Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
August 31,  1970
Selling Cattle on a Carcass Weight and Grade Basis
by Jack H. Armstrong and J. William TJhrig, Department of Agricultural Economics;
and Max D. Judge, Department of Animal Sciences
V,
ARIOUS CHANGES in the
cattle feeding industry have resulted in an increase in marketing slaughter cattle on the basis
of carcass evaluation and pricing
rather than on a live basis. The
evaluation and pricing of cattle
on a carcass basis is of sufficient
importance that all cattle feeders
should have some idea of the
problems and opportunities for
marketing in this manner. Information on carcass weight and
grade selling of cattle will also
improve the producer's ability to
make comparisons between this
method of selling and other
methods of selling slaughter
cattle.
Carcass Weight and
Grade Marketing Defined
The recent rapid increase in
direct selling of cattle has resulted in many different methods
of pricing cattle after slaughter
or "on the rail" pricing systems.
Many times these methods are
not strictly based upon a carcass
evaluation but upon dressing
percentage and other undisclosed
evaluation criteria. For practical
purposes a carcass weight and
grade marketing system should
provide the seller or producer
with sufficient detailed carcass
information to be useful in improving the value, quality and/or
cutability in future cattle breeding and/or feeding programs. In
general, and for ease in use and
understanding, grades used in
evaluation should normally be, in
some manner, related to present
USD A grading standards.
Diferences   Between   Carcass
and Live Marketing
Selling cattle on the basis of
an evaluation of the carcass versus a live evaluation of the animal differs in the follwoing
ways:
1. A live price evaluation includes an estimate of the total
animal value including the carcass and by-products while a
price quotation on a carcass
basis includes only an evaluation
of the carcass.
2. As final payment for the
total animal is figured upon the
basis of the carcass, there is little advantage of either shrinking or filling cattle prior to
slaughter.
3. The way in which price
differentials among the various
carcass evaluation criteria are
developed will determine whether producers of high value—in
terms of quality and cutability
—livestock will be rewarded.
4. Few, if any, of the functions necessary in live marketing  are  eliminated   in  carcass
marketing. Usually additional
functions must be performed
when marketing and evaluating
cattle on a carcass weight and
grade basis. This can result in
added costs in the marketing
process. Someone, either buyer
or seller, must pay the cost of
performing the necessary and
sometimes additional functions.
5. In carcass marketing, just
as in live marketing, there is no
substitute for producer knowledge of market conditions and
prices and accurate knowledge
of the livestock being sold.
Knowledge Required to Market
on a Carcass Weight and Grade
Basis
The information necessary to
market slaughter cattle on a carcass weight and grade basis can
roughly be divided into two categories: (1) the physical measurement and evaluation of the
carcass in terms of its weight,
i.e., its grade relative to both
quality of the meat and quantity
in terms of carcass cutability or
yield and (2) an evaluation of
the prices for the various quality
and quantity products being considered.
In addition, when marketing
on a carcass basis, it is necessary
to make some evaluation for the
above two factors relative to the
Am