Performance of the agricultural sector
Data extracted in March 2021.
Planned article update: December 2021.
This article gives an overview of the economic and resource performance of agriculture in the EU. It uses indicators on agricultural output, agricultural income and agricultural prices in the European Union (EU) for economic performance and indicators on agricultural output, intermediate consumption, sales of pesticides, fertiliser consumption and risk from pesticide use for resource performance. The data are extracted from Eurostat collections of agricultural statistics: economic accounts for agriculture (EAA), agricultural price indices (API) and agri-environmental indicators (AEIs).
Editorial note: The acronym 'EU' refers to the EU-27 as of 1 February 2020.
Value of agricultural output
Agriculture is an activity that falls within the primary sector of the economy, which is concerned with the extraction or harvesting of products from the earth. In an accounting context, an industry is a branch of economic activity. The term ‘agricultural industry’ is used to describe the branch of agricultural production but it should not be understood as inferring that agriculture is industrialised or that it is about the processing of raw materials. In this article, the term ‘agricultural industry’ is used only where precise accounting terms are required, with ‘agricultural sector’ being used elsewhere.
Agriculture contributed 1.3 % to the EU’s GDP in 2020
Agricultural production in the EU by the millions of predominantly small farms adds up to being big business, even without considering its importance as the key building block for the downstream food and beverage processing industry. The agricultural sector contributed EUR 171.9 billion towards the EU’s overall GDP in 2020. To put this in some context, the contribution of agriculture to the EU’s economy was only slightly less than the GDP of Greece, the 16th largest economy among the EU Member States.
This contribution (gross value added at producer prices, which is comparable to GDP at market prices) is the difference between the value of agricultural output and the value of various input costs built up in the production process, adjusted for taxes and subsidies on products. It is therefore interesting to look at the structure and composition of the value of this agricultural production and the various inputs used.
The agricultural industry created an estimated added value of EUR 177.0 billion in 2020
The gross value added by the EU’s agricultural industry, which is the difference between the value of everything that the EU’s primary agricultural sector produced and the costs of the services and goods used in the production process, was an estimated EUR 177.0 billion in 2020. One way of looking at this is that for every 1 euro spent on the cost of goods and services used in the production process (known as intermediate consumption), the EU’s agricultural industry created added value of EUR 0.75. Whilst this relative value added was lower than the EUR 0.76 in 2019 and the EUR 0.79 in 2017, it was still higher than all the other years since 2007.
The value of the output produced by the EU’s agricultural industry was an estimated EUR 411.8 billion in 2020
The value of everything that the EU’s agricultural industry produced in 2020 was an estimated EUR 411.8 billion; this includes the value of crops, of animals, of agricultural services, as well as some goods and services that were not strictly agricultural but which could not be separately measured.
About one half (52.8 %) of the value of the total output of the EU’s agricultural industry in 2020 came from crops (EUR 217.5 billion), within which vegetables and horticultural plants and cereals were the most valuable crops (see Figure 1). About two fifths (38.6 %) of total output came from animals and animal products (EUR 158.8 billion), a majority coming from just milk and pigs. Agricultural services (EUR 20.2 billion) and inseparable non-agricultural activities (EUR 15.3 billion) contributed the rest (8.6 %).
Contributions from Member States varied significantly, reflecting differences in volumes produced, prices received, as well as the mix of crops grown, animals reared, animal products collected and services offered. More than one half (58.6 %) of the total output value of the EU’s agricultural industry came from the ‘big four’ of France (EUR 75.4 billion), Germany (EUR 56.8 billion), Italy (EUR 56.3 billion) and Spain (EUR 52.9 billion). The next grouping of Member States were the Netherlands (EUR 28.2 billion), Poland (EUR 27.2 billion) and Romania (EUR 16.8 billion). Three quarters (76.2 %) of the total value of EU’s agricultural industry in 2020 came from these seven Member States.
