The Accuracy and Informativeness of Agricultural Baselines
AAEA members new research released in AJAE
Each year the USDA produces long-run projections of agricultural production, trade, and prices, along with US farm sector income. These projections are widely used in policy discussion and planning within the Federal government, as well as by decision-makers in private industry. The Food & Agricultural Policy Research Institute (FAPRI) at the University of Missouri produces a similar set of baseline projections using slightly different methods, which also receive much attention from policymakers and business leaders.
Despite their widespread use, these projections have not been rigorously evaluated. New research released in the American Journal of Agricultural Economics “The Accuracy and Informativeness of Agricultural Baselines” by Siddhartha Bora from West Virginia University, Ani Katchova from The Ohio State University, and Todd Kuethe from Purdue University, examine the accuracy of both sets of baselines to estimate how far into the future each series provides useful information for planning and decision-making.
Bora says, “Our study shows that for many economic measures, USDA and FAPRI baselines provide meaningful information for several years, so they are appropriate for policy and planning. However, there is some room for these agencies to improve their projections, particularly at longer horizons. By examining previous baseline projections and observed outcomes, we find that the information provided by USDA and FAPRI projections diminishes a few years into the future. For most variables, the baselines provide a relatively accurate prediction for a few years. In addition, we find that neither USDA nor FAPRI baseline projections provide better forward guidance than the other.”
If you are interested in setting up an interview, please contact Allison Ware in the AAEA Business Office.
ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
Contact: Allison Ware
Senior Communications & Membership Manager