Transcript No Slide Title

ERS Market Information:
Why We Do It and How We Evaluate It
Presentation for Vietnamese Officials
February 2006
William Hahn
Senior Economist, Market and Trade Economics
Economic Research Service, USDA
Overview
 Why does USDA forecast supply, use,
and prices?
 How is market analysis used?
 What makes a market analysis program
effective?
 How do we evaluate user needs?
Why Does USDA Forecast
Supply, Use, and Prices?
 Ensures availability of basic data and
information to all in the marketplace—
big companies and small farmers alike.
 Provides process for forecasting key
variables in important global markets.
 Critical to USDA decision-making on
trade policy, domestic programs, etc.
How Is Market Analysis Used?
 Public sector—
 Anticipating, and reacting to, market
developments (e.g., impact of BSE).
 Formulating new farm policy directions.
 Private sector—
 Farmers: breeding, marketing decisions.
 Input suppliers: fertilizer, equipment sales.
 Exporters: timing, strategic planning
decisions.
What Makes a Market Analysis
Program Effective?
 Analysts are market experts who are viewed
as highly insightful.
 Procedures (e.g., surveys, intl. reporting, etc.)
are well-regarded, transparent, and made
independent of policy officials.
 Data and information released by USDA are
acknowledged as objective.
 Data and information are timely, widely
available, and clearly presented.
Different Approaches Are Used to
Examine the Benefits of USDA Forecasts
 Various academic studies indicate that:
 The social benefits of improved outlook
forecasts greatly exceed the costs.
 For several commodities, futures market
prices can react significantly upon
release of USDA forecasts.
In a Special ERS Effort, Users Were
Asked About Their Outlook Needs...
 Private Sector
 Comprehensive survey
conducted in 2000.
 916 respondents.
 Among other issues,
addresses use of—
 Key data.
 Formal vs. informal
information.
 Data vs. information.
 Public vs. private
sources.
 Public Sector
 Focus groups conducted
in 1997-99.
 High- and mid-level
USDA participants.
 Among other issues,
addressed—
 Most critical types of
output.
 Impact of absence of
different types of data
and information.
As Part of This Effort, USDA Users Were
Asked About Their Outlook Needs...
USDA Source
Number of Users Importance 1/
1-10
Needs Met 2/
1-4
Effect if not
available 3/
1-4
Consultation
101
7.71
3.40
2.82
Attaché Reports
77
6.39
2.72
2.64
WASDE
90
6.14
2.99
2.55
Circular Reports
82
6.00
2.73
2.34
Commodity S&O
93
5.92
2.84
2.25
Baseline
90
5.87
2.81
2.40
1/ Mean importance is evaluated for users of the source only. “0” means source is not used; “10” means
source is essential. 2/ “1” means not very well; “4” means very well. 3/ “1” means there would be no
significant effect; “4” means users cannot function without it.
The Survey of Private Sector Users, Also
Part of This Effort, Indicates That…
 Informal information accounts for 2/3 to 3/4 of all
information used.
 Crop producers and agribusiness rely more heavily on
data and public sources than do livestock producers.
 Livestock producers rely more on information and
private sources.
 Seventy-three percent report use of USDA data
and/or information; 67% obtain at least a portion
directly from USDA.
This Private Sector Survey Indicates That
Current Price Data Are Key...
Do Not Use Information
Other
4
1
Imports/Exports
46
Current Prices
90
Price Forecasts
Consumption Trends
84
46
Inventories and Stocks
67
Production/Supply
71
Farm Finance and Income
Industry Structural Changes & Trends
Economic Conditions
68
48
62
Percent of respondents
Source: USDA, Economic Research Service.
We Continually Develop Audiences,
Both in USDA and Elsewhere...
 China briefing for our Undersecretary in
April provided impetus for…
 Two-hour briefing at the WAOB for 6 agencies.
 WAOB: “We’ve got to get the ERS China group
providing critical input to the May WASDE.”
 Release of publications in a timely way- “Is China’s Corn Market at a Turning Point?” (1 day
after May WASDE)
 “China’s Wheat Economy: Current Trends and
Prospects for Imports” (4 days after May WASDE)
We Interact With Outlook Program
Users Through Various Mechanisms...
 Annual Data Users’ Conference
 USDA speakers give presentations on future directions and
respond to questions.
 Approximately 150 private sector/university users attend.
 Annual Interagency Review Forum
 In-house evaluation; includes feedback from users in
industry, government, universities.
 Consultant Studies (e.g. special studies by Booz Allen
Hamilton, others on the impact of commodity projections).
 Web Statistics (visits; referrers; pdf openings; etc.).
 One-on-One Interaction with Users
Our Website Provides a “Showcase” for
Key Outlook and Research Areas
 88 briefing rooms covering all ERS work
 19 commodity-focused, 11 country-focused.
 Others are issue-oriented--U.S. agricultural trade, farm
policy, more.
 Broad scope
 Comprehensive access to outlook, research, data, analysis.
 Links to other information sources.
 Rich in content
 Broad-based analysis and discussion.
 Detailed data (increasingly in databases).
We Have a Variety of Outlook Products
Housed in These Briefing Rooms...
 Regularly-scheduled publications
 14 newsletters (generally monthly, all-electronic).
 10 commodity yearbooks (annual).
 USDA baseline projections report (annual).
 Issue-driven, electronic “e-outlook” articles
 “Is China’s Corn Market at a Turning Point?”
 “China’s Wheat Economy: Current Trends and Prospects for
Imports”
 An agency flagship magazine (contains short, topical
articles).
 Electronic databases and spreadsheets.
Internet Subscribers Receive
Automatic Notification of Releases...
Selected Electronic Publications
Internet Subscriptions
Cotton and Wool
2,225
Feed
3,095
Fruit and Tree Nuts
2,126
Livestock, Dairy, and Poultry
3,866
Oil Crops
3,314
Wheat
3,499
U.S. Ag. Trade Update
3,865
Outlook for U.S. Ag. Trade
4,442
Note: Internet subscription totals are as of December, 2005 and
include only subscribers through Mann Library at Cornell University.
Total subscriptions are approximately double those shown.
Regardless of the Source,
We Hear That…
 Timeliness and quality are critical
 We’ve moved from lengthy commodity reports to
newsletters to enhance timeliness.
 We complement newsletters with high-quality, timely
articles addressing key issues.
 Effectively meeting data needs is very important
 We’re moving to databases across outlook program.
 Transparency is another key element...
 …Tools providing users ability to “do-your-own-analysis.”
 …”Models on the web”—so users can have a better
understanding of how commodity outlook projections are
generated.