Thursday, March 24, 2011
USDA Acreage And Yield Estimates: Complex And Controversial.
We are a week away from a whole new season. No, not just baseball, but the season of crop forecasting by USDA’s National Agricultural Statistics Service. March 31 will bring the first estimate for the 2011 crop, which is the Prospective Plantings Report that calculates farmer intentions for acreage of corn, beans, and other crops. Once that data is confirmed with the Acreage report on June 30, yield estimates will be issued. US agriculture has a love-hate relationship with the reports. It seems that farmers cannot live with them and cannot live without them, and more than one farmer on the wrong side of the market at the time of the report has accused the USDA statisticians of conspiring with the grain market against the farmer. The reports are the product of an unbelievably complex process, but here goes…
For many years I took farmers to Washington to be in the “lock up” at USDA when Prospective Plantings Report was issued at the end of March and the August 1 Crop Report revealed the first field-level yield estimate. I saw hundreds of farmers go into the process convinced that it was all a façade, and every one come out ready to return to their coffee shop buddies and endorse the accuracy of the USDA process. That process is fully laid out by University of Illinois economists Darrel Good and Scott Irwin in their latest Marketing Brief. They are quite accurate when they say:
1) Market participants demonstrate a lack of understanding of methodology for making acreage, yield, and production forecasts.
2) A lack of trust in the objectives of the forecasts
3) Not fully aware of the sampling methodology employed in gathering acreage and yield data
4) There is not a widespread understanding that (multiple data collection methods) are used for making acreage estimates and yield forecast
5) The estimation process is not clearly understood.
6) Some market participants express belief that USDA has a hidden agenda associated with producing estimates and forecasts and that agenda centers on price manipulation for managing farm programs and influencing food prices.
All of those have been voiced by respectable Cornbelt farmers as they enter the “lock up” area ahead of typical reports.
Good and Irwin detail the methodology for estimating the planting intentions, the estimate of actual planted acreage, monthly yield forecasts, and the estimate of the final crop report in January following harvest.
Many farmers may have been asked by USDA to participate, the March 31 report will involve more than 80,000 farmers who are asked for their estimate of acreage to be planted. USDA statisticians know any biases that farmers may report, and are ready to apply corrective calculations to put the data back on track. At the end of every crop estimate is a statistical report that indicates how close the report will be to the actual number and how reliable the data is.
The acreage report at the end of June is a similar process, with more than 70,000 farmers surveyed from a list pulled at random. Their information is compared to another survey which is based on aerial maps that can verify the estimates of farmers, with enumerators on the ground verifying what the aerial maps show, contacting land owners and operators in some 11,000 mapped locations throughout the US cropping areas.
Yield surveys begin with projected trend line yields applied to the intended plantings and then to the actual acreage. Once yields can be estimated in August, a more reliable yield can be projected. Those surveys occur in the 32 states where corn is a dominant crop and 29 states where soybeans are a prominent crop. For the objective yield surveys farmers are asked for their estimates, and enumerators will also conduct their own detailed field checks. Those plots are monitored from August to November to determine the progress of the crop with a final yield estimate, including how much grain may have been left in the field that should be deducted from the yield estimate.
Good and Irwin say, “Acreage, yield, and production estimates and forecasts provided by NASS are the result of a complex, multilayered process developed over many decades. Given this complexity, it is not entirely surprising that a great deal of misunderstanding and outright myth surrounds these forecasts.” Their analysis indicates that the forecasting methods used by USDA have strong points, but are also subject to being misunderstood, particularly in the yield estimates. They suggest that USDA release the separate results for the farmer estimates and the estimates made by statisticians.
Summary:
USDA’s effort to estimate acreage and yield is a lengthy process involving tens of thousands of farmers as well as crop enumerators, as well as different types of surveys. As the 2011 Prospective Plantings report is soon to be issued, many farmers will renew their complaints and their misunderstandings of the process of data collection and assembly. The process is well documented and transparent, but some changes could be made to improve farmer acceptance of the process and accuracy of the data.
Posted by Stu Ellis on 03/24 at 12:00 AM | Permalink