Krista Swanson, the National Corn Growers Association’s lead economist, provides an analysis of a newly published independent study on the accuracy and market impact of USDA information on corn markets.
The United States Department of Agriculture (USDA) collects survey data from farmers that is used as a basis for forecasts in several publicly published reports and databases. Agriculture economists, like me, frequently use USDA information in articles and studies that benefit farmers and our industry.
In recent years growers have raised concerns about the complexity of the survey process, report accuracy and declining survey participation. The declining survey response rates have left USDA with a growing rate of insufficient data not only limiting what can be published, but also limiting ways data can be of value to farmers in return. As an example, when making the 2019/2020 farm program selection, farmers in counties with unpublished 2019 county survey yields, which would be very close to Agriculture Risk Coverage yields, were at a disadvantage in making an informed farm program decision.
In this spiraling cycle, declining survey participation leads to insufficient data, while insufficient data leads to questions of accuracy and value that deter participation. To overcome the spiral, the National Corn Growers Association (NCGA) established a collaboration with USDA in 2016, by promoting grower participation in USDA surveys and improvements to enhance grower confidence in USDA reports.
Continuing that endeavor, the Risk Management and Transportation Action Team of NCGA commissioned a newly published independent study to establish the state of knowledge regarding accuracy and market impact of USDA information on corn markets. The study led by Agriculture Economics Professors Olga Isengildina Massa (Virginia Tech), Berna Karali (University of Georgia), and Scott H. Irwin (University of Illinois), included a review of more than eighty academic reports dating back to 1970 and creation of a searchable public database of the reports and content.
Addressing one of the biggest concerns about USDA reports, the authors conclude that USDA reports do cause market volatility, which is not a negative development as volatility does not equate to uncertainty. In fact, the review also shows USDA reports help decrease market uncertainty, which is only possible if USDA information is accurate and reliable. The authors also find strong evidence that market participants find USDA to be a reliable, objective source and a difficult source of information to beat.
There is always room for improvement, such as the authors suggestion for expanded communication. But overall, the review confirms USDA as a vital and trustworthy source of market information for corn.
As a daily user of USDA data, that’s significant validation I value.
In addition to the revolving series of surveys USDA completes throughout each year, we are in the midst of the USDA Census of Agriculture survey that is only completed once every five years. When receiving such surveys, I encourage farmers to remember the value of the data to NCGA and our members is increased when USDA has adequate grower participation.
Contact Researchers:
Olga Isengildina Massa (oimassa@vt.edu)
Berna Karali (bkarali@uga.edu)
Scott H. Irwin (sirwin@illinois.edu)
