1. Establishments cross-classified by sector of owner and type of productive activity

Contents - Previous - Next

2.55 For the purposes of economic analysis and policy-making, it is desirable to separate agricultural establishments owned by agricultural households from those owned by other types of institutional units. This raises the question of the ways in which agricultural establishments may be divided into sub-groups for purposes of the Part II accounts of SEAFA. There are several economically important criteria that may be used to classify and group agricultural establishments. These include:

· the type of institutional unit that owns the establishment;
· the type of agricultural activity -- growing crops, farming of animals, etc. as specified in ISIC;
· the location of the establishment;
· the size of the establishment in terms of land or number of workers.

Other characteristics may also be relevant. It is not necessarily appropriate for an international statistical system to specify the degree of detail in which statistics should be compiled in individual countries. Each of the characteristics listed above may be more or less important in particular countries and cross-classification of establishments by these characteristics could lead to a proliferation of accounts that are well beyond the statistical capability of any country. Nevertheless, it may be useful to indicate certain priorities.

2.56 First, it is recommended that agricultural establishments be classified by the type of institutional unit that owns them. As a minimum, it is desirable to separate establishments owned by households from these owned by other kinds of institutional unit. Second, it is recommended that establishments should also be grouped by main type of agricultural activity. This would suggest the following basic set of accounts for agricultural establishments. At the first level of breakdown, establishments are divided into those owned by households and those owned by other institutional units. At the second level of breakdown, establishments are divided into three groups on the basis of ISIC, namely:

· 011, Growing of crops, market gardening and horticulture;
· 012, Farming of animals;
· 013, etc. Other sub-divisions of ISIC 01.

2.57 The cross-classification by type of owner and type of activity just given yields six sets of production and generation of income accounts. The 1993 SNA recommends the general cross-classification of output, intermediate consumption, gross value added and its uses by type of sector and industry in order to link the production accounts by sector with those by type of industry (see paragraphs 15.105 to 15.109, and paragraph 10, p. 524). The above proposal to cross-classify agricultural establishments and their accounts by type of owner and type of activity is a particular small-scale application of this general recommendation.

2.58 It should be noted that the aggregate production account for all agricultural establishments owned by households is not the same as the aggregate production account for all agricultural households in the sector accounts. A household whose principal source of income comes from agricultural production may possibly engage in some secondary nonagricultural activities and own more than one establishment. It is likely to produce housing services for own consumption. In general, the total production of an agricultural household must be greater than, or equal to, that of any agricultural establishment or establishments that it owns. It is also worth noting that some agricultural establishments may be owned by households that are not classified as agricultural households because their main source of income is not mixed income from their own agricultural production.

2.59 Nevertheless, agricultural production must usually account for most, if not all, of the production of agricultural households. The establishment-based accounts have the advantage that they show the share of total agricultural production that is carried out in agricultural households and they can be used to track changes in this share over time. There may also be important differences between the predominant types of agricultural activity undertaken by agricultural households and those undertaken by establishments owned by corporate or quasi-corporate enterprises, government units and NPIs.

2.60 Just as in the sector production account for agricultural households, it is recommended that the output of agricultural establishments should be broken down first to distinguish market output from output for own final use and second to distinguish different types of products in order at least to distinguish food products from other agricultural products. By dividing agricultural establishments into those owned by agricultural households and those owned by others, it is possible to measure and track the share of total food production produced by agricultural households.

2. Other data for agricultural establishments

2.61 Although the only accounts that can be compiled for agricultural establishments are the production and generation of income accounts, it is of course possible to collect additional data relating to these establishments that are not in the form of accounts. Again, in line with general recommendations made in the 1993 SNA, the following types of data may be collected for establishments:

· Numbers of persons employed in agricultural production; owners, employees, unpaid family workers (see Chapter XVII of the 1993 SNA);
· Gross fixed capital formation broken down by type of asset;
· Stocks at fixed assets used in production within the establishment;
· Quantity and Price Measures.

