Estimating the Economic Value of Specific Characteristics Associated with Angus Bulls Sold at Auction



Jones et al.: Value of Bull Characteristics

317


regression model was used, and tests for
structural change were conducted. Results of
these tests showed three structurally distinct
time periods: 1989 and 1993, 1996-1997, and
1998-2000. Birth weight, sale weight, and
scrotal circumference were significant in all
three periods. Ribeye area and back fat were
significant in the last time period. Walburger
interpreted this as a sign of producer adoption
of genetic technology.

Data

Data for this study were collected over a 4-
month period from purebred Angus producers
across the Midwest, Rocky Mountain, and
Northwest regions of the United States.
Producers were contacted by phone, written
correspondence, and e-mail requesting sale
catalogs and price data from their most recent
production sale. Data were collected on 8,285
bulls from 60 sales in 11 states. Variables
included sale price, registration number, and
various marketing factors specific to each sale.
Data relating to actual weights and EPDs
were not recorded at this time, although
animals found to have incomplete production
records were noted for each sale.

The collection of all actual weights, EPDs,
and pedigrees was done in cooperation with
the American Angus Association (AAA).
Registration numbers for all bulls were
forwarded to AAA, which then generated a
database with all relevant genetic information
with respect to each bull. This database was
combined with the existing record of prices
and marketing factors to create a complete
summary of variables for each bull. Table 1
provides definitions of variables used in this
study, and Table 2 provides summary statis-
tics for the price, actual weights, EPDs, and
marketing variables.

It is important to note that AAA has access
to and provided more information for several
of the bulls in our data set than what was
reported to buyers at the time of sale.
Although AAA encourages breeders to pro-
vide as much information to buyers as
possible, there is not a standard reporting
system followed by every producer. No two
sales in this study reported exactly the same
amount or types of information in their sale
catalogs. These discrepancies were noted and
are accounted for in the forthcoming models
but at first glance may appear misleading. An
example of this problem appears in Table 2.
Even though AAA provided over 7,000
observations on adjusted yearling weight, the
actual number of observations reported by
breeders was far lower. Therefore, in order to
avoid creating models that included informa-
tion that was unavailable to buyers, details
regarding variables reported at each specific
sale were tracked and models specified using
only data that were available to buyers at the
time of the sale (i.e., data reported in the sale
catalog). As a result of this ‘‘missing data’’
issue, the usable number of observations out
of the initial 8,285 bulls varied depending on
which variables were included in the model.
For example, the number of observations used
in the first estimated model was 4,150,
representing 41 of the 60 surveyed sales.
Similarly, the usable number of observations
for the second estimated model, which includ-
ed EPDs, was 3,760, representing 29 different
bull sales. Clearly, not all sellers are reporting
ultrasound EPDs in their sale catalogs.

Methods

Following a hedonic price determination
framework (Ladd and Martin; Rosen) and
expanding on earlier purebred bull price
studies (Chvosta, Rucker, and Watts; Dhuy-
vetter et al.), actual production measures,
EPDs, and marketing factors form the basis
for a model of bull prices that can be generally
specified as

Bull Price ~ ðAge, Actual Weights,
Ultrasound Scans,

(1)               ProductionUltrasoundEPDs,

Marketing Factors,
Sire, States
=Sales):

Actual production measures include age,
birth weight, and adjusted weaning and
yearling weight. Production EPDs include



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