Description: Forecasts for corn harvests and stockpiles by the U.S. Department of Agriculture have been increasingly inaccurate over the past two years. This makes it difficult to predict prices and determine whether and how much to plant.
Source: L. Pleven & T. McGinty, “Faulty Forecasts Roil Corn Market,” Wall Street Journal
Date: December 5, 2011
Questions for discussion:
- Describe the U.S. Department of Agriculture’s job in terms of data and information. Based on what you learn from the article/video, assess how the USDA is doing in terms of the five criteria of useful information.
- Discuss the importance of reliable information from the standpoint of farmers (both corn producers and corn consumers), ethanol companies, and foreign governments (corn buyers). Note: It may be helpful to think about individuals associated with these entities as information processors and problem solvers.
- What type of managerial decision does Mike Yost (a consumer of corn) face? Identify the decision environment he faces.
- Examine the planning process. Now imagine yourself in one of the following roles: feed buyer for a dairy farm, purchasing agent for an ethanol manufacturing plant, commodities buyer for an international government. Which steps of the planning process are most affected by inaccurate USDA forecasts?
- What type(s) of tools/techniques could you use to reduce your business’ risk in the above situation?