NORTH PLATTE, Neb. — Last week USDA’s Economic Research Service released 2018 Net Farm Income projections. As we all know forecasting is fraught with error. Even the best modeling or data available at the time can not accurately project the unknown. So with that in mind, U of Illinois Ag Economist Todd Kuethe reviewed the accuracy of the November Net Farm Income forecast to the official number to be released. The range of forecast from 1975 to 2017 is an over-estimation by 50% to and under estimation of about 30% with the average 2.75% below actual. Since 2000 ERS Net Farm Income projection has averaged 4.37% low. Using this latter error, Kuethe corrected the November 30 ERS income project to “$69.3 billion. This adjusted forecast is still below 2017 official estimates but reflects a more modest 8.2 percent decline.” (Kuethe, 2018) ERS’s original estimate is a decline of 12.1% to $66.3 billion. I look forward to the actual number that ERS will release in 2019 as well as many others in agriculture.
Click on the Permalink below for the full analysis.
Source: Kuethe, T. “Adjusting USDA’s Net Farm Income Forecast Based on Historic Performance.” farmdoc daily (8):222, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, December 5, 2018. Permalink
— Robert Tigner
Agricultural Systems Economist, Educator
University of Nebraska Extension
Red Willow Farm and Ranch Management
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