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Archive:Agricultural output, price indices and income

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Data extracted in June 2015. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: February 2017.
Table 1: Agricultural output and gross value added at producer prices, 2010–14
(million EUR)
Source: Eurostat (aact_eaa01)
Figure 1: Agricultural output and gross value added at producer prices, EU-28, 2005–14
(2005 = 100)
Source: Eurostat (aact_eaa01)
Table 2: Subsidies and taxes in the agricultural sector, 2010–14
Source: Eurostat (aact_eaa01)
Figure 2: Change in deflated price indices of agricultural input and output, 2010–14 (1)
(average annual rate of change, %)
Source: Eurostat (apri_pi10_ina) and (apri_pi10_outa)
Table 3: Price indices of agricultural output
(nominal), 2014
(2010 = 100)
Source: Eurostat (apri_pi10_outa)
Table 4: Index of income from agricultural activity
(indicator A), 2005–14
(previous year = 100)
Source: Eurostat (aact_eaa06)

This article gives an overview of recent changes in agricultural output, gross value added and prices in the European Union (EU), and their effect on income from agricultural activity; the information presented is drawn from the economic accounts for agriculture (EAA).

One of the principal objectives of the common agricultural policy (CAP) is to provide farmers with a reasonable standard of living. Although this concept is not defined explicitly within the CAP, a range of indicators including income development from farming activities may be used to determine the progress being made towards this objective.

Main statistical findings

Output and subsidies

Following the financial and economic crisis, the gross value of EU-28 crop output in producer prices fell to a relative low of EUR 170.3 billion in 2009. This was followed by a rebound and four years of consecutive growth through to 2013 (peaking at EUR 212.1 billion). However, the latest information available reveals that crop output in the EU-28 fell by 4.8 % in 2014 to EUR 201.8 billion.

EU-28 gross animal output in producer prices also recorded a relative low in 2009 (EUR 134.7 billion), but then grew for five consecutive years to 2014, initially at a very rapid pace. The rate of change subsequently slowed and in 2014 there was almost no change (up 0.2 %) in the value of animal output in the EU-28, which reached EUR 167.9 billion (see Table 1).

These increases in the EU-28’s gross output during the period 2009–13 were offset to some extent by an increase in the value of intermediate consumption of goods and services at basic prices. Here too there was a period of relatively rapid growth followed by more modest growth rates and then a reduction of 2.7 % in 2014.

As a result, from a relative low of EUR 125.0 billion in 2009, the gross value added of the EU-28’s agricultural sector at producer prices rose for four consecutive years to reach a relative high of EUR 162.3 billion in 2013, before falling by 1.5 % to EUR 159.8billion in 2014.

Value added at producer prices reflects the value of output before taking account of subsidies and taxes on products and production. Value added at basic prices adds in any subsidies (less taxes) on products: in 2014 the EU-28’s agricultural sector recorded value added at basic prices that was EUR 163.1 billion, 2.1 % higher than the valuation at producer prices. Value added at factor cost also adds in subsidies (less taxes) on production: in 2014 this was valued at EUR 210.0 billion, a further 28.7 % higher than the valuation at basic prices.

These various valuations of value added reflect the relative importance of product and production subsidies and to a lesser extent taxes. In 2014, total subsidies (after deducting taxes) on products for the agricultural sector were valued at EUR 3.3billion, while subsidies on production were just over 14 times this level, at EUR 46.8 billion — see Table 2.

Various types of agricultural subsidy have changed over time through successive reforms of the CAP: the shift from product to production subsidies was mainly implemented in 2005 and 2006. Whereas production subsidies were more than 14 times as high as product subsidies in 2014, in 2005 they had only been 1.5 times as high. The net impact of these two types of subsidies less taxes in 2014 was to add an extra 31.4 % to value added at producer prices; for comparison, in 2005 the increase due to subsidies less taxes was 34.5 %.

