Archive:Agricultural output, price indices and income

Data from September 2011, most recent data: Further Eurostat information, Main tables and Database.

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.

Table 1: Agricultural output and gross value added at producer prices (EUR million) - Source: Eurostat (aact_eaa01)

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, one of the measures tracked within the policy is income development from farming activities. Economic accounts for agriculture (EAA) provide information that allows an analysis of agricultural activity and the income generated by it.

Main statistical findings

Figure 1: Agricultural output and gross value added at producer prices, EU-27 (2005=100) - Source: Eurostat (aact_eaa01)

Figure 2: Change in deflated price indices of agricultural input and output, 2005-2010
(average annual rate of change, %) - Source: Eurostat (apri_pi05_ina)and (apri_pi05_outa)

Table 2: Price indices of agricultural output (nominal), EU (1)
(2005=100) - Source: Eurostat (apri_pi05_ina)

Table 3: Index of income from agricultural activity (indicator A)
(2005=100) - Source: Eurostat (aact_eaa06)

The EU-27’s agricultural industry generated EUR 125 400 million of gross value added at producer prices in 2009, which represented a 14.0 % reduction in relation to the previous year (see Table 1). There were large decreases in both the value of crop output (down 13.9 % to EUR 171 000 million in 2009) and animal output (down 10.9 % to EUR 133 000 million); these were partly compensated for by a sizeable reduction in the value of intermediate consumption of goods and services (down 10.5 %).

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 2005 to 2009 (see Figure 2) there were considerable differences between the Member States in the development of deflated agricultural output prices: such deflated prices show the extent to which agricultural prices have changed compared to consumer prices. Deflated prices rose in nine of the 26 Member States (Germany, no information available), the largest increases being recorded for the United Kingdom (average growth of 5.9 % per annum), Cyprus (3.9 % per annum between 2005 and 2008) and Romania (3.2 % per annum), while reductions were posted in 17 of the Member States, the most significant being in Latvia (-6.3 % per annum), Slovakia (-6.2 % per annum) and Estonia (-6.1 % per annum).

The development of deflated agricultural input prices showed a very different picture, as prices rose in 17 of the 25 Member States for which data are available between 2005 and 2009 (Germany and Ireland, no information). As with output prices, Cyprus (4.9 % per annum between 2005 and 2008) and the United Kingdom (4.7 % per annum) reported the highest input price increases, followed by Portugal (3.5 % per annum).

There was an overall 9.4 % increase in EU output prices for agricultural products between 2005 and 2009, with a breakdown between crop output (9.0 %) and animal output (9.8 %) showing prices increasing by a similar magnitude. The overall increase in output prices between 2005 and 2009 did not occur as a stable development, as there was a considerable reduction in prices between 2008 and 2009 when the price of agricultural products fell by 13.9 %. The largest reductions between 2008 and 2009 were recorded for cereals (-30.2 %), eggs, milk, fruits and olive oil (reductions of between 14 % and 17 %).

The real net value added at factor cost of the agricultural activity per unit of labour (expressed in annual work units – equivalent to the work performed by a person employed full-time), also termed as agricultural income indicator A, declined by 11.7 % in the EU-27 in 2009, compared with 2008. There were stark contrasts among the Member States, with decreases in income of more than 20 % in Hungary, Luxembourg, Ireland, Germany and Italy, contrasting with rapidly rising incomes in Malta (7.1 %) and Denmark (4.2 %).

Data sources and availability

Economic accounts for agriculture (EAA) provide key insights into:

the economic viability of agriculture;
agriculture’s contribution to a 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, 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 industry 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 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 Member States and 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 (2005=100), and are expressed both in nominal terms, and deflated using an implicit 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);
the index of real net agricultural entrepreneurial income, per unpaid annual work unit (indicator B);
net entrepreneurial income of agriculture (indicator C).

Context

Significant reforms of the common agricultural policy have taken place in recent years, most notably in 2003 and 2008, 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 production (decoupling); the 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, building on the reform package from 2003, such that all aid to the agricultural sector will be decoupled by 2012.

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.

Further Eurostat information

Publications

Main tables

Agriculture (t_agri)

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

Agriculture (agri), see:

Economic Accounts for Agriculture (aact)

Economic Accounts for Agriculture (aact_eaa)

Economic accounts for agriculture - values at current prices (aact_eaa01)

Economic accounts for agriculture - Values at n-1 prices (aact_eaa02)

Economic accounts for agriculture - Values at constant prices (2005=100) (aact_eaa03)
Economic Accounts for agriculture - Values at real prices (aact_eaa04)

Economic accounts for agriculture - indices : volume, price, values (aact_eaa05)

Economic accounts for agriculture - Agricultural income (indicators A, B, C) (aact_eaa06)

Agricultural Labour Input Statistics (aact_ali)

Agricultural Labour Input Statistics - absolute figures (aact_ali01)

Agricultural Labour Input Statistics - indices (2005=100) (aact_ali02)

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

Agriculture

Methodology / Metadata

Economic Accounts for Agriculture (ESMS metadata file - aact_esms)
Price indices of agricultural products (ESMS metadata file - apri_pi_esms)
Selling prices of agricultural products (absolute prices), land prices and rents (ESMS metadata file - apri_ap_esms)

Other information

Source data for tables and figures (MS Excel)

Agricultural output, price indices and income: tables and figures