Intermediate consumption costs for the EU’s agricultural industry were an estimated EUR 234.8 billion in 2020
Producing all this output incurred costs. Farmers had to make purchases of goods and services to be used as inputs in the production process; they bought things like seeds, fertilisers, animal feedingstuffs and fuel for their tractors as well as veterinary services, among other things. These input costs are termed ‘intermediate consumption’ in an accounting context. Intermediate consumption costs for the agricultural industry came to a total of EUR 234.8 billion for the EU as a whole in 2020.
Some costs are associated with the farming of animals; they required feed, which accounted for over one third (38.5 %) of total intermediate consumption costs, and veterinary services (a further 2.6 %). Likewise, some costs are associated with crop farming; farmers required seeds and plants (5.4 % of total costs), many used plant protection products, herbicides, insecticides and pesticides (4.7 %) and fertilisers and soil improvers (6.3 %). Other costs are common to all types of farm, independent of whether specialist or mixed-type.
The value of the output produced by the EU’s agricultural industry in 2020 fell back from the peak in 2019
The estimated value of agricultural output in 2020 declined by 1.4 % in nominal terms, falling back slightly from the high in 2019 (see Figure 2). This change in nominal value reflected slight falls in both the nominal price for agricultural goods and services as a whole (an estimated –0.7 %) as well as in the volume of output (an estimated –0.8 %).
This decline in the estimated overall output value of the EU’s agricultural industry in 2020 was driven by the decreases in five of the seven key Member States: France (-2.1 %), Italy (-2.6 %), Germany (-2.9 %), the Netherlands (-3.1 %) and Romania (-9.4 %). By contrast, there were rises in the values of the agricultural industries in a number of countries, including, Spain (+2.4 %) and Poland (+6.6 %). The sharpest rises were for Croatia (+7.0 %) and Lithuania (+7.9 %).
The gross value added generated by the EU’s agricultural industry in 2020 also fell back from its peak in 2019
The cost of the intermediate goods and services used by the agricultural industry in 2020 was slightly less than a year earlier (an estimated -0.8 %). This rate of decline was less, however, than that of the value of agricultural output (an estimated -1.4 %), which resulted in a stronger rate of decline (-2.2 %) in the gross value added generated by the agricultural industry.
Agricultural labour productivity
The economic performance of the agricultural industry can be measured in terms of net value added at factor cost, which is gross value added adjusted for the consumption of fixed capital, and subsidies and taxes on production. It is also known as factor income, as it is the remuneration available for all the factors of production.
Factor income in the EAA can be expressed per full-time labour equivalent. As such, it is considered a partial labour productivity measure; it is a measure of the net value added by the equivalent of each full-time worker in the agricultural industry. This indicator of performance is measured in real terms (adjusted for inflation) and expressed as an index. It should not be confused with total income of farming households or the income of a person working in agriculture.
To understand the development of this agricultural income measure, it is first necessary to understand the development of the agricultural labour amongst which this remuneration is notionally shared. With so much part-time, seasonal and unsalaried labour input in agriculture, the amount of work actually carried out in farming activities is best described when using a unit called the annual work unit (AWU). This unit expresses the volume of work done in full-time work equivalents.
Downward trend in the volume of agricultural labour in the EU continued in 2020
Agricultural labour input in the EU was the equivalent of an estimated 8.5 million full-time workers in 2020. These are the notional workers that are remunerated with agricultural income.
A majority of total agricultural labour input is non-salaried labour; it was the equivalent of an estimated 6.2 million full-time workers in 2020. Salaried labour was the equivalent of 2.3 million full-time workers in 2020. In a few Member States, more salaried agricultural labour was used in 2020 than in 2019 (see Figure 4.), in part reflecting hiring requirements at seasonal peaks. This was often in contrast to the overall decline in the total amount of agricultural labour used.
There is a long-established downward trend in the number of people working in the EU’s agricultural sector; during the period between 2005 and 2020, the average rate of decline in agricultural labour input used across the EU as a whole was 2.5 % per year. The downward trend continued in 2020, at much the same rate (-2.8 % compared with 2019) as the average for 2005-2020.