Price indices

Changes in the value of agricultural output comprise a volume and price component: one important strand of recent changes in agricultural policy has been to move away from price support mechanisms, so that prices more accurately reflect market forces and changes in supply and demand. During the period 2010 to 2014 (see Figure 2) there were considerable differences between the EU Member States in the development of deflated agricultural output prices; such deflated prices show the extent to which agricultural prices have changed compared with consumer prices. Deflated output prices rose in 19 of the EU Member States, the largest increases being recorded for the Czech Republic (average growth of 4.2 % per annum), Ireland (3.8 % per annum) and Cyprus (2.5 % per annum), while reductions were posted in seven of the EU Member States, the largest being in Portugal (-1.2 % per annum) and Belgium (-1.9 % per annum); deflated input and output prices are not available for Estonia and Spain.

The development of deflated agricultural input prices during the period 2010–14 showed a somewhat different picture, as prices rose in all but one of the EU Member States, the exception being a modest reduction (-0.2 % per annum) in prices in Croatia. At the other end of the ranking, input prices rose, on average, by over 2.0 % per annum in Ireland, Lithuania, Portugal and Denmark (where the highest price increases were recorded, 2.8 % per annum).

For 16 of the 26 EU Member States for which data are available, the average annual rate of change in input prices was greater than the change in output prices, with the largest (percentage point) differences observed for Portugal and Belgium (both of which recorded falling output prices). Among the 10 EU Member States where output price changes exceeded the change in input prices the greatest differences were observed for France, Ireland and the Czech Republic.

Table 3 presents output price indices for a range of agricultural goods for 2014; the reference year for the index is 2010 (= 100). When analysed for the main components there was a wide range of price developments across the EU Member States during the period 2010–14. While crop output prices increased by 29.2 % in the Czech Republic during these four years, prices fell by 18.5 % in Belgium. There were four other EU Member States were crop output prices fell: Croatia, Austria, Malta and Portugal.

A similar comparison for animal output shows the highest price increases were also recorded in the Czech Republic (an overall increase of 24.1 %). Animal output prices rose in all of the EU Member States for which data are available during the period 2010–14, with the smallest increases recorded in Greece (an overall increase of 2.0 %).

The overall upward development of output prices between 2010 and 2014 was largely a result of rising prices for animal output, in particular, milk and to a somewhat lesser degree, cattle, poultry and pigs. While the price of crop output generally rose at a slower pace there were some exceptions, with relatively fast price increases for forage plants, wine and olive oil.

Income: Indicator A

The real net value added at factor cost of agricultural activity per unit of labour (expressed in annual work units), also known as the agricultural income indicator A, fell by 4.3 % in the EU-28 from 2013 to 2014, having risen by 5.2 % the year before. There were stark contrasts among the EU Member States in the development of this indicator in 2014, with income rising at a rapid pace in Slovenia (14.3 %), France (28.5 %), Denmark (32.1 %) and Luxembourg (61.0 %). By contrast, relatively strong falls in agricultural income were recorded for Portugal (-12.4 %), Spain (-15.8 %), the Netherlands (-17.1 %), Germany (-17.9 %), Romania (-20.2 %), Italy (-22.3 %) and Bulgaria (-24.5 %) — see Table 4.

Data sources and availability

Economic accounts for agriculture (EAA) provide an insight into:

  • the economic viability of agriculture;
  • agriculture’s contribution to each EU Member State’s wealth;
  • the structure and composition of agricultural production and inputs;
  • the remuneration of factors of production;
  • relationships between prices and quantities of both inputs and outputs.

These accounts comprise a production account, a generation of income account, an entrepreneurial income account and some elements of a capital account. For the production items, EU Member States transmit to Eurostat values at basic prices, as well as their components (values at producer prices, subsidies on products, and taxes on products). The data for the production account and for gross fixed capital formation are transmitted in both current prices and the prices of the previous year.

