Beef consumption has declined steadily over the last two decades, both in total quantity and as a share of U.S. meat consumption. Reductions in the price of pork and poultry and health concerns about the effects of red meat consumption account for much of this trend. However, relative improvements in the quality and consistency of pork and poultry products may also be a factor. Perhaps it is no coincidence that the beef industry has trailed pork and poultry in adopting methods for vertical coordination among the various production stages from farm to market. Contract arrangements and vertical linkages—alliances among producers, processors, and retailers—are common in pork and poultry production. Beef production, on the other hand, mainly is still coordinated through traditional market structures.

The March 31 USDA Prospective Plantings report lowered the national corn acreage and slightly raised the soybean acreage relative to the market expectation. According to the report, U.S. growers plan to sow 79 million acres of corn in 2003, which is unchanged from the previous year’s level and close to the five-year average. Most states in the Great Plains region reported a decrease in the intended corn plantings because of possible drought conditions and higher fertilizer and energy prices. This decline is offset by increases in prospective corn plantings by growers in the eastern Corn Belt who shifted into soybeans last year because of the wet season. U.S. soybean producers are projected to plant 73.2 million acres, down 1 percent from 2002. The expected soybean acreage is the lowest in the last five years and is slightly lower than the five-year average of 73.6 million acres. Counteracting the national trend, soybean acreage is expected to increase in the northern Great Plains as well as some areas in the south.

To an industry lobbyist, the role of government is to adopt programs and regulations that increase profits for the firms in the industry. Steel and timber lobbyists argue for higher taxes on imports; lobbyists for power generators argue for lower air quality standards; and farm lobbyists argue for higher support prices and stronger protection from imports. When government responds to lobbying pressure and adopts a new program or regulation, all firms in the industry typically have access to the benefits. And because the benefits often are in proportion to the level of production, the largest firms obtain the greatest benefit. Thus, President Bush’s import taxes on steel benefit the largest steel companies the most. In agriculture, the best example of this principle is the sugar program. The program limits U.S. imports of sugar, thus costing U.S. consumers approximately $1.4 billion per year through higher prices. According to a recent Heritage Foundation study, Alfonso and Jose Fanjul, owners of Flo-Sun, Inc., in Palm Beach, Florida, benefit by approximately $65 million per year from producing sugar in Central Florida. Furthermore, they obtain an additional $60 million per year because they are given a portion of the U.S. import quota, which allows them to import inexpensive Dominican sugar into the high-priced U.S. market.

Congress has once again passed a disaster assistance program for farmers. This time the drought of 2001 and 2002 was the rationale for the legislation.