Prices differ according to the underlying value of beef and by-products produced from each animal.
Both cattle feeders and packers have been reluctant to change from a live animal pricing system to a carcass pricing system. However, Schroeder et al. found general agreement that pricing fed cattle on averages was detrimental to the industry because it did not send appropriate price signals to cattle feeders, stockers and, ultimately, cow-calf producers. Opportunities to profit from better matching fed cattle prices to value have encouraged packers, alliances and producers to use carcass-based pricing. Now there are several value-based fed cattle pricing systems, including formula pricing, price grids and alliances. The purpose of this publication is to help producers decide which form of fed cattle pricing may be most profitable for them.