Lower volumes of labour were used in most Member States in 2020, with particularly stark contractions of about 5-6% in Romania, Slovakia, Lithuania, Portugal, Hungary, Bulgaria and Estonia, and slightly more than 8% in Spain. By contrast, the volume of total agricultural labour used in Luxembourg was higher (+1.9 %) in 2020 than in 2019, although this should be seen against a persistent and strong contraction over the longer-term.
Over the long-term, the volume of agricultural labour has been in steep and steady decline
The volume of total agricultural labour declined sharply in almost all Member States during the period between 2005 and 2020 (see Figure 5); the sharpest declines were in Bulgaria (an average -8.0 % per year), Slovakia (-5.5 % per year), Estonia (-4.9 % per year) and Latvia (-4.5 % per year). This contraction in the agricultural labour force reflected both push and pull factors; there have been great strides in mechanisation and efficiency on the one hand and, on the other, a wider choice of attractive job opportunities in other sectors of the economy. The main exceptions to this general trend were Malta (+1.5 % per year on average) and Ireland (+0.5 % per year on average).
The contraction in the total work input from non-salaried labour between 2005 and 2020 was more pronounced than for salaried labour at the level of the EU as a whole (-3.1 % per year on average compared with -0.4 % per year). There were higher levels of salaried labour input in Ireland (+4.3 % per year on average), Luxembourg (+3.7 % per year on average), Austria (+2.6 % per year on average), Denmark (+1.9 % per year on average) and Poland (+1.9 % per year on average) among others, but sharp declines in Slovakia (-4.9 % per year on average), Greece (-3.6 % per year on average), Czechia (-3.0 % per year on average) and Romania (-3.0 % per year on average).
Agricultural income as defined by real factor income per AWU for the EU fell slightly in 2020 (-1.5 %)
Agricultural income, as defined by deflated (real) factor income per AWU and expressed as an index (called Indicator A), for the EU as a whole was an estimated 1.5 % lower in 2020 than in 2019. This reflected a lower (-4.2 %) factor income than in 2019 that was notionally shared amongst a reduced agricultural labour input (-2.8 %).
A majority of Member States recorded increases in this index of agricultural income in 2020 (see Figure 6). The sharpest upturns were in Lithuania (+30.2 %), Croatia (+13.2 %), Spain (+13.0 %) and Hungary (+11.6 %).
The slight decline in agricultural income per AWU at the level of the EU as a whole reflected lower agricultural incomes in five of the largest seven agricultural producer-Member States; Italy (-4.9 %), the Netherlands (-5.1 %), France (-7.6 %), Romania (-13.8 %) and Germany (-14.6 %), this being the sharpest rate of decrease among Member States).
Continued levelling off in the upward trend in the index of agricultural income for the EU
After a number of years of strong growth after 2005, there has been a levelling off in the index of agricultural income per AWU for the EU as a whole since 2017. This has reflected a recent downturn in factor income, accompanied by a continuous contraction in agricultural labour input. Nevertheless, agricultural income per AWU for the EU as a whole in 2020 was an estimated 27.2 % higher than the index level in 2010.
Resource performance of the agricultural sector
There is increasing interest in the efficiency with which resources are used . In order to become more sustainable, an economy would need to decouple economic growth from resource use and its environmental impact.
Some indication of the resource performance of agriculture can be derived from the EAA by looking at trends in the ‘volumes’ of outputs generated and of the goods and services used as inputs in the production process. These volumes come from a decomposition of the values into price and volume components. These implicit volumes are not quantities; they are not measured in terms of kilograms or tonnes. They are termed ‘volumes’ because they capture not only changes related to quantity but also to quality as well as composition, which is important to bear in mind. As indices, they provide an overview of the trends in the volumes of inputs and outputs, which can be used for some productivity and performance measures.
