DERIVING FEEDER CATTLE PRICING CONTRACTS FROM FED CATTLE PRICE GRIDS: SIMULATION RESULTS OF RISK-SHARING CONTRACTS

Abstract

Post-slaughter quality-based pricing of cattle is increasingly common. This quality, however, is dependent upon unobservable quality characteristics of the feeder cattle used as inputs. Through stochastic simulation we construct incentive compatible quality risk-sharing contracts based upon final grid-quality schedules that facilitate input quality sorting in the feeder cattle market.Marketing,