentiation allows firms to price products differently and receive premium prices for perceived or actual product differences. Brand loyalty and perceived or actual product differentiation enables firms to extract premium prices. Consumers pay a premium for consistent quality or perceived quality. Therefore, firms have an economic incentive to vertically integrate and to develop consumer brands and brand loyalt

Beef has lost considerable market share because it does not offer adequate value to consumers. Important components of value are problems related to inadequate beef quality determination and pricing fed cattle on averages. This study summarizes results of industry surveys solicited to investigate problems with value-based fed cattle pricing. A research agenda to address the problems is proposed. Research needs include more information on the expected costs and benefits of a less subjective and improved beef quality identification system. More information is needed regarding economic trade-offs between beef carcass quality and cattle production management. All segments of the beef industry, from cow-calf producers through retailers, are realizing more opportunities to develop longer term contractual relationships. Many of these agreements substantially alter production and market risk and expected returns and therefore need in-depth investigation. In general, more research is needed on ways to improve both price and non price coordination of the complex beef market.

Socioeconomic and production system characteristics of a sample of Oklahoma sheep producers were employed to examine the decision to use or not use an electronic market for slaughter lambs. Producer attributes that influence electronic market use were identified with qualitative choice models. The results help identify characteristics of electronic markets which influence their success. The findings also have implications about educational opportunities for cooperative extension.

Pooled cross-section time-series data were used to assess inter-firm differences in fed cattle prices paid by southern plains meatpackers during June 1989. Significant price differences were found among packers, even after accounting for numerous factors affecting fed cattle value. Some buyers paid higher prices and some lower prices than did one of the three largest packers. As a group, the Big Three firms paid lower prices than did smaller firms, both in the southern plains as a whole and in three of its subregions.

Economies of size studies can be categorized according to the methodology employed. Two recent studies for cattle slaughtering and beef fabrication that varied widely in methodology and data were compared using a binary variable regression model. Despite differences in data and the methodology chosen, the comparative analysis showed that results from the two studies were similar. Estimated minimum costs and associated annual volumes were sensitive to inclusion or exclusion of the smallest plant size in one study. Minimum cost annual volumes varied over a relatively wide range, suggesting a flat long-run average cost curve at higher volumes, with only a small effect on average total cost. © 1993 John Wiley & Sons, Inc.