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Agricultural income per annual work unit

From Statistics Explained

Agricultural income per annual work unit in EU-27 remained at the same level in 2012


Statistics in focus 19/2013; Author: Garry MAHON, Ruben GARCIA NUEVO
ISSN:2314-9647  Catalogue number:KS-SF-13-019-EN-N

According to the second estimates of the economic accounts for agriculture (EAA) submitted to Eurostat by the European Union (EU) Member States at the end of January 2013, agricultural income per annual work unit (Indicator A) at EU-27 level is estimated to have remained stable in 2012 compared with 2011. However, agricultural labour input decreased slightly (- 0.2 %) in EU-27 compared with the previous year.

Figure 1: Real value of output for the agricultural industry in EU-27, 2012, (million EUR) - Source: Eurostat
Figure 2: Trends in EU agricultural income per work unit, Indicator A, 2005-2012 (% change compared with previous year) - Source: Eurostat (aact_eaa06)
Figure 3: Trends in EU agricultural income per work unit, Indicator A, (2005=100) - Source: Eurostat (aact_eaa06)
Figure 4: Agricultural income per work unit, Indicator A, 2012 vs 2011 (% change compared with the previous year) - Source: Eurostat (aact_eaa06)
Figure 5: Main components of agricultural income, EU-27, 2012 vs.2011 - Source: Eurostat (aact_eaa05) and (aact_ali02)
Table 1: Main components of agricultural income, EU-27, 2012 vs.2011 - Source: Eurostat (aact_eaa05)
Table 2: Indices of agricultural income per work unit, Indicator A, EU-27, 2005-2012 - Source: Eurostat (aact_eaa06)
Table 3: Changes in intermediate consumption, EU-27, 2012 vs 2011 (%) - Source: Eurostat (aact_eaa05)
Figure 6: Agricultural labour input (total, 1000 AWU) - Source: Eurostat (aact_ali01)
Table 4: Main components of agricultural income, EU-27, 2012 vs.2011 (% change compared with previous year) - Source: Eurostat (aact_eaa05)

Main statistical findings

Agricultural income per annual work unit remained stable at the EU-27 level in 2012, following an increase of 8.3 % in 2011 and 17.1 % in 2010.

This latest development was driven by an increase of 3.6 % in agricultural income per work unit in EU-15, which was counterbalanced by a decrease in those Member States which joined the EU in 2004 and 2007, (-11.9 %). The decrease in Indicator A for Member States which joined the EU in 2004 and 2007 was linked to the decrease in factor income (-11.3 %). Nonetheless, the agricultural labour input registered a small increase of 0.7 % in 2012.

On the other hand, the factor income in EU-15 increased by 2.4 % in 2012 compared with the previous year. This led to an increase of 3.6 % in the agricultural income, which when divided by the agricultural labour input, resulted in a decrease in Indicator A (-1.1 %).

For EU-27, the index (2005=100) of Indicator A reached 128.5 % in 2012, the same as in 2011. This increase since 2005 is attributable to the positive developments in EU-15 and Member States which joined the EU in 2004 and 2007, which recorded rises of 17.9 % and 50.1 % respectively, when compared with 2005.

Agricultural income per work unit, Indicator A, in 2012: comparison across countries

Agricultural income per work unit developed differently across the Member States of the EU-27. In 2012, the largest increases were seen in Belgium (+27.9 %), Latvia (+21 %) and Lithuania (+17.6 %). The Netherlands, Germany and Estonia also showed increases of over 14 %. (Figure 4)

The steepest decreases, on the other hand, were seen in Romania (-27.1 %), Poland (-13.7 %) and Slovenia (-12.2 %). Hungary, the United Kingdom, Ireland and Austria also recorded marked decreases (steeper than -7.5 %).

In 2012, almost 83 % of total factor income in EU-27 was generated in EU-15, by 50 % of the total agricultural labour input (in AWU).

The trends in the two EFTA countries for which data were available, were very different in 2012 compared with 2011. Indicator A rose in Norway (+10.7 %) while it decreased in Switzerland (-1.1 %).

Croatia, the new EU Member State as of July 2013, observed a decrease in agricultural income per work unit, Indicator A (-10.8 %).

Main factors in income development for 2012

Indicator A combines the development in net value added at factor cost (factor income) and the trend in agricultural labour input (Figure 5).

In EU-27, there was a slight decrease (-0.2 %) in factor income for 2012 compared with 2011 in real terms (which represents an increase of 1.2 % in nominal terms), while agricultural labour input also decreased slightly (-0.2 %).

Factor income development in 2012 was mainly attributable to small increases in the output values of both crop production (+0.9 %) and animal production (+3.2 %). The output value of agricultural services registered a slight increase in 2012 compared with 2011 (+0.7 %). On the other hand, the output value of inseparable non-agricultural secondary activities dropped (-1.2 %).

Even though the overall output of the agriculture industry grew by 1.8 %, according to the second estimates, this was counterbalanced by an identical increase of 1.8 % in the value of intermediate consumption. This led to factor income remaining unchanged.