The output of agricultural activity includes output sold (including trade in agricultural goods and services between agricultural units), changes in stocks, output for own final use (own final consumption and own-account gross fixed capital formation), output produced for further processing by agricultural producers, as well as intra-unit consumption of livestock feed products. The output of the agricultural sector is made up of the sum of the output of agricultural products and of the goods and services produced in inseparable non-agricultural secondary activities; animal and crop output are the main product categories of agricultural output.

Gross value added equals the value of output less the value of intermediate consumption and is shown in producer prices (the producer price excludes subsidies less taxes on products). Intermediate consumption represents the value of all goods and services used as inputs in the production process, excluding fixed assets whose consumption is recorded as fixed capital consumption. The EU Member States transmit information on intermediate consumption to Eurostat using values at purchaser prices (basic prices).

Eurostat also collects annual agricultural prices (in principle net of VAT) to compare agricultural price levels between EU Member States and to study sales channels. Quarterly and annual price indices for agricultural products and the means of agricultural production, on the other hand, are used principally to analyse price developments and their effect on agricultural income. Agricultural price indices are obtained by a base-weighted Laspeyres calculation (2010 = 100), and are expressed in nominal terms or as deflated indices based on the use of an implicit consumer prices (HICP) deflator.

Agricultural income indicators are presented in the form of:

  • an index of real income of factors in agricultural activity per annual work unit (indicator A);
  • an index of real net agricultural entrepreneurial income, per unpaid annual work unit (indicator B);
  • and the net entrepreneurial income of agriculture (indicator C).

The information presented in this article for indicator A (as found in Table 4) relates to prices of the previous year — in other words, an example value of 107.1 represents a 7.1 % increase (based on the prices of the previous year).

Context

Significant reforms of the common agricultural policy (CAP) have taken place in recent years, most notably in 2003, 2008 and 2013, with the aim of making the agricultural sector more market-oriented. The 2003 reform introduced a new system of direct payments, known as the single payment scheme, under which aid is no longer linked to the level of production (decoupling); this single payment scheme aims to guarantee farmers more stable incomes. Farmers can decide what to produce in the knowledge that they will receive the same amount of aid, allowing them to adjust production to suit demand. In 2008, further changes were made to the CAP, building on the reform package from 2003.

The Europe 2020 strategy offers a new perspective on economic, social, environmental, climate-related and technological challenges and future agricultural reform is likely to be made in relation to the goals of developing intelligent, sustainable and inclusive growth, while taking account of the wealth and diversity of the agricultural sector within the EU Member States. As part of this process, the European Commission launched a public debate on the future of the CAP during 2010. Its outcome, coupled with input from the European Council and Parliament led the Commission to present a Communication in November 2010, titled ‘The CAP towards 2020: meeting the food, natural resources and territorial challenges of the future’ (COM(2010) 672 final).

In December 2013, this latest reform of the CAP was formally adopted by the European Parliament and the Council. Among the main elements of the CAP post-2013 are a fairer distribution of direct payments (with targeted support and convergence goals), revisions to public intervention and private storage aid, and continued support for rural development. For more information, see the introductory article for agriculture, forestry and fisheries.

See also

Further Eurostat information

Publications

Main tables

Economic Accounts for Agriculture (t_aact)
Crop output - basic and producer prices (tag00054)
Animal output - basic and producer prices (tag00055)
Output of the agricultural industry - basic and producer prices (tag00102)
Gross value added of the agricultural industry - basic and producer prices (tag00056)
Indicator A of the income from agricultural activity (tag00057)
Agricultural prices and price indices (t_apri)

Database

Economic Accounts for Agriculture (aact)
Economic Accounts for Agriculture (aact_eaa)
Agricultural Labour Input Statistics (aact_ali)
Agricultural prices and price indices (apri)
Selling prices of agricultural products (absolute prices), land prices and rents (apri_ap)
Price indices of agricultural products (apri_pi)

Dedicated section

Methodology / Metadata

Source data for tables and figures (MS Excel)

Other information

External links


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