A statistical model of the primary and derived market levels in the u.s. beef industry

An annual dynamic model of the primary and derived levels of the U.S. beef industry was estimated by rational distributed lags. Geometric rational lags at the retail level were instru-mental in establishing prices in the dressed meat trade and the slaughter and feeder levels. Polynomial rational lags characterized primary inventory supply, which, along with cattle and corn prices, determined the production of fed and nonfed beef. The results suggest that the short- and long-term market behavior in the beef industry is better understood when higher and lower order market interactions are taken into account. This paper presents a statistical system of price, demand, and supply equations describing the U.S. beef industry within a rational distributed lag framework. Mar-ket activities reveal that the retail, whole-sale, slaughter, and feeder market levels are highly interrelated. When these inter-relationships are accounted for in an em-pirical model, the estimated structural pa-rameters and various elasticities provide a better understanding of forces determin-ing demand and supply in the beef in-dustry. Also, such knowledge can be a valuable asset in evaluating the impact of exogenous shocks and government poli-cies on the beef industry and in condi-tional forecasting. Previous models of the U.S. beef indus-try have addressed several of these level