The use of value-added programs to raise and market cattle is growing. Industry sources estimate 15-20 percent of Nebraska cattle are currently marketed or produced through a value-added program, up from 5-10 percent a few years ago.
Dr. Elliott Dennis, livestock marketing economist at the University of Nebraska-Lincoln, examined value-added programs and the premiums paid for cattle raised in these programs using data from the USDA Agricultural Marketing Service. Figure 2, created by Dennis, plots premiums and discounts between 2010 and 2020 for various attributes compared to prices received for choice cattle (green line). Points above the green line represent premiums relative to prices for choice cattle; points below represent discounts. NHTC are cattle which have never been treated with hormones. All-natural are cattle which have never been administered hormones or antibiotics. Dennis found that since 2016, premiums for NHTC cattle averaged $20 per cwt. and $24 per cwt. for all-natural cattle. Premiums for prime animals averaged $17 per cwt. over the 10-year period. Premiums were also payed for Certified Angus Beef cattle, but not as high as those offered for the other attributes. The findings show a willingness in the market to provide premiums for cattle with certain quality attributes or raised under certain practices, perhaps an opportunity for cattle producers willing to change production or marketing practices.
Figure 2. Monthly Fed Cattle Premiums & Discounts
Source: Value-Added Fed and Feeder Cattle Practices: Are They Paying? Elliott Dennis, Ph.D., Assistant Professor, Livestock Marketing Economist, Department of Agriculture Economics, University of Nebraska-Lincoln, Nebraska Cattlemen, February 2020.