These types of data may be compiled for the different groups of establishments proposed above. Further details of quantity and price measures are given below.

2.62 The activity accounts for agricultural establishments provide a suitable framework for the compilation of quantity and price indices relating to agricultural production and also for the construction of accounts at the constant prices of same base year, if desired. For example, quantity and price indices may be compiled for all the major commodity flows in the activity accounts and also for value added.

2.63 The general methodology to be used is described in some detail in Chapter XVI of the 1993 SNA. It can be applied directly to the flows in the activity accounts. In line with recent developments in index number theory and practice it is recommended that annual indices should be chain indices in which each year is compared with the previous year and longer-term measures are obtained by linking together the year-to-year movements. When annual chaining is used, the results obtained are likely to be much closer to the underlying economic theoretic indices. The results are also much less sensitive to the choice of index number formula than when index numbers use the same base year over a long period of years.

Goods and services accounts

2.64 Goods and services accounts, as defined in the 1993 SNA, are also included in the Part II accounts of SEAFA. A goods and services account is compiled at the level of the total economy. For an individual product or any designated set of products, such as all agricultural products or all food products, it shows the total resources or supplies produced as outputs from domestic establishments plus imports and trade and transport margins on agricultural products; and the total uses for purposes of intermediate consumption, final consumption by households, government or NPIs, gross fixed capital formation, changes in inventories and exports. Provided the various flows are valued consistently the value of total uses must be identical with that of total resources or supplies. When outputs and imports are valued at different prices from intermediate and final uses, it becomes necessary to include an item for taxes or subsidies on products in the account, as explained below. As already noted, the identity is secured because the change in inventories must be identical with the difference between all other uses and total resources.

2.65 The supply and use tables described in Chapter XV of the 1993 SNA constitute a major element in a system of national accounts. In effect, they constitute an integrated set of goods and services accounts for all the different products supplied and used in an economy, with intermediate uses broken down by industry of use, together with an integrated set of production accounts for the different industries based on establishment-type data.

2.66 In the context of SEAFA it is proposed to compile goods and services accounts for all agricultural products and for selected groups of agricultural and food products. The format of a specimen account is given in Table 2.5. It is necessary to clarify the way in which the various flows are to be valued. In accordance with SNA guidelines, the flows should be valued as follows:

· Output should be valued at basic prices, or, if this is not feasible, at producers' prices. Trade and transport margins on agricultural products are shown as a separate item.
· Imports should be valued c.i.f.
· The content of taxes and subsidies on products depends on how output is valued. Output is always valued excluding value added tax (VAT) invoiced by the producer so that the total non-deductible VAT actually payable by users is recorded here to ensure that total resources are valued consistently with total uses. Other taxes and subsidies on products must also be recorded here when output is valued at basic prices, but not when output is valued at producers' prices (see paragraphs 6.210 to 6.227 of the 1993 SNA). Taxes on imports must also be recorded when imports are valued c. i. f.
· Intermediate and final consumption and gross fixed capital formation should be valued at purchasers' prices.
· Changes in inventories of inputs and outputs should be valued at their respective purchasers' or basic prices at the times the changes occur.
· Exports should be valued f.o.b. -- in effect, at purchasers' prices at the border of the exporting country.

2.67 The uses of agricultural goods as intermediate inputs for other production can be divided to distinguish uses by other agricultural establishments, by food manufacturing establishments and by other industries, as shown in Table 2.5.

2.68 Goods and services accounts are described by different names in different contexts, even within SNA. For an individual product or group of products the balance between supplies and uses may be described as any of the following:

· a goods and services account;
· the balance between total resources (or supplies) and total uses;
· a food balance sheet (in the case of food products).

