Impact of macroeconomic assumptions on United States Department of Agriculture's baseline farm income projections

The United States Department of Agriculture's (USDA) agricultural baseline projections are important in shaping US agricultural policy. We investigate the degree to which previous findings of bias and inefficiency of USDA baseline projections of farm income and its components are driven by underlying macroeconomic assumptions. Once we control for the deviation of underlying macroeconomic assumptions from their observed path, we find that USDA projections of net cash income and its components are optimal for 73.3% of the projection horizons and the length of informative horizons improves. These findings may help USDA projection users, adjust their expectations when making plans and decisions.