Measurement of Agricultural Output in the Australian System of National Accounts: Methods and Issues Authors: Rick Brunton and Carol Trickett Presenter: Allan Nicholls Australian Bureau of Statistics

Agriculture’s contribution to GVA Agriculture GVA is about 2% of total GVA However, variability of agricultural output can have a significant impact on total GVA Eg in , because of drought, agriculture GVA fell 19% and this made a negative contribution of 0.5% to Australia’s GDP in –So GDP grew by 3.3% rather than a possible 3.8% if ag output had been stable

Main ABS data sources Agricultural Census – every 5 years –Quantities of production of a large range of commodities –Large scale survey in non-census years Market prices and costs –Used to convert production quantities to values and thus –To calculate gross value of production Annual Economic Activity Survey –Economic and financial data –Supplemented by admin data from Tax Office Livestock products collections – qtly –Price and quantity information for livestock slaughterings, meat production, exports of livestock, exports of meat, whole milk intake, market milk sales and wool receivals by brokers

Australian Bureau of Agricultural and Resource Economics (ABARE) Annual farm surveys –Broadacre crops, livestock and dairy only –Farm production, farm costs and prices Commodity production and value forecasts up to 5 years out Forecasts are used initially in the national accounts and progressively replaced as actual data becomes available Farm costs important in measurement of intermediate input costs

Components of agricultural national accounts estimates Cereal and non-cereal crops Livestock –Slaughterings –Exports –Capitalised livestock –Work in progress livestock Livestock products Services to agriculture Other components –Output for own consumption –Production valuation adjustment

Cereal and non-cereal crops Wheat and barley are main contributors Annual estimates –Annual production quantities obtained from annual agricultural survey/census –Quantity data is revalued to current prices using data from the market prices survey Quarterly estimates –Qtly information on wheat receivals used to allocate annual production to qtrs –For other cereal and non-cereal crops, annual production is allocated to qtrs using fixed harvesting ratios –Quantity data is revalued to current prices using data from the market prices survey

Livestock Livestock slaughterings and live exports –Qtly data obtained from direct collection –Annual derived from annualised qtly data Annual capitalised livestock (for beef, sheep and dairy cattle) –Calculated as acquisitions less disposals –Acquisitions estimated using agricultural survey/census data on animals raised for breeding purposes –Disposals estimated from slaughterings data Quarterly capitalised livestock derived by allocating annual figure equally across qtrs

Livestock, ctd Work in progress livestock (beef, sheep and dairy cattle) –Annual estimates based on data from the annual ag survey/census on numbers of animals less than one year in age –Quarterly estimates based on allocating the annual figure equally across qtrs

Livestock products Comprise wool, milk, eggs and honey Wool –Qtly estimated from wool receivals colln But adjusted to account for timing differences between when wool is shorn and sent to brokers –Annual estimates use annualised qtly data Milk –Qtly estimated from data on raw milk processed in factories –Annual estimates use annualised qtly data

Livestock products, ctd Eggs –Annual data sourced from annual ag survey/census –Quarterly estimates based on allocating the annual figure equally across qtrs Honey –Annual data last collected in ag survey in –Annual data since then extrapolated using a honey production index published by ABARE –Quarterly estimates based on allocating the annual figure across qtrs based on historical ratios

Services to Agriculture Annual estimates based on data from the annual Economic Activity Survey Quarterly estimates based on allocating the annual figure equally across qtrs –Except for sheep shearing where the allocation is based on shorn wool production

Other components Output for own consumption –Benchmark data from a survey of home production of selected foodstuffs –Qtly estimates extrapolated using movement in the food category for qtly household final consumption expenditure –Annual estimates based on annualised quarterly data

Production valuation adjustment Used for wheat and wool –These commodities are historically sold through marketing authorities Initial prices based on expected sales Final prices not available until actual sales –For details of the adjustment used, please refer to the paper

Intermediate input costs These are subtracted from the gross value of agricultural production to arrive at value added at producer prices Four components – marketing costs, seed costs, fodder costs & other input costs Marketing costs –Annual based on data collected in the marketing costs survey –Quarterly derived by allocating annual based on production profiles for relevant commodities

Intermediate input costs, ctd Seed Costs –Annual based on seed price (in previous year), area planted and yield –Qtly derived by allocating annual based on fixed quarterly seed planting ratios Fodder costs –Separate estimation methods for Hay, Manufactured fodder & Grains are detailed in the paper

Other input costs Contribute about 65% of total intermediate input costs Include costs of chemicals, electricity, fertilisers, fuel, insurance, repairs and maintenance & services to agriculture Estimates for most components are based on data from ABAREs farm surveys

Taxes less subsidies on products Needed to derive gross value added at basic prices Currently an area of weakness in the accounts Estimated using data from the Economic Activity Survey, Australian Tax Office data and commodity production related indicators

Seasonal adjustment Because production of most cereals is almost exclusively in the December and March qtrs, difficulties can arise with seasonal adjustment A special method of seasonal adjustment is applied to cereals production and to wheat marketing costs Details are in the paper

Secondary production Main measurement issue facing Australia In the agriculture industry, secondary production may include transport services and accommodation services for tourists Secondary production activity is captured in aggregate through the annual Economic Activity Survey, but it is difficult to allocate this secondary production to products

Double counting of outputs May occur in vertically integrated businesses which have agriculture activity, but whose predominant activity is not agriculture The annual agriculture survey/census includes these units, as does the annual economic activity survey. Currently an area of weakness

Own account capital formation Includes fences, sheds, dams, etc Partly captured through the annual Economic Activity Survey –But sample size is relatively small –Very small units based on tax data which does not provide this type of information So there is an undercoverage of this activity for agriculture

Crops – time of recording in output and GDP SNA93 recommends crops be included in output as work-in-progress or gross fixed capital formation over the entire period of growth Australian treatment includes crops in output at time of harvest – we do not have the data necessary to implement SNA93 treatment

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