USDA Forecasts

USDA forecasts are vital to the agricultural sector, offering crucial insights into crop yields, livestock production, commodity prices, grain stocks, farm income, and more. These forecasts guide decision-making for a wide range of stakeholders across the agricultural supply chain. Farmers depend on USDA predictions to make informed planting and harvesting decisions, manage risk, and optimize their operations. Agribusinesses use these forecasts to plan production, pricing, and inventory strategies. Lenders rely on them to assess the financial health and creditworthiness of agricultural clients, while companies involved in food processing, retail, and export use them to guide procurement and supply chain logistics, ensuring they can anticipate market trends and adjust their strategies accordingly.

The goal of this paper is to systematically review the literature on USDA forecast evaluations, critically assessing their methods and findings. Key characteristics of optimal forecasts include bias, accuracy, efficiency, as well as encompassing and informativeness. This review revealed that results vary significantly depending on the forecast being evaluated, the commodity in question, the sample period, and the methodology used. While some forecasts performed exceptionally well, others showed inconsistencies, resulting in a mixed record of forecast optimality. The paper discusses the methodological and empirical contributions of these studies, identifies their limitations, and offers suggestions for future research to improve the reliability and usefulness of USDA forecasts for the agricultural economy at large.

To read the full entry in the Journal of Agricultural and Applied Economics, visit the article: Are USDA Forecasts Optimal? A Systematic Review.