Economic determinants of the variation in average carcass weight for United States slaughter cattle

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Date

2016

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Montana State University - Bozeman, College of Agriculture

Abstract

Over the past century, average carcass weights of slaughter cattle have demonstrated a substantial upward trend, as well as year-to-year volatility. Since the mid-1970s however, increasing average carcass weights have coincided with high levels of beef production but with diminishing beef cow herds. Increased beef production with fewer cow numbers is likely explained by technological advancements throughout the beef industry. Annual variability in average carcass weight, on the other hand, is hypothesized to arise because of the dynamics of fed cattle production arising from changes in input and output prices. To identify the economic factors responsible for the variation in average carcass weight theoretical and empirical models are developed. Based on the theoretical model, cattle feeders choose the levels of corn and labor that yield optimal carcass weights by equating each factor's value marginal product to the marginal cost. Theoretical predictions are then tested using 85 years of aggregate annual data in a distributed lag model. Overall, we find coefficient estimates on the input and output prices consistent in sign with our theoretical predictions. Of importance is the finding that the manufacturing wage accounts for an estimated 61 percent of the total input and output price induced variation in average carcass weight. A trend for technological change in the beef industry accounts for a yearly increase in average carcass weight of 3.6 pounds.

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