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Dairy production decisions are considered to be determined outside the beef cattle industry. However, through its effects on nonfed cattle marketings, a dairy herd buyout program affects both feeder and slaughter cattle prices in the U.S. feeder cattle industry. An impact analysis of a year-long buyout program indicates relatively severe first quarter price effects. However, by the second quarter price flexibilities show lessened relative price impacts, even though prices continue to decline in absolute terms. Within two years, reduced beef cattle numbers lead to higher prices that would have occurred without the buyout program.


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