An Economic Analysis of the Price Discount for Over Thirty Months of Age Cattle

On December 23, 2003, the first confirmed United States case of Bovine Spongiform Encephalopathy, or BSE, was discovered in Washington State. Following this incident, weekly exports of United States beef fell from 13,819 metric tons of beef the week before the incident to 130 metric tons of beef to by the second week of January of 2004. Since 2004, annual United States beef exports have increased from 460 million pounds to 2.6 billion pounds in 2014.Cattle priced on formulas or on grids are discounted if older than 30 months. BSE related regulations limit the ability to export beef from cattle over 30 months old. Data on over thirty month price discounts began in January 2004. The discount is also related to maturity grading with A maturity being younger animals and B maturity capturing older animals. This analysis indicates that the discount has grown steadily larger since 2004. Yet, the discount has become smaller relative to fed cattle price as beef supplies have tightened. Changing trade regulations are shown to have had a statistically significant effect on the discount magnitude.

An Economic Analysis of the Price Discount for Over Thirty Months of Age Cattle Institutional Repository Document