Rising output volume of agricultural industry but with rising volume of input goods and services as a whole
Over the reference period between 2005 and 2020, there was a relatively steady upward trend in the output volume of the EU’s agricultural industry (a total increase of +11.3 %). To a large extent, higher output volumes were underpinned by a greater volume (+7.2 %) of input goods and services consumed (see Figure 8). The medium-term trends suggest that there is little evidence of any decoupling of output growth from resource use at the EU level.
Among Member States, there was also little suggestion of an apparent decoupling of agricultural output growth from intermediate consumption resource growth, with a few notable exceptions. Over the period between 2005 and 2020, the volume index of agricultural industry output in Belgium grew by 15.0 % at the same time as the volume index of intermediate consumption goods and services consumed declined by 28.2 %. Likewise, Slovenia and, to a lesser extent, Finland also recorded rises in agricultural output over the same period (+12.3 % and +3.5 % respectively) at the same time as a reducing their consumption of intermediate consumption goods and services (-9.3 % and -18.5 % respectively). It should be borne in mind that these changes may, in part, reflect changes within the structure of the agricultural industries in these Member States as well as improved resource efficiency.
Sales of pesticides unchanged but risk from pesticide use in decline
Sales of pesticides in the EU were about 360 000 tonnes in 2018 and this was more or less unchanged in the period from 2011. The data on pesticide sales cover all types of sales, not only for use in farming but also, among others, forestry. The types of active substances used in pesticides are changing and volume is not indicative of the potential hazards associated with the use of pesticides. Harmonised risk indicator 1 (HRI1) estimates the trend in the risk from pesticide use ; it covers all sectors of the economy.
The risk from pesticide use has been in decline over much of the past decade across the EU as a whole; compared with the average between the years 2011 to 2013, the risk from pesticide use is estimated to have declined by about 17 % through to 2018 (see Figure 10). During this timeframe, the risk of pesticide use declined in a majority of Member States, the steepest declines being in Romania (-52 %) and Denmark (-48 %). There were a few Member States, however, where the risk rose; among others, in Latvia the risk rose an estimated 40 % and in Finland an estimated 44 %. Such increases may occur for countries starting from a baseline much lower than the EU-average. Exchanging the use of low-volume chemical pesticides in storage buildings for the use of high-volume inert gases, and obligatory applications to fight particular plant problems are other reasons for an increase in HRI1.<image imgid="figure10" zoom="100">
Fertiliser consumption remains high
The consumption volume of mineral fertilisers, nitrogen and phosphorus, by agriculture remained high in the period 2007 to 2018; an estimated 11.3 million tonnes were used in 2018 .
When the nutrients used in agriculture are not absorbed by crops, their use is considered excessive and is linked to environmental issues regarding water pollution, the climate  and reduced biodiversity. The gross nitrogen balance provides an indication of the potential surplus of nitrogen (N) on agricultural land (kg N per hectare per year). The gross nitrogen balance for the EU-27 decreased from an estimated average of 51 kg N per hectare per year in the period 2004-2006 to 47 kg N per hectare per year in the period 2013-2015 . Mineral fertilisers accounted for 45 % of the nitrogen input in the EU in 2014, manure accounting for another 38 %.
The gross phosphorus balance provides insight into links between agricultural phosphorus use, losses of phosphorus to the environment, and the sustainable use of soil nutrient resources. A persistent surplus indicates potential environmental problems, such as phosphorus leaching resulting in pollution of drinking water and eutrophication of surface waters. A persistent deficit can impair the resource sustainability of agriculture soil through soil degradation, or soil mining, resulting in declining fertility in areas under crop or forage production. The gross phosphorus balance for the EU was 1.2 kg per hectare per year in the period 2013-2015, down from 3.9 kg per hectare per year in the period 2004-2006. This means that although there remains an annual surplus, the size of this annual surplus has declined; in the period between 2013-2015 it was about 30 % of what it was in the early 2000s .
