Evaluating USDA’s farm balance sheet forecasts

Abstract

Purpose

The United States Department of Agriculture Farm Balance Sheet forecasts provide important, timely information on the financial assets and debt in the U.S. farm sector. Despite their prominent role in policy and decision making, the forecasts have not been rigorously evaluated. This research examines the degree to which the USDA’s Farm Balance Forecasts are optimal predictors of subsequent official estimates.

Design/methodology/approach

Following prior studies of USDA’s farm income forecasts, archived asset and debt forecasts from 1986 through 2021 are used in regression-based tests of bias and efficiency.

Findings

Forecasts from 1986–2021 are found to be unbiased but inefficient. The forecasts have a tendency to over-react to new information early in the revision process.

Originality/value

These findings can be helpful for forecast users in adjusting their expectations and for forecasters in adjusting the current forecasting methods.

Citation

Díaz Cachay, P.A. and Kuethe, T. (2024), "Evaluating USDA’s farm balance sheet forecasts", Agricultural Finance Review, Vol. 84 No. 2/3, pp. 165-174. https://doi.org/10.1108/AFR-10-2023-0138