A recent IowaStateUniversity study of sale prices at Iowa auction markets shows that cattle carrying certification of preconditioning and a 30-day weaning program earn significant premiums.

The report notes that the majority of U.S. feeder cattle are sold through auction markets. While these auctions are very efficient at bringing buyers and sellers together for price discovery, signaling the value of cattle at auctions framework is often a challenge. This

is particularly true for unobservable traits such as vaccinations and previous management of the cattle.

The root of the problem is that buyers cannot assess the quality of cattle at a low cost, and sellers have incentive to overstate the condition of their animals. Third-party programs, such as state-sanctioned green- or gold-tag preconditioning programs, or similar private company programs, have potential to mitigate this problem provided that buyers trust the integrity of programs and procedures.

After tracking prices at 105 Iowa auction facilities, the researchers found that calves sold with third-party certification of preconditioning claims (certified vaccination and at least 30 days weaning claims) receive significantly higher premiums than those with similar uncertified claims. On average, the difference exceeds the unit participation cost of third-party certification.

Click here for the full report.