Carcass Quality and Genetic Selection in the Beef Industry

By Vanek, Joseph K.; Watts, Myles J. et al. | Journal of Agricultural and Resource Economics, December 2008 | Go to article overview

Carcass Quality and Genetic Selection in the Beef Industry


Vanek, Joseph K., Watts, Myles J., Brester, Gary W., Journal of Agricultural and Resource Economics


A lack of high-quality beef has been cited as one of the primary factors for the 50% decline in beef demand from the mid-1970s to the late 1990s. Cattle producers argue that appropriate price premiums are not sufficient to encourage the production of high-quality cattle. Although some improvement in carcass quality can be made by the cattle feeding and processing sectors, substantial improvements in quality must include genetic progress. A hedonic analysis of four major U.S. beef seedstock producers indicates that bull purchasers place relatively high values on a bull's ability to produce progeny with improved carcass-quality traits.

Key words: beef quality, expected progeny differences, hedonic model

Introduction

A lack of high-quality beef has been cited as one of the primary factors for the 50% decline in beef demand that occurred between the mid-1970s and the late 1990s (Smith et al., 2000). In response, the National Cattlemen's Beef Association argued for increased value-based marketing as a means for improving beef quality (Value-Based Marketing Task Force, 1990). A value-based system measures the quality of fed cattle carcasses and then establishes individual cattle sales prices based upon these measures. Although many value-based cattle pricing methods have been implemented, Johnson and Ward (2005) note that value-based pricing has, on average, only weakly influenced fed cattle quality.

This paradoxical result begs the following question: If consumers truly demand higher quality beef, why are market prices unable to transfer this information to fed and feeder cattle producers? It could be that transactions costs of measuring, managing, and transferring such price information simply do not exceed the benefits of doing so. Or, it could be that fed cattle producers are limited in their ability to improve fed cattle carcass quality because of a lack of high-quality feeder cattle. That is, while cattle feeding practices can influence fed cattle carcass quality, feeder cattle genetics are a limiting factor in the production of high-quality fed cattle (Corah and McCuIIy, 2006). Alternatively, it may be that such information is actually being transmitted along the marketing chain, but appropriate data are not available to adequately research the issue.

Indeed, feeder cattle producers often argue that appropriate price premiums are either unavailable or insufficient to encourage the production of high-quality feeder cattle. However, it is virtually impossible to directly determine the soundness of this argument for a number of reasons. First, the evaluation of feeder cattle quality is fraught with measurement error and signal extraction problems. Second, approximately 37 million head of feeder cattle are produced each year in the United States [Livestock Marketing Information Center (LMIC), 2008a]. Given that the average beef cattle operation maintains a breeding cow herd numbering less than 50 head, the costs of measuring feeder cattle quality are large (LMIC, 2008b). Third, the eventual end-use quality of any single feeder calf is ultimately a combination of genetics, feeding strategies, weather conditions, animal health, and processing activities.

If the marketing chain is not clearly signaling consumer demands for higher quality beef cuts (i.e., more tender, consistent, and flavorful) to feeder cattle producers, then fed cattle carcass quality would not be substantially improved by value-based pricing methods. Furthermore, feeder cattle (i.e., cow-calf) producers would be expected to ignore the potential for higher fed cattle carcass quality when purchasing bull seedstock. Cow-calf producers select bull seedstock based on expectations of a bull's ability to transfer various characteristics to its offspring. Expected progeny differences (EPDs) are quantitative measures of heritable traits that may be transmitted to a bull's offspring (e.g., birth weight, weaning weight, yearling weight, etc. …

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