Abstract
The impact of corn price on composition and prices of slaughter beef is examined using an annual disaggregated econometric model of the U.S. livestock industry. Major attention is given to the implications of the reduced form model. The ceteris paribus effects of a 1% change in corn price on beef supply are greater than the effects of 1% change in all beef prices. The quality composition and relative prices of slaughter beef categories change dramatically in response to corn price changes. This is true both of current-year and long term effects. The greatest relative current-year impacts of an increase in corn price are decreases in choice beef slaughter and utility beef price. In the long run, a sustained corn price increase has its greatest influence in increasing utility beef slaughter, decreasing choice beef slaughter, and decreasing utility beef price. The use of corn price as a potential policy instrument for increasing the supply of lean beef or stabilizing producer incomes is also investigated.
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