Everybody wants their future told. Go to any meeting on dairy and there will be no shortage of predictions about what the future of dairy prices will be.
However, just how good are the experts? While we may not know how good dairy experts are, no one has done any scientific study, there have been scientists study the accuracy of expert predictions. In the mid-1980s psychologist Philip Tetlock assembled a group of 284 political experts to make nearly 100 predictions each about a variety of possible future events. Twenty years later, he published the results. The experts did not perform any better then minimally sophisticated statistical model.
Other studies have come to the same conclusion. Experts are not very good at predictions, however, few people verify the predictions experts make.
Presently, there are so many balls in the air and any one of them or several of them might drop. Therefore, predictions about future dairy prices are virtually meaningless.
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Exactly. You couldn't have said it better. Nice post John.
ReplyDeletePersonally, I follow the forecasters that are WRONG most of the time... they are the ones who hold the key! Just don't tell them that..
Dave
jajajaja
ReplyDeleteJust because someone says something will happen does not guarantee it. Producers are smart enough to understand that. The only protection a dairy farmer has is a government price floor in milk. 10 bucks or so. They can buy better protection in chicago but most choose not to. If you are a dairy producer, your risk is always higher costs and lower milk prices. Just cover your milk downside with worst case scenario put protection and cover your grain upside with call protection. Let the dairy experts publish their forecasts. They are paid to do such analysis whether they are wrong or right. Nice gig huh? When milk prices get to a level where there is some profit and costs are covered, sell some milk. keep things simple. if you are looking for comfort from an expert you might as well go to one that serves drinks.
ReplyDelete-Ron