Source data for tables and graphs
The EAA are a satellite account of the European system of accounts (ESA 2010). They cover the agricultural products and services produced over the accounting period sold by agricultural units, held in stocks on farms, or used for further processing by agricultural producers. The concepts of the EAA are adapted to the particular nature of the agricultural industry: for example, the EAA includes not only the production of grapes and olives but also the production of wine and olive oil by agricultural producers, if produced from own grapes and olives. It includes information on intra-unit consumption of crop products used in animal feed, as well as output accounted for by own account production of fixed capital goods and own final consumption of agricultural units.
The EAA comprises 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 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.
Three indicators are computed in relation to agricultural income:
- an index of real income of factors in agricultural activity per AWU (Indicator A);
- an index of real net agricultural entrepreneurial income, per unpaid AWU (Indicator B);
- and the net entrepreneurial income of agriculture (Indicator C).
The information presented on agricultural income relates to Indicator A (the real income of factors in agriculture per AWU). This indicator corresponds to the real (deflated) net value added at factor cost of agriculture per AWU and is expressed as an index. Net value added at factor cost is calculated by subtracting from the value of agricultural output at basic prices the value of intermediate consumption, the consumption of fixed capital, and adding the value of (other) subsidies less taxes on production.
Agricultural price statistics provide information on the development of producer (output) prices for agricultural products and purchaser prices for the means of agricultural production (the intermediate consumption of goods and services within the production process). Data on prices are available for single commodities and for larger aggregates in the form of absolute prices and price indices.
The index of producer prices for agricultural products is based on sales of agricultural products, while the input index (for intermediate goods and services) is based on purchases of the means of agricultural production. Prices should be recorded at points which are as close as possible to those of the transactions which the farmer actually undertakes. This means that product prices should be recorded at the first marketing stage so as to best indicate the actual producer prices received by farmers. Similarly, the prices paid by farmers for their means of production should be recorded at the last marketing stage, that at which the items arrive on the farm, so as to best indicate the purchase prices paid by farmers. It is assumed, by convention, that the fertilisers and feeding stuffs purchased are used in the same production period and that there are no stocks on farm.
As regards spatial comparisons, the structure of the weights with respect to products and means of production reflect the value of the sales and purchases in each country during the base year (currently 2010 = 100); the weights therefore differ from one country to another.
Since the reference year 2011, statistics on pesticides have been collected under Regulation (EC) No 1185/2009, which established a common framework for the systematic production of Community statistics on sales and use of those pesticides which are plant protection products. The ‘harmonised classification of substances’ classifies each active substance in a major group, category of product and chemical class. For the purpose of this article, the term ‘pesticides’ refers to plant protection products and covers the following categories:
- fungicides and bactericides;
- herbicides, haulm destructors and moss killers;
- insecticides and acaricides;
- plant growth regulators;
- other plant protection products.
Harmonised risk indicators were established in 2019 to estimate the trends in risk from pesticide use under Directive 2009/128/EC on the sustainable use of pesticides. Eurostat disseminates harmonised risk indicator 1 based on sales of pesticides. The indicator is an index with a baseline set to the average for 2011-2013.
Mineral fertiliser consumption is indicated by the evolution of the consumption of the nutrients nitrogen and phosphorus in mineral fertilisers by agriculture over time. Eurostat publishes two data sets on inorganic fertilisers. The first is collected from Member States and is an estimate of the nitrogen and phosphorus use in agriculture. The other data set is estimated consumption based on the sales of mineral fertiliser in the EU; these data are provided by a European trade association, Fertilizers Europe. The figures estimated by Fertilizers Europe are based on sales of mineral fertiliser and mostly correspond with the estimates of nitrogen and phosphorus use reported by countries, although they cannot be directly compared due to methodological differences.
The performance of the agricultural sector has traditionally been about how successful farming is in delivering primary agricultural products and services. However, it is increasingly taking on a green aspect, recognising the impact of agriculture on water, air and soil quality, land use diversity, ecologies, wildlife and climate change.
