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Abstract
It has been argued that access to captive supply cattle improve the economic efficiency of beef
packing facilities. However, this argument has not been subject to hypothesis testing. This work
models the cost efficiencies associated with captive supplies or cattle we refer to as being
sourced through alternative marketing agreements (AMAs). We find that slaughter and
processing costs are lower ceteris paribus for AMA cattle than for cash market cattle. We find
that plants that slaughter cattle from AMA sources operate at higher monthly volumes ceteris
paribus and lower average costs per head. And we find that plants that slaughter cattle from
AMA sources have more predictable volumes ceteris paribus and have lower average costs per
head. If AMAs were limited or prohibited then packing industry efficiency would be negatively
impacted and that fed cattle prices would be negatively impacted.