NASS and U.S. Crop Production Forecasts: Methods and Issues

Summary

The National Agricultural Statistics Service (NASS) of the U.S. Department of Agriculture (USDA) estimates agricultural production (including area and yield) and stocks for more than 120 crops and 45 livestock items. Traditionally NASS estimates have focused on state and national data, but in recent years county-level estimates have gained in importance. NASS crop production estimates are crucial to people in the U.S. agricultural sector involved in making marketing and investment decisions, policymakers who design farm support programs, USDA agents who implement those programs, and producers who benefit from those programs.

NASS conducts hundreds of surveys every year and prepares reports covering many aspects of U.S. agriculture. For example, NASS survey data are used to produce forecasts of area, yield, production, value, and stocks for major crop and livestock products, as well as for estimates of the historical number of farms and land in farms, land rental rates and values, farm labor usage, fertilizer and chemical usage, computer usage and ownership on farms, and farm production expenditures. NASS also undertakes a National Census of Agriculture every five years that provides comprehensive information about the nation’s agriculture down to the county level. The census includes data on the number of farms, land use, production expenses, value of land and buildings, farm size and characteristics of farm operators, market value of agricultural production sold, acreage of major crops, inventory of livestock and poultry, and farm irrigation practices.

NASS spending is controlled by annual appropriations acts. In FY2016, Congress appropriated $177 million for NASS operations, including $126.2 million (75% of its budget) for annual agricultural estimates and $42.2 million (25%) for the Census of Agriculture.

The critical role that NASS data plays in promoting a smooth and efficient marketing process for U.S. agriculture makes NASS’s successful function a concern of Congress. In particular, three issues related to NASS’s survey methodology and crop estimates are of potential concern to Congress. First, a trend has emerged since the early 1990s of declining NASS survey response by farmer participants. For most crops, NASS production estimates are based on data collected from farm operations via grower survey responses. The quality of NASS crop acreage and production estimates depends on a high level of participation by agricultural producers. As the number of respondents falls, the statistical reliability of estimates and forecasts declines and the value of NASS estimates for a host of other purposes declines as well.

The second issue derives primarily from the first in that the declining survey response impacts more localized or regional estimates first, particularly county-level estimates and those programs that are based on county-level data. In particular, insufficient response rates in some counties have led to unexpectedly wide discrepancies across counties in farm program payment rates under the county-based revenue support program—Agricultural Risk Coverage (ARC-CO)—established under the 2014 farm bill (P.L. 113-79). These discrepancies have generated concern about whether the new revenue program is working as intended or whether this is simply a data problem that needs to be addressed. Barring any near-term fix by USDA, lawmakers may elect to address county-to-county payment disparities in the context of the next farm bill.

Third, market participants and policymakers alike are concerned that NASS estimates be unbiased and objective so as not to influence market prices or volatility. Analysis of NASS data suggests that it is both objective and trustworthy; however, variability of data as measured by market price reactions to NASS estimates appears to have increased in recent years.