Agricultural Exports Overstated

May 30, 2001

Grain export projections used by the U.S. Army Corps of Engineers and agriculture policy-makers have consistently over-estimated actual exports, according to a new study by Dr. C. Phillip Baumel, a professor of economics at Iowa State University. The study, "How U.S. Grain Export Projections from Large Scale Agricultural Sector Models Compare With Reality," was commissioned by the Minneapolis-based Institute for Agriculture and Trade Policy (IATP).

The study analyzed the two major sources of export projections: the USDA agricultural baseline and the Food and Agriculture Policy Research Institute (FAPRI) agricultural baseline. The USDA and FAPRI state that their models are not intended to be forecasts but rather baseline projections to be used for policy analysis. Yet the practical reality is that they have been used as forecasts in the proposed Upper Mississippi River Navigation Project and by other analysts in the formulation of U.S. farm policy, according to the study.

Dr. Baumel said, "The Corps of Engineers, agribusiness, and farm organizations use these projections to make business and infrastructure decisions. It turns out that they are relying on models that have a tendency to project increasing exports, even in the face of a 20-year downward trend in actual exports."

Government agencies, trade associations, and agribusiness increasingly use baseline projections from USDA and FAPRI as forecasts, according to the study. A federal grant finances FAPRI's annual crop and livestock price projections to Congress. FAPRI is a joint venture of Iowa State University and the University of Missouri. The overly optimistic USDA projections are a particular concern because the U.S. Army Corps of Engineers is using the projections as the basis for its 50-year Mississippi River corn and soybean traffic forecasts.

Dr. Baumel is a Charles F. Curtiss Distinguished Professor in Agriculture at the Iowa State University. Dr. Baumel served on the National Research Council Committee to Review the Upper Mississippi River -- Illinois Water Navigation System Feasibility Study which issued its report in January 2001.

The Institute for Agriculture and Trade Policy promotes resilient family farms, rural communities and ecosystems around the world through research and education, science and technology, and advocacy.

The study can be read at: www.iatp.org.