You Don't Know What You Don't Know

March 14, 2016 12:19 PM

By: Derrell Peel, Oklahoma State University Extension

It is all too easy for producers and even more so for consumers to underestimate the value of the market data that helps ensure efficient agricultural markets and a steady supply of affordable food.  Unfortunately, political decision-makers also increasingly see only the immediate cost savings from cutting data while overlooking the long-term consequences of less and poorer quality data on the nation’s food and fiber sector.  The result in recent years has been a constant battle to fend off repeated and pervasive attempts to chip away at a wide variety of agricultural data.

The latest example is the recent decision by USDA’s National Agricultural Statistics Service (NASS) to suspend the July Cattle report.  The argument is made is that is only one piece of data, arguably of lesser quality than the January Cattle report; and even some industry participants would suggest that by itself is not that important.  However, it is part a bigger set of data to help understand the enormously complex and dynamic cattle industry.  How many struts can you knock out from under a bridge before it fails?  The U.S. beef cattle industry is in the midst of the first significant herd expansion in over 20 years.  Producers are desperately trying to assess the status of the expansion to anticipate market conditions in coming years.  Producers need to expand enough to take advantage of market opportunities but not over-invest in herds and set themselves and the industry up for excess production and a market crash.  The current NASS decision means that producers will get no update on the size of the 2016 calf crop, the status of heifer retention or feeder cattle supplies for nearly a year.  Meanwhile decisions have to be made.

The quantity and quality of U.S. agricultural data is generally very good; very easy to take for granted and yes, is a significant public investment.  The agricultural data system is large and complex.  In addition to the two primary data agencies in USDA; NASS and the Agricultural Marketing Service (AMS), data originates from a variety of agencies and is used by an even wider array of agencies.  The value of agricultural data depends on who is using it and how it is used.  There seems to be a feeling among some politicians that highly aggregate national data available annually is sufficient to track the status of U.S. agriculture. However, data is used by producers and other market participants on a daily and weekly basis in specific locations.   Indeed, the quality of data highly aggregated over time and space depends on starting with comprehensive and timely grass-roots level data.  Comprehensive data from a variety of sources increases the value of all data by permitting more synthesis and validation of the entire set of data.  I know from many years of working outside the U.S. with limited and poor quality data that U.S. data is vastly underappreciated and undervalued by many in the U.S.

There have been recent movements to do away with voluntary market price reporting using the argument that it can all be done by the private sector.  This ignores the public good value of agricultural data which recognizes that the value exceeds that which can be captured by private markets.  It is ironic that this view should emerge when there is continuing and, indeed, growing concern about changing industry structure; potential impacts of concentration; and the ability of smaller producers to compete in modern agriculture.  Monitoring and analyzing these concerns depends on having more, not less data.  Simultaneously, there is emphasis on promoting and supporting local and specialized agricultural markets making the need for additional market information imperative to help specialized and niche market producers succeed. 

Often overlooked as well is the use of agricultural data for research and long-term analysis.  U.S. agriculture has undergone profound impacts in the last decade and the resulting structural change will continue for many more years.  Losing or interrupting long term data series seriously hampers many types of fundamental agricultural analysis.  An interruption in time series data, even when reinstated on second thought, creates data holes that diminish the research value of the data for many years.

Agricultural producers and industries must remain vigilant to political decision-makers’ short sighted attempts to trade the political expediency of budget challenges for the long-term health of U.S. agriculture.  The persistent gutting of agricultural data is like a slow growing cancer whose impacts on the body are not apparent until the damage is widespread.  You can drive a pickup a long time without doing any maintenance or putting in oil but when you finally realize you have a problem it’s a big problem with severe impacts which will be very costly to remedy. Consumers, who may never directly use agricultural data, are the ultimate beneficiaries of agricultural data and the ultimate losers when lack of data results in less efficient markets and higher food prices.    You don’t know what you don’t know…until it’s too late.

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