Short-term acreage forecasting and supply elasticities for staple food commodities in major producer countries

Forecasting food production is important to identify possible shortages in supply and, thus, food security risks. Such forecasts may improve input allocation decisions that affect agribusiness and the input supply industry. This paper explains methods and data used to forecast acreage of four crops that are particularly important staple commodities in the world, namely wheat, corn, rice, and soybeans for major global producer countries. It focuses on forecasting acreage-one of the two major determinants of grain production-3 months before planting starts with publicly available data. To this end, we use data from the period 1991 to 2013 and perform an out-of-sample forecast for the year 2014. A particular characteristic of this study is that the respective acreage determinants for each country and each crop are identified and used for forecasting separately. This allows accounting for the heterogeneity in the countries' agricultural, political, and economic systems through a country-specific model specification. The performance of the resulting forecasting tool is validated with ex-post prediction of acreage against historical data.