Short-Term Forecasting:

Accuracy of USDA's Meat Forecasts and Estimates

PEMD-91-16: Published: May 6, 1991. Publicly Released: May 20, 1991.

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Pursuant to a congressional request, GAO examined the accuracy of the Department of Agriculture's (USDA) short-term forecasts and estimates of meat production, prices, and inventories.

GAO found that: (1) between 1983 and 1988, overall bias error was less than 3 percent for all the USDA short-term cattle, hog, and broiler production and price forecasts, and overall total error was less than 6 percent; (2) error rates were much higher and more varied when forecast accuracy was evaluated on an annual or monthly level instead of over a multiyear period; (3) droughts, increased consumer demand for broilers, and the federal payment-in-kind, dairy diversions, and dairy termination programs affected the accuracy of USDA forecasts; (4) bias errors and total errors were relatively small for the National Agricultural Statistics Service's (NASS) estimates of cattle and hog inventories and broiler production between 1983 and 1989; (5) the use of other forecasts or estimates as benchmarks for comparison and analysis required some reconstruction, since historical information for other forecasts and estimates was not always retained or accessible; (6) the American Agricultural Economics Association's production and price forecasts were more accurate than USDA forecasts of cattle production and cattle, hog, and broiler prices; (7) although benchmarks showed when improvement in forecast accuracy was needed, they did not indicate what should be done; (8) forecast errors could have implications for government policies, programs, and budget decisions; and (9) between 1983 and 1989, excess meat imports totalled 135.6 million pounds, because USDA used biased forecasts that underestimated actual production and imports.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: GAO confirmed that NASS now reports reliability information and it has new manuals explaining its procedures. WAOB has also implemented its comprehensive plan for monitoring and evaluating short-term USDA commodity forecasts.

    Recommendation: To improve meat production and price forecasts and estimates, the Secretary of Agriculture should direct the USDA World Agricultural Outlook Board (WOAB) and NASS to develop a process to more clearly identify, report, and correct bias errors when they occur and to provide better documentation of their procedures and assumptions.

    Agency Affected: Department of Agriculture

 

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