The European Green Deal  sets out how to make Europe the first climate-neutral continent by 2050. The Farm to Fork Strategy , for a fair, healthy and environmentally-friendly food system, was adopted by the European Commission on 20 May 2020 and lies at the heart of the Green Deal. Among other things, it addresses comprehensively the challenges of sustainable food systems by recognising that ‘food production still results in […] pollution, contributes to the loss of biodiversity and climate change, and consumes excessive amounts of natural resources’ . This is a reason for the goal to increase the area under organic farming to 25 % of the utilised agricultural area by 2030, a goal that goes hand-in-hand with measures to change resource performance. Individual targets to reduce dependency on chemical pesticides and antimicrobials, reduce excess fertilisation, and reduce waste will pave the way for a more sustainable food-chain.
Assessing the performance of the agricultural sector matters for a number of reasons:
- farming is a cornerstone of the rural community, one on which a number of ‘upstream’ sectors (such as machinery, animal healthcare and input businesses) and ‘downstream’ sectors (such as food processing, packaging and transport businesses) depend;
- farming is about providing a stable supply of safe, quality food;
- farming has a key role to play in preserving landscapes and biodiversity;
- farming has a key role to play in climate change action; and
- to support this, there is a need to ensure a fair income for farmers.
Economic impacts on farmers therefore not only influence future farming business decisions but also wider ecological and environmental business decisions and behaviour.
The performance of the agricultural sector as a whole can be assessed by bringing the information about the volume and price changes for agricultural goods and services under the umbrella of an accounting structure. To this end, the economic accounts for agriculture (EAA) provide a set of comparable data that provide an insight into:
- the economic viability of agriculture;
- the income generated by farmers;
- the structure and composition of agricultural production and the inputs used in that production; and
- the relationships between prices and quantities of both outputs and inputs.
The resource performance of the agricultural sector can be seen by analysing key targets of the European Green Deal. For this reason, analyses on sales of pesticides and the risks from their use as well as on fertiliser consumption are also provided in this article.
- Agriculture (t_agri), see:
- Economic accounts for agriculture (t_aact)
- Agricultural prices and price indices (t_apri)
- Agriculture (agri), see:
- Economic accounts for agriculture (aact)
- Economic Accounts for Agriculture (aact_eaa)
- Agricultural Labour Input Statistics (aact_ali)
- Unit value statistics for agricultural products (aact_uv)
- 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)
- Agriculture, forestry and fishery statistics — 2020 edition (statistical book)
- Absolute agricultural prices (ESMS metadata file — apri_ap_esms)
- Economic accounts for agriculture (ESMS metadata file — apri_ap_esms)
- Manual on the economic accounts for agriculture and forestry EAA/EAF 97 (Rev. 1.1)
- Price indices of agricultural products (ESMS metadata file — apri_ap_esms)
- Target methodology for agricultural labour input (ALI) statistics (Rev. 1) (ESMS metadata file — aact_esms)
- Regulation (EC) No 138/2004 of 5 December 2003 concerning economic accounts for agriculture
- Summaries of EU Legislation: Economic accounts for agriculture
- The Europe 2020 strategy includes the Roadmap to a Resource Efficient Europe (COM(2011) 571) that outlines how the European economy can be transformed into a sustainable one by 2050.
- For more information, see the European Commission’s webpage on harmonised risk indicators.
- For more information, see the Statistics Explained article: Agri-environmental indicator — mineral fertiliser consumption.
- OECD (2019), Accelerating Climate Action: Refocusing policies through a Well-being lens.
- For more information, see the Statistics Explained article: Agri-environmental indicator — gross nitrogen balance.
- For more information, see the Statistics Explained article: Agri-environmental indicator — risk of pollution by phosphorous.
- For more information, see: A European Green Deal.
- For an overview of the strategy and related documents, see https://ec.europa.eu/food/farm2fork_en.
- For more information, see the Communication from the Commission on the European Green Deal.