2.69 It should be noted that these are merely different names for the same type of account or balance, at least when the flows are expressed in monetary values and not in physical units. The use of the expression "balance sheet" for a flow account is not consistent with standard economic and accounting usage and is therefore potentially misleading. It may, for example, give the impression that a food balance sheet refers to stocks and not flows of foods.

2.70 To be consistent with general international statistical standards and classifications, in particular with ISIC, the classification of products used in the goods and services account, and in SEAFA generally, must be the Central Product Classification (CPC) of the United Nations. It is therefore recommended that goods and services accounts should be compiled for the following groups of products (the numbers in brackets apply to the CPC Divisions):

(01) Products of agriculture, horticulture and market gardening;
(02) Live animals and animal products;
(01) and (02) combined;
(21) Meat, fish, fruit, vegetables, oils and fats;
(22) Dairy products;
(23) Grain mill products, starches and starch products; other food products;
(21), (22) and (23) combined;
(24) Beverages;
(25) Tobacco products

2.71 At the level of a single homogeneous product, it is possible to compile a balance of total resources and total uses using units of physical quantity (kilograms, tons, litres, etc.). It may be useful to compile such accounts for a number of selected agricultural or food products within the framework of SEAFA when the corresponding products are also covered by the goods and services accounts, but accounts in physical units should be included in Part III rather than Part II of SEAFA.

Satellite accounts and supplementary tabulations relating to food (food balances)

1. Forestry and fisheries
2. Other tabulations

2.72 These accounts make up Part III of SEAFA. They consist of accounts or tables that are not to be found within the set of accounts or tables that make up SNA, although the concepts, definitions or classifications used should be consistent as far as possible with the main international statistical systems and standards, such as SNA, ISIC and CPC.

2.73 A major concern of FAO and its Member Countries is to raise levels of nutrition and standards of living. To meet this goal and to formulate national food and nutrition policies the following additional information is required:

(a) Quantities and types of food available for consumption in each country;
(b) Wastage and losses of food as a result of processing, distribution and other production channels as well as the food of consumption habits of the population;
(c) The current and evolving structure of the national food supply in terms of the major food commodities and their nutritive values;
(d) Various aspects of food availability such as domestic production of food; import or export of food products; set-up of food processing establishments in terms of production and capital formation, producer and consumer prices of food products; and generation of income.

2.74 FAO, in partial fulfilment of its goal, is preparing Food Balance Sheets which provide the most essential information. The Satellite Accounts for Food Balances (SAFB) include four accounts and six statements. Two of the accounts are, respectively, the production and income generation accounts for establishments whose principal activity is the production of food. Of the remaining two accounts one relates to capital formation in food production and the other shows the supply and use of food products. The supporting statements to the accounts establish links between monetary and physical data and are discussed in the next section. The framework of these accounts is given in Annex 2.6.

2.75 The supporting statements to SAFB express food availability in supply and use accounts. In the first statement, details of supply and utilization of food by type of products are presented in quantity terms. This statement also gives per caput per day utilization of food products. The other statements give producer or consumer prices of selected items of food products, calories (number), protein (grams) and fats (grams) contents of selected items of food products, per caput per day food utilization in terms of calories (number), protein (grams) and fats (grams) and total domestic food supply and utilization by components and by type of products at current and constant prices.

