1. Home
2. Conferences
3. 2005 National Extension Risk Management Education Conference

Price Risk Management in Extension Beef Carcass Evaluation Programs: The Georgia Beef Challenge Experience

R. Curt Lacy

Summary

The Georgia Beef Challenge (GBC) is a beef carcass evaluation project conducted by the University of Georgia Cooperative Extension Service (UGA) and Georgia Cattleman’s Association (GCA) in cooperation with the Tri-County Steer Carcass Futurity and Iowa State University. In this program consignors submit home-raised cattle to be fed to finishing. Carcass and performance data are then returned to consignors.

In 1991, the first year of the program, 157 cattle were consigned. This number increased steadily to 3,551 in 2002-2003. In 2003-2004 enrollment was down to 2,030 due to the high values of feeders.

To reduce price risk, a risk management program is implemented. Consignors establish profit and loss parameters at their annual meeting and then a risk management committee comprised of UGA and GCA representatives execute the program. During the lifetime of the program, consignors have averaged profits of $44.55.

Breakeven and target prices are calculated on an individual pen basis using Georgia feeder values assigned by Georgia Department of Agriculture Market Reporters at shipment. These values account for frame-size, muscle score, and weight. Various futures and options alternatives are evaluated and utilized to satisfy the objectives as market conditions permit.

As a result of this program, producer interest in utilizing futures and options has grown to the extent that risk management workshops have been conducted. In some instances, producers have begun conducting their own risk management while other producers have decided to allow the risk management committee to continue marketing their cattle.

Details

---