Overview of the USDA Baseline Process
The USDA agricultural baseline provides longrun projections for
the farm sector for the next 10 years. Projections cover agricultural
commodities, agricultural trade, and aggregate indicators of the
sector, such as farm income and food prices. In so doing, the baseline
identifies major forces and uncertainties affecting future agricultural
markets; prospects for global long-term economic growth, consumption,
and trade; and future price trends, trade flows, and U.S. exports
of major farm commodities. The baseline is also used to develop
cost estimates for the President's budget and to analyze impacts
of alternative policy scenarios.
The projections are one representative, longrun scenario for the agricultural
sector based on specific assumptions regarding macroeconomic conditions,
agricultural policy, weather, and international developments. In particular,
the baseline incorporates provisions of the Farm Security
and Rural Investment Act of 2002 (2002 Farm Act) and assumes that
current farm legislation remains in effect through the projections period.
The baseline also assumes that there are no shocks due to abnormal weather,
business cycles, or other factors affecting global supply and demand.
The projections are not intended to be a Departmental forecast of what
the future will be, but instead a description of what would be expected
under a continuation of current agricultural law (the 2002 Farm Act) and
specific assumptions about external conditions. As such, the baseline
is a neutral backdrop, reference scenario that provides a point of departure
for discussion of alternative farm sector outcomes that could result under
different domestic or international assumptions.
The USDA baseline projections reflect a composite of model results
and judgment-based analysis. The baseline analysis is conducted
by interagency committees in the Department, with the committees
chaired by the World Agricultural Outlook Board (WAOB). The Interagency
Agricultural Projections Committee, also chaired by the WAOB, provides
oversight to the baseline process through coordination of the projections
and review and clearance of baseline reports and related web products.
In addition to the WAOB, other agencies involved with the baseline
analysis and review include the Economic Research Service; the Farm
Service Agency; the Foreign Agricultural Service; the Office of
the Chief Economist; the Office of Budget and Program Analysis;
the Risk Management Agency; the Agricultural Marketing Service;
the Natural Resources Conservation Service; and the Cooperative
State Research, Education, and Extension Service. The Economic Research
Service has the lead role in preparing the USDA baseline report.
The Departmental baseline report is released in early February,
shortly after the President's budget is submitted to Congress. Printed
copies of the full baseline are available at the USDA Outlook Forum
in late-February.
Baseline Timeline
The baseline projections process that leads up to the annual report
starts in the preceding summer. In August and September, domestic
and international macroeconomic assumptions are prepared, covering
gross domestic product, inflation, exchange rates, and population.
Detailed foreign country and commodity projections then are prepared
in October to support the global trade analysis and U.S. export
projections in the baseline. The core domestic analysis for program commodities takes place in November, which incorporates the
trade analysis results. The domestic projections for crops also
make use of preliminary projections for the livestock sector in
order to appropriately represent crop-livestock interactions. Final
projections for livestock and other non-program commodities are
completed in late November and early December. Livestock projections
incorporate the feed price projections from the crop-sector analysis
to assure internal consistency between agricultural subsectors.
Once the program commodity projections are completed, the Farm
Service Agency generates budgetary projections for inclusion in
the President's budget submission. The Economic Research Service
derives implications of the commodity projections for agricultural
trade measures, consumer food prices, and farm income to provide
sectorwide economic projections for the Departmental baseline report.
Projections for these aggregate indicators are made in December
and January.
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