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Measuring Producer Level Beef Cattle Alliance Financial Performance

There has been a movement toward developing production and marketing alliances in the beef cattle sector in the United States to improve communications and ultimately provide higher priced branded products consistent with consumer demand. Beef cattle producers do not employ a consistent methodology to measure the financial performance of alliance participation. Nor do they have the information to negotiate financially sustainable agreements. The concentrated packer and retail sector do not share cost and returns information beyond total business data required by public traded corporations. A methodology using cost accounting and economic analysis is described to measure return on producer’s assets for an alliance agreement. This information can be used to inform the margin sectors, feedyards, packers and retailers on what share of increased revenue from branded product sales to pass to the cow-calf segment to make participation competitive and the alliance financially sustainable. The cow-calf segment must absorb the added costs and cyclical financial loss to participate in alliances. Increased revenue is required to make branded products a more profitable marketing option than producing commodity beef.

Author(s): McGrann Prof. James (1), Richardson Doug ( 1)

Organization(s): Department of Agricultural Economics Texas A&M University (1)

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