The Value of Third-Party Certification of Preconditioning Claims at Iowa Feeder Cattle Auctions

After controlling a variety of feeder cattle characteristics and market and sale conditions in Iowa feeder auctions, the price premiums for preconditioning claims (vaccinations and minimum 30 days of weaning) with and without third-party certification (TPC) are estimated as $6.12/cwt and $3.35/cwt,...

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Bibliographic Details
Published in:Journal of agricultural and applied economics 2007-12, Vol.39 (3), p.625-640
Main Authors: Bulut, Harun, Lawrence, John D.
Format: Article
Language:English
Subjects:
Animals
asymmetric information
Auctions
Beef
C23
Cattle industry
Certification
Datasets
feeder cattle auctions
Immunization
Q12
Q13
quality
Sales
signalling
Third party
third-party certification
Weaning
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Summary:After controlling a variety of feeder cattle characteristics and market and sale conditions in Iowa feeder auctions, the price premiums for preconditioning claims (vaccinations and minimum 30 days of weaning) with and without third-party certification (TPC) are estimated as $6.12/cwt and $3.35/cwt, respectively. These premiums differ statistically (p < 0.0001), and their difference exceeds the average participation cost of TPC ($l/cwt). This indicates that TPC is valued in the market to credibly signal preconditioning investment under asymmetric information.
ISSN:1074-0708
2056-7405
1074-0708
DOI:10.1017/S1074070800023312