2.76 SAFB have been constructed on one hand to present the contribution made by various productive activities to food production and, on the other hand, to link the physical data presented in the FAO food balance sheets to their monetary counterparts. Without changing the conceptual basis for measuring the various aggregates, the coverage of SAFB has been restricted to food production for human consumption (but excluding catering services provided by hotels, restaurants, etc.). Thus, it includes foods that are wholly or partly for human consumption produced by agriculture, forestry and fishing establishments as well as by manufacturing establishments engaged in food production. As a result, all those agricultural products that are not for human (food) consumption, are excluded. To prepare accounts for this activity, the production of the agricultural, forestry, fishing and manufacturing establishments, that contribute to food production, is first divided into two subgroups (i.e. food and non-food). While preparing the production and income generation account for this activity the non-food products produced by food producing units are treated as secondary products and are excluded from the account to the extent feasible. In this connection, however, it may also be noted that, apart from including non-food products, the total production of this account will also include that part of output of food products that is being used as intermediate consumption in food as well as non-food industries. However, it would not be possible to exclude the production of those non-food products for which the intermediate consumption and other inputs for production of food and non-food products cannot be separated from each other. Thus these accounts present the economics of food production as well as the details of intermediate consumption in terms of primary products of agriculture, forestry and fisheries going to the food processing activity. The production boundary of SAFB is the same as in SNA. It includes the imputed value of own-account food production such as subsistence farming, kitchen gardening in urban areas or food gathering (including meat obtained from hunting, etc.), but does not include the processing of food for immediate consumption within the household.

2.77 In SAFB, the concept of wastage has been extended to include wastage of food by the household (during cooking, plate waste etc.). Thus, total wastage has been divided into two components: wastage in production and distribution channels (e.g. pre- and post-harvest losses, losses during processing and storage); and wastage by the household. Wastage of the former type is taken into account in the production account while the latter type is included in the goods and services account.

Economic Activities other than Agriculture

1. Forestry and fisheries

2.78 In the case of forestry the accounting framework is somewhat different. This sector has three special features: first, in most countries any forest will produce a large number of products and it becomes difficult to study the economics of an individual product; second, the forests are owned by all types of institutional units and the objective of policy-makers is to cover the total activity; and third, certain products that are derived from forests are not included in the output of the forestry industry. These include activities such as providing fodder for livestock, the use of forests for games or recreation and the impact of forest development on the ecosystem. Such items are not generally reflected in the industry's accounts except in the form of receipt of royalty. Thus standard production accounts may not meet the need of policy-makers. The System, therefore, includes the accounts recommended by SEAFA for the forestry sector as a whole as well as activity accounts for different forests classified according to their management aspects (for details see Annex 2.7). The goods and services account is compiled only for the products of forestry as a whole and, the capital account in the system is intended to cover the forestry sector as a whole. However, the activities or output relating to forest-type areas of compact plantations not covered under forestry, can be included in the form of statements. This aspect will be covered in the next supplement of the Handbook.

2.79 The case of fisheries activity is somewhat similar to agriculture but for the fact that non-resident producers and the complete sector may be relatively more important. A background note on fisheries activity is given in Annex 2.8. Keeping in view the specific requirements of the sector, combined with specific problems in collection and compilation of data, it has been decided to cover this activity also in a separate supplement of the Handbook.

2. Other tabulations

2.80 The macro-economic information contained in the SEAFA accounts shows only a very small part of the performance of the total economy. The main functions of accounts containing such information is to show their inter-relationship and ensure consistency. These characteristics of economic accounts make them useful in the formulation of macro-economic models that are used for the preparation of plan targets and projections. Apart from such uses these accounts are also capable of giving indications of the current status and sometimes the presence of a disorder in the system. The indications can be compared to a high body temperature in human beings, which may or may not indicate the presence of a disease. For an in-depth understanding of the situation as well as for evaluation of economic policies additional detailed disaggregated information is necessary. The advantage of disaggregating the entries in the economic accounts are two-fold. First, it ensures internal consistency and second, as the data contained in the accounts cover the entire economy, it allows assessment of the relative status and magnitude of the variable that has been picked up for further investigation. Although it is difficult to envisage the availability of data and requirements of any country in the abstract, a suggested list of statements has been included in the handbook for agriculture (ISIC 01) and food (Annex 2.9). Countries can enlarge or reduce the list depending on their needs. However, what can be noted from this list is that most of the statements included are nothing but the basic worksheets that are commonly used in the calculation of economic accounts. Thus the creation of such statements provides help in the calculation of economic accounts.

