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What are long-term baseline projections?
When are the projections released?
What is the difference between a baseline projection and a forecast?
What are some applications of the baseline?
What is the process used
by USDA to prepare its 10-year baseline projections?
What are long-term baseline projections?
Each year, USDA makes 10-year projections of the food and agriculture
sector. The commodity projections are used to forecast farm program
costs and to prepare the President's budget. The projections reflect
a number of assumptions that are spelled out in a baseline scenario
and cover agricultural commodities, agricultural trade, and aggregate
indicators of the U.S. farm sector such as farm income and food
prices.
When are the projections released?
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.
What is the difference between a baseline
projection and a forecast?
Baseline projections focus on longer term underlying trends
based on a set of assumptions, while forecasts focus more on predicting
actual outcome within a shorter time frame (1 or 2 years). USDA's
"baseline" projections represent one plausible scenario
for the next 10 years. These projections assume no shocks but instead
are based on specific assumptions for the macroeconomy, policy,
weather, and international developments. Such conditioning assumptions
are usually designed to provide a neutral backdrop for the projections
to allow the analyses to focus on key long-term underlying factors.
For example, macroeconomic assumptions for baseline projections
are usually "smoothed," without recessions or economic
booms, and agricultural policies are typically assumed to remain
unchanged from current law. In contrast, forecasts incorporate additional
information that departs from the neutral assumptions of baseline
projections and are designed to lead to predictions of actual outcomes.
What are some applications of the
baseline?
The commodity projections in the baseline are used to forecast
farm program costs and to prepare the President's budget. As a neutral
policy scenario, the baseline provides a useful basis of comparison
for analysis of alternative polices and market developments. Examples
of baseline applications include:
- evaluating the gains in U.S. agricultural exports and farm income
relative to the baseline for China joining the World Trade Organization;
- providing an overview of major changes in production agriculture
resulting from the 2002 Farm Act provisions on commodity programs,
trade, and conservation by analyzing the impacts relative to the
2002 baseline (which was published prior to the passage of the
2002 Farm Act); and
- analyzing the relationship of U.S. agricultural trade to the
economies of developing countries, and comparing these countries'
income changes and exchange rate movements with the baseline scenario.
What is the process used by USDA to prepare its 10-year baseline
projections?
See overview of the USDA
baseline process.
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