1. Implementation of IFRS in statistics Ultimate Harmonization tool? Koen Boone Wye City Group Meeting, Rome, 11 th of June 2009

2. Content International Financial Reporting Standards Implementation IFRS in Dutch FADN Biological assets Intangible assets (milk quota) Conclusion

3. International Financial Reporting Standard International accounting standards for financial reporting by companies Adopted by EU to realize EU-27 standardization Obliged for all stock listed companies Strongly advised to other companies (national regulation) Applied in more than 100 countries FASB started process to harmonize with IFRS Standard (IAS 41) on agriculture

4. IFRS content – biological assets Fair value for biological assets (living) Market price Market price related assets/markets Benchmarks Net Present Value Costs Change in fair value part of income Agricultural inventories: fair value or costs (fair value at point of harvest)

5. IFRS content - Intangibles Valuation if Identifiable Verifiable Lead to economic profit When active market: Valuation at fair value and no depreciation Example: Milk quota

6. Dutch FADN 1500 farms Data assembled by own employees Financial, environmental, off farm, people Part of data in EU-27 database Complete renewal of system around 2000 Decision to adopt IFRS guidelines Harmonization with other sectors International harmonization

7. Biological assets in FADN Valuation in Dutch (and EU) FADN was already largely based on current value Some products still cost of production Not traded in its current state (tomato plant) Very small products Very volatile products (lettuce) Fair value/market prices assembled by LEI. For very differentiated products (flower bulbs): ask farmer

8. Change in fair value part of income Part of IFRS trend to adopt market values Much debated Product not yet sold (prudence principle) Users are not used to it or do not understand it Unreliable and volatile No relation with performance of farm(er) Developing countries Production factors (dairy cow, apple tree) are not sold in their current state

9. Biological assets in FADN Dutch FADN: Completely implemented Not much discussion in period 2001-2006 Large price differences in 2007 and 2008 Change in value dairy cows 2007 + 22.000 and in 2008 – 13.000 Debate restarted again for bearers/production factors

10. Intangibles – Milk quota All milk quota included on balance sheet and no depreciation Deferred tax provision (30%) End of 2008: Abolishment of quota system in 2015 Average value per farm 600.000 Depreciate complete value? Increase of value of quota was not included in income Price of land will increase

11. Conclusion IFRS worldwide standard but adoption not very fast IFRS suitable for statistics Adoption of IFRS in FADN possible but not without problems Limited adoption of business economic accounting in agriculture Change in value of bearers Developing countries

12. Thank you for your attention © Wageningen UR