Evaluating the OECD-FAO and USDA agricultural baseline projections

Abstract

Abstract The Organization for Economic Cooperation and Development (OECD) in collaboration with the Food and Agricultural Organization (FAO), and the United States Department of Agriculture (USDA) produce long-term agricultural projections for key indicators of agricultural commodities. These baseline projections play a key role in agricultural decision-making and policies. Our study compares the OECD-FAO and USDA baseline projections for harvested acres, production, and yield in the European Union, the United States, and China for rice and wheat. We evaluate the accuracy by examining the projection error, including the magnitude of bias and variance as well as the significance of bias. We also compare the OECD-FAO and USDA projections’ predictive abilities using the modified Diebold-Mariano test. We find that the accuracy of the projections decreases as the projection horizon increases. Both agencies underestimate wheat projections in the European Union and China. USDA projections generally outperform OECD-FAO projections for most rice variables, while the reverse is found for longer-horizon EU wheat projections. This assessment may enable agencies to make more accurate projections and enable market participants to better understand these projections.