I've listened to dad complain about the inaccuracy of the USDA crop reports, as they project production, then issue updates which roil the markets. His claim is that private-sector players can do the same thing better and cheaper. My claim is that the big players will use the dearth of government information to game the markets even more. My belief is that if the private players had better numbers than the government, then the markets wouldn't react so violently to USDA reports. As far as I can tell, the market players have a much better picture of the overall market than farmers, but the government has the best numbers because they have the farm-level information from farmers having to report their planted acres for direct payments, and having to report their yields for crop insurance.The U.S. Agriculture Department has kept tabs for decades on a wide range of agricultural industries that generate billions of dollars for the U.S. economy. But that's about to change, as the agency eliminates some reports and reduces the frequency of others to save millions of dollars in tight budget times.The reports influence the price and supply of many products that end up on American dinner plates. Without them, some farmers say they'll be left guessing how much to produce and when to sell. Food processors and traders also will have less information when making decisions about buying and selling.South Dakota farmer Richard Adee said he used the annual honey and bee report to decide when to sell his honey. If the February report indicated a large supply nationwide, he'd sell before prices dropped. If the supply was short, he'd hold on to the honey and wait for prices to go up.
Whatever the case, we are not going to end up with a smaller government than we do now. The main question is how efficient our government is. As any businessperson knows, there is almost no limit to the amount of information someone can have which is beneficial. Cutting statistical functions, like the Energy Information Agency already has, and USDA is implementing, will hurt both government and private-sector efficiency. A 5% cut in direct payments would fully fund all of the statistical services, and would be well-worth the investment, but it is much more politcally feasible to save very small amounts by gutting little-known agencies. It's just plain stupid.