Gannett News Service | June 08, 2001 | George Anthan, The Des Moines Register
WASHINGTON -- Farmers, agribusiness, farm organizations and federal agencies use rosy food export projections developed by the Agriculture Department and by Iowa State and Missouri university analysts to make critical business and policy decisions.
Also, these upbeat forecasts are seen by politicians as the solution to the farm economy's woes. We can simply export our way to farm prosperity, they say.
The trouble is, these projections have been wrong and most likely will continue to be wrong, according to a new report for the Institute for Agriculture and Trade Policy by C. Phillip Baumel, professor of economics at Iowa State.
The institute describes itself as promoting "resilient family farms, rural communities and ecosystems."
The statistical models used by the USDA and the universities' Food and Agriculture Policy Research Institute (FAPRI) have projected steadily increasing corn exports in recent years. Over the same period, corn exports have trended downward, Baumel states.
The USDA and FAPRI export models have predicted higher wheat exports.
Wheat exports have trended sharply downward, Baumel notes.
The USDA data have predicted that soybean exports from Brazil, a key U.S. competitor, would show "minimal growth." Actually, Brazil's soybean exports since 1992 have shown sharp increases.
China's corn imports have declined sharply over the last six years, Baumel states. At the very time the USDA was projecting that China would import large quantities of corn. The USDA's models also foresaw greater increases in corn purchases by South Korea and Taiwan than actually have occurred in recent years.
In 1997, the USDA said Europe would continue to buy 90 million bushels of corn over the next 10 years. U.S. corn sales to Europe last year were at one million bushels and are headed for zero bushels because of concern over genetically modified varieties.
Soybean export projections have been closer to the long-term trend, Baumel said.
He states that the USDA and FAPRI analysts who develop export projections themselves caution that these should not be the basis for long-term investment and policy decisions.
Nevertheless, Baumel said, the export models are the basis for many business and government decisions, including the Army Corps of Engineers' plans for costly expansions of Mississippi River locks and dams.
The widely used USDA and FAPRI export models, Baumel continues, don't recognize actual sales figures. They don't take into account the lower caloric requirements of work forces shifting from manual to mental labor.
Baumel said his study indicates the USDA and FAPRI models rely on obsolete data, they fail to "recognize technological improvements in grain production" and they underestimate world grain supplies.
Also, he believes the projections fail to adequately account for shifting exchange rates, changing food consumption patterns and environmental constraints on livestock production, which can reduce feed demand.
Beth Lilliston, an official of the Institute for Agriculture and Trade Policy, said, "Most family farm supporters believe that a U.S. farm policy should take a more realistic approach to exports, expand where possible, but focus more on the central issue of farm prices."
She added, "Because we've been overly optimistic with export projections, we've over-produced, creating gluts and below-the-cost-of-production prices."
George Anthan is Washington bureau chief of The Des Moines Register.Gannett News Service:
