Research Progress Report 338 May, 1968

Monthly Farm-Level Demand for Slaughter Cattle
Anthony A. Prato and Joseph Havlicek, Jr.*
Department of Agricultural Economics

Summary and Conclusions
Information about the factors influencing the monthly and seasonal demand and price of slaughter cattle is essential for the efficient use of resources in the production, marketing and processing of slaughter cattle. Monthly and seasonal differences in the demand for slaughter cattle may also be important in terms of allocating slaughter cattle supplies intraseasonally so as to increase returns to producers.

This study focused on analyzing the monthly farm level demand and price of slaughter cattle for the 1948-1964 period. It is mainly concerned with identifying major factors which influence farm level demand and prices of slaughter cattle, determining the nature of the monthly demand for slaughter cattle at the farm level, and assessing the impacts which changes in these major factors have on quantities and prices of slaughter cattle at the farm level.

A model consisting of three overidentified equations containing three endogenous variables and five exogenous variables was used to relate the factors affecting the monthly price and quantity of cattle slaughtered and to estimate the monthly demand for slaughter cattle. The demand relation expressed the price received by farmers for slaughter cattle as a function of the per capita volume of slaughter cattle, per capita cold storage holdings of beef, and per capita personal income. The supply relation expressed the quantity of slaughter cattle supplied as a function of the current price received by farmers for slaughter cattle, the price received by farmers for slaughter cattle in the previous month, the price of feeder cattle lagged one year, and the current price of corn. The level of per capita cold storage holdings of beef was considered a function of per capita cold storage holdings of beef in the previous month and the current quantity of slaughter cattle. The quantity demanded and the quantity supplied of slaughter cattle

*Formerly graduate assistant at Purdue University, now graduate assistant at the University of California (Prato) and associate professor of agricultural economics at Purdue Univei sity (Havlicek). This report is based on Anthony A. Prato’s unpublished M.S. thesis, "An Econometric Analysis of the Monthly Farm Level Demand for Beef Cattle, Purdue University, January 1966. The authors appreciate the comments and suggestions which J. H. Armstrong and J. W. Uhrig made on an earlier draft of this manuscript.

PURDUE UNIVERSITY • Agricultural Experiment Station • Lafayette, Indiana