Summary: 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.
