Financial structure of corn-belt cow-calf enterprises: The impact of alliance participation on producer financial position

Until recent years, the beef industry has lost market share to the poultry and pork industries. This decline coupled with very low profits in beef production have led some producers to seek alternative marketing structures. However, beef appears poised to take an entirely different direction than poultry and pork have in their market restructuring. Beef alliances are promoted as a means for producers to capture additional production value for their cattle.; This study looks at how participation in an alliance affects the financial position of Corn-belt Cow-Calf producers. The study finds the risk-return theory to be intact as income variability rises with the added expected returns of alliance participation. Additionally, the results suggest that the improved expected return has a strong impact on improving financial ratios due to the low return nature of the beef industry. However, producers must be cautioned that choosing an alliance is very crucial to this success. If the alliance chosen does not match with the producer's herd, then the producer would likely be better off in the traditional open market.