Document Type
Article
Publication Date
8-23-2024
Publication Title
Agricultural Economics
Abstract
An overview of how macroeconomic shocks affect beef quality-grade premiums and discounts in the U.S. fed cattle market is discussed. We review the shock transmission linkages along the beef industry supply chain and determine the economic implications for the finished cattle market. The analysis provides insight into how the fed cattle market responds to macroeconomic shocks. The economic implications of financial risk associated with the behavior of beef carcass quality-grade premiums and discounts associated with the Great Recession and the COVID pandemic are contrasted and assessed.
Data analysis indicates that macroeconomic shocks affect the quality-grade premium pricing mechanism for finished cattle. The origins of the shock (aggregate demand versus aggregate supply) and government fiscal policy intervention determines how premium levels and premium volatility responds to a macroeconomic shock. Thus, beef carcass quality-grade premiums are not only subject to industry idiosyncratic risk, such as swings in the seasonal demand for beef, but are also subject to systematic risk associated with business cycle fluctuations.
Recommended Citation
Fausti, Scott W.; Tejeda, Hernan A.; and Diersen, Matthew A., "Macroeconomic shock effects on beef carcass premiums" (2024). College of Business Faculty Publications and Presentations. 29.
https://digitalcommons.csumb.edu/cob_fac/29
Comments
Published in Agricultural Economics by Wiley Periodicals LLC on behalf of International Association of Agricultural Economists. Available via doi: 10.1111/agec.12849.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.