The driving force behind this trend is beef's loss of market share and the resultant need to meet consumer demand for enhanced palatability, consistency, convenience and safety. These coordinated systems take shape in a number of ways, ranging from feeder calf marketing pools to closed cooperatives and other arrangements such as alliances, some of which produce branded products. Implementation of value-based marketing usually is one objective of these systems. Defining market targets includes establishing specifications for carcass traits as well as live cattle characteristics. This in turn leads to various methods of formula or grid pricing.
Some formulas reward quality grade, some reward yield grade, and others try to balance the two.
Pricing formulas reflect market targets. A few outliers in a load can easily wipe out premiums paid on superior cattle in the same load. Producers within these alliances must avoid discounts if they are to benefit financially from formula pricing. Some alliances publish average premiums paid across all cattle marketed in their system. In our necessary quest to improve the end product, we must beware of going to extremes when selecting for carcass traits.