A. Definition of the Agricultural Income in the Community – A methodological note

The formation and implementation of any policy area is based on a reliable basis of statistical and other information. In this respect, the systematic collection of data on the basis of specific criteria is a necessary condition for the establishment of the most appropriate policy measures.

To monitor the evolution of significant economic figures, such as agricultural income, as well as to obtain reliable figures comparable among all the member states, a common methodology has been established by Eurostat, the statistical service of the European Union.

The estimates of agricultural income indicators are based on the Economic accounts for Agriculture (EAA) which were established in the framework of the European System of Integrated Economic Accounts (ESA). The data cover the branch “Products of Agriculture and Hunting” which includes all agricultural output resulting from a main or secondary activity, but excludes non-agricultural secondary activities (non-agricultural activities, wages, salaries, social benefits, property income) of agricultural holdings. In other words, income from agricultural activity must be regarded as farmers’ income.

It should be noted that the final output which is the starting point for the estimation of income from agriculture, as well as, the main three indicators A, B, and C (see below), does not include products produced by the agricultural branch and used directly by it, for instance, seeds and animal feedingstuffs in particular. However, this does not affect the resulting measures of value added or the income indicators, given that the measurement of intermediate consumption likewise excludes the corresponding consumption of these items.

The income from agriculture (net value added at factor cost) and the three indicators are derived as follows:

Final output

-

Intermediated consumption

=

Gross value added at market prices

+

Subsidies

-

Taxes linked to production

=

Gross value added at factor cost

 

 

-

Depreciation

=

Net value added at factor cost

 

 

 

-

 

Rents Interest

 

=

Net income from agricultural activity of total labour input

 

 

 

-

 

Compensation of employees

 

=

Net income from agricultural activity of family labour

Indicator A = Deflated Net value added at factor cost divided by Annual
                   Working Units (AWU)
Indicator B = Deflated Net income from agricultural activity of total labour
                   Input, divided by Annual Working Units (AWU)
Indicator C = Deflated Net income from agricultural activity of family labour,
                   divided by Annual Working Units (AWU)

Indicator A is the most significant indicator that is used in order to compare the evolution of agricultural income between the European member states. It measures the change of real agricultural factor income corresponding to the net value added at factor cost) related to the change in total agricultural labour input.