Summary: Pursuant to a congressional request, GAO reviewed the accuracy of the Department of Agriculture's (USDA) commodity program budget forecasts for 1972 through 1986 to determine the reasons for errors.
GAO found that the USDA commodity programs' budget estimates: (1) were substantially incorrect in most years, with absolute errors totalling $64.1 billion and averaging about $4.3 billion annually; and (2) underestimated actual budget levels by an average of $3.1 billion annually. GAO also found that USDA: (1) developed its budget estimates using estimates for individual farm commodities for supply and demand, farmer participation, and market price forecasts; (2) did not document how it used such macroeconomic forecasts; (3) did not systematically attempt to identify the source of forecasting errors or implement a structured quality control program for those factors which were controllable; and (4) did not inform Congress about its estimates' limitations. In addition, GAO found that consistent problems in USDA management of forecasting processes included: (1) limited or no evaluation of forecasting methods to determine accuracy; (2) poor or nonexistent data management and recordkeeping regarding input data and their use; (3) poor or nonexistent documentation of analysts' forecast production methods; and (4) decentralized managerial accountability that weakened problem identification and solution.