2.81 Another two aspects, referring to natural resources and other activities related to food and agriculture, are also included in SEAFA and are listed below.

2.82 In recent years, considerable discussion has been devoted to natural resource accounting and environmental accounting. There are three main approaches. The first, generally referred to as natural resource accounting, focuses on total natural resources in physical terms. The second approach uses satellite accounts which record monetary values, identify actual expenditures on environmental protection and show how environmental costs to natural and other assets caused by production activities can be treated in the calculation of net product. The third approach is welfare-oriented. It deals with the environmental effects borne by economic units other than the producers that cause these effects. Work is also in progress to define indicators that measure the impact of various economic activities on the environment. This work relates to the development of indicators of productivity, surface and groundwater quality, land use and soil quality, use of agro-chemicals, biodiversity (genetic and species diversity, wildlife habitats), pollution and waste management, climate change and water use and quality. At present, the system of economic accounts for agriculture does not include these aspects, which are still at the exploratory stage and there is no clear consensus as yet on which to base the specification of international standards. The system includes a set of statements which provide links to measure the quantum of various types of problem areas. For example, if agricultural land is affected by the use of fertilizers and pesticides the SEAFA statement should indicate into which region, crop or class of society the land belongs and classify the total agricultural land according to degree of degradation. A more detailed discussion on these aspects will be included in the next supplement to this Handbook.

2.83 The last category of the system includes activities such as the production, import and export of agro-chemicals and machinery and matters relating to extension and training, etc., which may be classified under various ISIC divisions, groups and classes. These items are also included as statements in the system so that interrelated data are readily available to policy-makers for immediate analysis and to statisticians for in-depth analysis of the overall scenario. Since these activities are included in other ISIC groups and since the study of general economic issues generally does not come under the aegis of policy-makers in food and agricultural ministries, the system has not been loaded with detailed accounts of these activities. However, statistics relating to these activities, need to be linked with data contained in various accounts of the System.

Table 2.1

PRODUCTION ACCOUNT FOR THE AGRICULTURAL HOUSEHOLDS SUB-SECTOR

Table 2.2
GENERATION OF INCOME ACCOUNT FOR THE AGRICULTURAL HOUSEHOLDS SUB-SECTOR

Table 2.3
ALLOCATION OF PRIMARY INCOME ACCOUNT FOR THE AGRICULTURAL HOUSEHOLDS SUB-SECTOR

Table 2.4
GROSS CAPITAL FORMATION BY AGRICULTURAL HOUSEHOLDS

(Appropriate SNA codes given for flows and types of assets)

P.511 Acquisitions less disposals of tangible fixed assets, divided into

Dwellings and other buildings (AN 1111 and AN 11121)
Other structures (AN 11122)
Machinery and equipment (AN 1113)
Cultivated assets (AN 1114), of which:

Livestock for breeding, dairy, draught, etc. (AN 11124)
Vineyards, orchards and other plantations yielding repeat products (AN 11142)

P.512 Acquisitions less disposals of intangible fixed assets
P.513 Additions to the value of non-produced, non-financial assets, of which

P.5131 Major improvements to non-produced, non-financial assets, of which Land (AN 211)
Other tangible, non-produced assets (AN 212, 213, 214)
P.5131 Costs of ownership transfer on non-produced, non-financial assets

Gross fixed capital formation (total of above items)

P.53 Acquisitions less disposals of valuables
K.2 Acquisitions less disposals of non-produced, non-financial assets, of which

K.21 Acquisitions less disposals of land under cultivation (AN 2112)

P.52 Changes in inventories, of which

Work-in-progress on cultivated assets (AN 1221)
Materials and supplies (AN 121)
Other (AN 1222 and AN 123)

Gross Capital Formation (total of all items)

Table 2.5
GOODS AND SERVICES ACCOUNTS FOR AGRICULTURAL GOODS

NPISH: non-profit institutions serving households

Contents - Previous - Next