Examining Packer Choice of Slaughter Cattle Procurement and Pricing Methods

Using daily fed cattle purchase transaction records collected by the Packers and Stockyards Program over the period April 1992 to April 1993, we identify characteristics associated with the choices of fed cattle procurement and pricing methods, The methodology involves the use of a multinominal logit model. Regional concentration; processing capacity; number of head per IOC average weight per head; cattle type; yield grade, quarterly grade, seasonality, and distance from packhrg plants play a significant role in determining the methods of procurement and pricing chosen by packers, The method chosen by packers to procure fed cattle also affects the choice of a given pricing method. While procurement and pricing policies may be made at the firm or plant level, the actual procure-ment and pricing decisions are often made in the field by cattle buyers salaried by meat packers or employed on a commission basis. Ward (1979, 1988), by way of case study interviews of bee