John D. Lawrence

Vertical coordination in the US pork industry: Status, motivations, and expectations

In addition to horizontal consolidation at the input, production, and processing subsectors, the US pork industry is becoming more vertically aligned. The largest hog producers and pork processors were surveyed regarding their involvement in vertical coordination arrangements and their plans for future involvement in such programs. Motivation for entering these vertical agreements was examined as was the rate of adoption. Structural and regional implications of these results for the pork industry are discussed.

Evolving Producer-Packer-Customer Linkages in the Beef and Pork Industries

The U.S. pork and beef sectors are rapidly moving from traditional cash markets to formal vertical linkages. In 1999, 27% of hogs and 65% of cattle were traded in the cash market and packers owned 18% of hogs and 5% of cattle; the rest were procured via marketing contracts. Contrary to popular opinion that plant efficiency is the impetus for the change, packers clearly identified quality concerns as the dominant reason for using marketing contracts or self-production. Quality standards and procurement systems to achieve them will increase in importance with the introduction of more branded pork and beef products.

Elements of Cattle Feeding Profitability in Midwest Feedlots

Conventional wisdom and earlier research have concluded that cattle feeding profitability is more determined by feeder and fed cattle prices than by animal performance. This study examined cross-sectional and time-series data from over 1600 pens of cattle in more than 220 feedlots in the upper Midwest where weather and lot conditions are thought to influence feedlot profitability. In addition to input and output prices and animal performance, other factors found to significantly impact cattle feeding profitability were sex, placement weight, facility design, and to a lesser extent placement season.

U.S. Consumers’ Valuation of Quality Attributes in Beef Products

A sample of U.S. consumers were surveyed in a choice based experiment in the Fall of 2005 and Spring 2006 to elicit consumers’ preferences for quality attributes in beef products. Based on the resulting data, a random coefficients logit model is estimated, and consumers’ willingness to pay for these quality attributes in beef products is obtained. The results indicate that consumers have strong valuation for traceability, grass-fed, and U.S. origin attributes in a standard rib-eye steak and are willing to pay a premium for these attributes.

The Value of Third-Party Certification of Preconditioning Claims at Iowa Feeder Cattle Auctions

After controlling a variety of feeder cattle characteristics and market and sale conditions, we estimate the price premiums for preconditioning (vaccinations and minimum 30 days weaning) claims with and without third-party certification (TPC) as

Factors Affecting Beef Cattle Performance and Profitability

6.15/cwt and

Performance of Six Vegetative Treatment Systems for Controlling Runoff from Open Beef Feedlots in Iowa

3.40/cwt, respectively, in Iowa feeder cattle auctions. These premiums differ statistically (p-value less than 0.0001) and their difference exceeds the additional participation cost of TPC (

Comparing fed cattle performance in open lot and bedded confinement feedlot facilities

1/cwt) on average. This indicates that the third party certification is valued in the market to credibly signal preconditioning investment under asymmetric information.

Comparison of Construction Costs for Vegetative Treatment Systems in the Midwestern United States

Close-out information, consisting of data from 1836 pens of cattle that were placed on feed between January 1988 and December 1997, which had been submitted by Iowa cattle producers using the Iowa State University Feedlot Performance and Cost Monitoring program, was examined to determine factors affecting beef cattle performance and profitability. Information provided on close-out sheets included start and end date, cattle per pen, sex, housing type, days on feed, initial and sale BW, feed efficiency (FE), percentage of concentrate, ADG, percentage death loss, feed cost and total cost/45.4 kg of BW gain, breakeven sale price, non-feed variable cost, non-feed fixed cost, and corn price. Feeder cattle prices were calculated as feeder cattle price = [(breakeven sale price × sale BW) − (total cost of gain × gain)]/initial BW. Gains in 45.4-kg increments were calculated as gain = (sale BW − initial BW)/45.4. Fed cattle prices were obtained weekly from the report published by the USDA for Southern Minnesota and Iowa. Profit per head was calculated as profit = (sale BW × fed price) − [(total cost of gain × gain) + (feeder price × initial BW)]. Steers consumed more feed (P 0.30) than heifers. Cattle housed under shelter generally gained more BW (P 0.20). Fewer cattle per pen lead to greater (P<0.002) profit per head. Feeder and fed cattle prices explained ∼50% of the variation in profitability. Results indicate that performance and profitability of cattle feeding are rather complex and are affected by housing type, season, initial BW, concentrate level, sex, and pen cattle population.

Comparison of Construction Costs for Vegetated Treatment Systems in the Midwest

Beef feedlots of all sizes are looking for more cost-effective solutions for managing feedlot runoff. Vegetative treatment systems (VTSs) are one potential option that has been proposed. Iowa State University (ISU) has monitored the performance of six VTSs on open beef feedlots throughout Iowa since 2006. These feedlots have interim, National Pollution Discharge Elimination System (NPDES) permits that allow the use of VTSs to control and treat feedlot runoff. As part of the permit requirements for these feedlots the effluent volumes, nutrient concentrations, and nutrient masses exiting each component of the VTS were monitored. This paper describes the VTSs and monitoring methods used in this study and evaluates the effectiveness, in terms of both effluent concentration and nutrient mass transport reductions, of each system. During the three-year monitoring period, results have shown that VTSs are capable of reducing the nutrient mass exiting the VTSs by 65 – 99% as compared to a settling basin only system, with performance varying by both site and year. In addition to overall mass transport reductions, nutrient concentrations were also reduced, typically reduced by 50-90%, during treatment. Furthermore, monitoring results have shown a consistent improvement in system performance during the three years of the study. Much of this improvement can be attributed to improved management techniques and system modifications that addressed key performance issues.