Dispelling the myths about USDA Crop Reports

Dispelling the myths about USDA Crop Reports

USDA strives for accurate, objective, reliable, timely forecasts by using statistically sound procedures.

Editor's Note: Greg Thessen is director of the USDA-NASS Upper Midwest Regional Office in Des Moines. Contact him at [email protected].

On August 12, USDA's National Agricultural Statistics Service (NASS) released the Crop Production report which provided the USDA's first survey-based yield and production forecasts for the 2015 growing season. Based on conditions as of August 1, the report showed that Iowa farmers expect to harvest 2.43 billion bushels of corn and 516 million bushels of soybeans, with yields forecast to average 183 and 52 bushels per acre, respectively.

BEST ESTIMATES: As soon as the monthly crop forecasts are released, there are always people who don't understand how USDA arrives at the numbers so they decide that USDA must have just made them up. But this couldn't be further from the truth.

Nationally, the corn crop is expected to total 13.7 billion bushels and soybean production is forecast at 3.92 billion bushels. National yield forecasts as of August 1 averaged 168.8 bushels per acre for corn and 46.9 bushels per acre for soybeans.

As soon as the forecasts are released, there are always people who don't understand how USDA arrives at the numbers so they decide that USDA must have just made them up. However, this couldn't be further from the truth.

What are these crop yield and crop size forecasts based on?
The fact is corn and soybean yield and production forecasts are obtained monthly, August through November, from two different types of yield surveys. One survey is a random sample of growers who are asked to report yields they expect for their farm; the other is a random sample of corn and soybean fields used to make objective plant and fruit counts along with other measurements to calculate yields.

Nationally, nearly 23,000 farm operators were contacted for the August forecasts while counts and measurements were made in half of the 1,920 corn and 1,835 soybean fields sampled across the 10 major corn and 11 major soybean producing states, representing roughly 80% of U.S. production. In Iowa, about 700 farmers were contacted while counts and measurements were made in half of the 290 corn and 210 soybean fields sampled across the state.

Data from the yield surveys reflect conditions as of the first of the month, as data were collected the last week of July and the first three or four days of August.

USDA crop surveyors make counts and measurements in fields
Using the counts and measurements from in-field plots, NASS statisticians are able to analyze the specific yield components (number of ears or pods and their weight) to help determine the yield forecast. Although early in the season, some of these yield components must be modeled, as the season progresses and crops mature NASS ends up with a final statewide average count of ears or pods and their associated weight. After harvest, NASS is back out in one-fourth of the sample fields to glean a small plot to determine harvest loss.

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One of the strengths of the NASS process is the same producers are contacted and measurements are taken in the same fields throughout the growing season. This not only provides a measure of yields but also gives a measure of how yields are changing each month as weather and growing conditions change.

How accurate are USDA's monthly crop production forecasts?
Another common comment heard after the monthly USDA report is released is that the numbers are not accurate. The fact is, NASS forecasts are as accurate as forecasts from other sources but all forecasts that are based on survey data do have a statistical margin of error.

In addition, when forecasting crop yields, NASS forecasts reflect conditions as of the first of the month and assume normal conditions for the remainder of the season. NASS doesn't attempt to predict future weather conditions and long-range weather forecasts are not used in any forecast models. To the extent that conditions depart from normal, the successive forecasts also will fluctuate.

To assist in evaluating the reliability of the August 1 production forecast, the margin of error is computed using the latest 20-year period. This margin of error, published in the report, represents the deviation between the August 1 production forecast and the final estimate. It is expressed as a percentage of the final estimate.

Accuracy of each month's forecast depends on several factors
Probability statements can be made concerning expected differences in the current forecast relative to the final end-of-season estimate, assuming factors affecting this year's forecast are not different from those influencing recent years.

For example, margin of error for the August 1 corn for grain production forecast is 4.3%. This means the chances are two out of three that the current production forecast will not be above or below the final estimate by more than 4.3%. Chances are nine out of 10 (90% confidence level) that the difference will not exceed 7.5%. The August 1 forecast has been below the final estimate 10 times and above 10 times over the past 20 years.

When crop maturity lags, monthly forecasts are more variable
The potential accuracy of each month's forecast depends on crop maturity at the time of the forecast and future weather. When maturity lags normal patterns, the number of pods, ears, etc., is based on number of plants and fruiting positions rather than actual number of fruit.

Thus, when maturity lags, the forecasts become more variable because the expected number of fruit can differ from the final number. However, the primary source of forecast error occurs when final end-of-season fruit weights differ from the historic average because fruit weight cannot be fully determined until crop maturity. So, as crops progress toward maturity and NASS collects new survey data each month, the forecast error is reduced.

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USDA strives for accurate, objective, timely crop forecasts
What's the bottom line? USDA-NASS strives to provide the ag community with estimates and forecasts that are accurate, objective, reliable and timely by using statistically sound and consistent procedures. The yield and production forecasts are meant to remove speculation about the size of this year's crops and are the unbiased source of information used by many market analysts to help provide their market outlook and advice to farmers and agribusinesses.

This is particularly important in a year like 2015 when wide variations in growing conditions exist between the eastern and western Corn Belt. NASS also provides the information to everyone at the same time which helps level the playing field between buyers and sellers and allows more equal bargaining since neither has an unfair advantage by collecting his own facts. This is only possible by conducting surveys throughout the growing season and after harvest but can only be accomplished with the voluntary cooperation of farmers.

Information collected from farmers is kept confidential
All information collected from farmers is kept completely confidential, as required by law. NASS safeguards the privacy of all respondents and only publishes aggregate totals, ensuring that no individual person or business can be identified. The Crop Production report is available on the NASS website at nass.usda.gov.

TAGS: Soybean
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