OCE Release No. 3-99



Media Contact: Raymond L. Bridge (202) 720-5447

rbridge@oce.usda.gov

Public Contact: Maria Bynum (202) 720-5192

maria.bynum@usda.gov

     



STATEMENT BY U.S. DEPARTMENT OF AGRICULTURE CHIEF ECONOMIST

KEITH COLLINS ON COMPLETION OF STUDY OF USDA'S COMMODITY

FORECASTING PROGRAM



June 7, 1999



     "The U.S. Department of Agriculture has received a

commissioned study focusing on the process used to develop

USDA's official commodity market estimates and forecasts. 

This independent study by Datatrac Information Services,

Inc. and its teaming partner, PricewaterhouseCoopers, LLP

makes recommendations for improving the process for

developing,  producing, and disseminating the World

Agricultural Supply and Demand Estimates (WASDE) report.

          

     "WASDE is a monthly report that provides both a short-

range production forecast and an official, Department-wide

consensus of supply, demand, and price for major crop and

livestock commodities that are traded in world markets. The

production of this information is based on a comprehensive,

interagency review and consensus building procedure that

uses nine Interagency Commodity Estimates Committees

(ICEC's).  The ICEC's, managed by the World Agricultural

Outlook Board, under the direction of the Chief Economist,

depend on direct staff support from the Agricultural

Marketing Service (AMS), Economic Research Service (ERS),

Farm Service Agency (FSA), and Foreign Agricultural Service

(FAS).



     "Over the past eight months, the study team worked

with USDA staff involved in the process, surveyed external

users and assessed the resources needed to maintain the

commodity market analysis program.  The study concludes,

'The existing WASDE/ICEC process is sound, provides adequate

security safeguards, and produces a WASDE report that is

highly regarded as reliable, accurate, and consistent by

both internal and external stakeholders and users.'  The

study does not recommend major revisions to the existing

process in an operational context.  



     "The study also concludes the Department's ability to

continue this long-standing process as it currently

functions may be at risk.  This risk arises from the

degradation of the ability of USDA agencies to continue to

provide the level of support required by the WASDE/ICEC

process in the face of cuts in agency resources, changing

agency priorities, and Government-wide budget reductions. 

The study reaffirms, however, that interagency input is

crucial to the consistency, objectivity, and reliability of

WASDE forecasts.  





     "The study provides an independent source of support

to USDA's commitment to continue the commodity forecasting

program as a benchmark for USDA's total commodity market

information program.  The study recommendations, which

address the growing risks to the interagency processes,

focus on organizational and efficiency improvements and on

maintaining the interagency involvement.



     "In response to the study's findings, organizational

improvements will be pursued by revisiting the mission and

authorities of the WAOB and the relationships with the

contributing agencies as well as the contributions of the

market analysts in those agencies.  New technologies and

management approaches are changing the traditional economics

of managing the intellectual contributions of people.  New

efficiencies that focus on knowledge management will be

pursued to help meet participating agency resource pressures

and changing priorities.  As the study emphasizes and the

Department recognizes, the knowledge, skills, and abilities

of professional staff are the key ingredients in the

WASDE/ICEC process, and this aspect will get a lot of

attention as the study's recommendations are implemented."



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NOTE TO EDITORS: The study findings and recommendations are

available on the Internet at http://www.usda.gov/oce.