Hwangwon Lee, Tanner McCarty, Anastasia Thayer, and Ryan Larsen
Abstract: This case study explores the decisions facing a cattle producer in southern Idaho. Milner Ranch is a diversified family-run business that currently has cow-calf, grazing, and feedlot operations that produce 1,000 head of cattle per year for processing. Like other beef producers, Milner Ranch has recently faced bottlenecks in beef processing and an increasing gap between beef and fed-cattle prices. They wonder whether they would be better served by constructing their own beef processing plant rather than continue to deal with their regional processors. This case study pushes students to conceptualize and analyze the key economic tradeoffs (revenue, cost, risk, etc.) that come with expanding an agricultural firm’s boundary. It also provides practice with examining the strengths and weaknesses of various transactional arrangements between producers and processors (marketing contracts, co-ops, and vertical integration).
Keywords: Cattle, firm boundary, marketing, processing, strategy