The stable level of agricultural income per labour unit in 2012 compared with 2011 results from a combination of small decreases in the volume of crop and animal production compensated by slight increases in prices.

Higher prices in agriculture (+6.6 %) led to an increase of 1.8 % in the value of total agricultural output in basic prices. On the other hand, the volume of agricultural output decreased (-3.0 %).

For intermediate consumption, the increase in value (+1.8 %) also resulted from a rise in prices (+4.9 %) and a decrease in volume (-1.5 %). As a result of both of these trends, i.e. the developments in output and intermediate consumption, the gross value added in agriculture in 2012 showed the same trend (+1.8 %) as the value of total agricultural output at basic prices.

The gross value added at basic prices accounted for 39.3 % of the total output value. Overall, subsidies were worth more than EUR 55 thousand million in 2012, accounting for around 38 % of the factor income.

A closer look at output

The value of the output of agricultural goods at basic prices increased by 1.9 % in 2012 compared with 2011. This small increase was driven by a decrease in volume (-3.2 %) and an increase of 6.9 % in the output prices of agricultural goods. The value of crop output at basic prices, which accounted for 52.2 % of the total output, remained at almost the same level. On the other hand, animal output, at around 40 % of total output, recorded a rise of 3.2 %. Agricultural services increased slightly (+0.7 %) while secondary activities decreased (-1.2 %) (Table 1).

Crop output

The value of crop output at basic prices increased slightly in 2012, compared with 2011 (+0.9 %), while animal output showed a larger increase (+3.2 %). The reason for the stability of crop output was a combination of a decrease in volume (-5.3 %)and the increase in producer prices (+6.9 %). Price increases were observed for almost all main agricultural crops. The largest price increases in 2012 were observed for cereals (+10.0 %), potatoes (+9.2 %), oil seeds and wine (+8.8 %). A small decrease in the producer price was observed only for sugar beet (-0.2 %) in 2012 compared with 2011. On the other hand, the changes in volume were negative for most agricultural crops (wine, -15.7 %; potatoes, -14.1 %) while oil seeds, fruits and cereals registered a volume decrease steeper than -7 %.

Ten Member States reported declines in total crop output in 2012 (see Table 4), which were most marked in Romania (-28.9 %), Slovakia (-11.0 %), Malta (-8.5 %) and Slovenia (-7.9 %). The largest increases in the value of crop output were observed in Latvia and Luxembourg (+31.4 %), Estonia (+16.4 %), Lithuania (+15.1 %) and Belgium (+13.5 %).

The value of crop output at basic prices in EU-15 increased by 3.2 % in 2012, while in Member States which joined the EU in 2004 and 2007, it decreased (-8.6 %). Basic prices in real terms rose by 6.5 % in EU-27, as a result of the increase of 7.1 % in EU-15 and 3.5 % in the other Member States.

Animal output

The rise in the value of animal output recorded in 2012 (+3.2 %) was mainly due to higher producer prices (+3.8 %) while the volume of animal output declined slightly (-0.5 %). At the EU-27 level, prices rose for most of the groups included in animal output. For animal products, the value of milk, which accounted for 13.6 % of the overall output in 2012, decreased (-4.4 %) compared with 2011, mainly due to the decrease in the price of milk (-4.7 %). On the other hand, the volume remained almost at the same level (+0.3 %) compared with 2011. As regards egg production, the large increase in the producer price (+30.6 %) brought about an increase of 28.5 % in value when compared with the previous year.

For animals (meat and livestock), the value in basic prices was up 5.5 %. Higher producer prices were the main reason for this in almost all animal groups: equines (+13.1 %), pigs (+9.7 %), cattle (+8.4 %) and poultry (+2.3 %). The only (slight) decrease in the price development was observed for sheep and goats (-1.0%). As regards volume, all categories (except poultry, +2.6 % and milk, +0.3 %) registered a drop compared with 2011: sheep and goats (-2.2 %); cattle (-2.1 %) and pigs (-1.8 %).

As shown in Table 4, 20 out of the 27 EU Member States reported higher values for animal output in 2012 than in 2011, with the most noticeable increases observed in Spain (+9.8 %), Hungary (+6.8 %) and Romania (+5.5 %). Member States such as Sweden (-5.9 %), Slovakia (-4.8 %) and Lithuania and Luxembourg (-2.0 %), on the other hand, reported lower output values in real terms than in the previous year.

A medium-term analysis (2005-2012)

In order to place the most recent income developments in a medium-term perspective, Indicator A is expressed in index form, with the year 2005 chosen as reference year. According to the trend of Indicator A, Member States can be divided into two groups.

The first group includes those countries for which agricultural income in 2012 was higher than in 2005. This group comprises twenty-two Member States. In fifteen of these, the level of agricultural income per work unit reached in 2012 was more than 20 index points higher than in 2005. The most marked trends were reported by Estonia (+119 %), Slovakia (+95.9 %) and Lithuania (+81.6 %).

There were five Member States which had a negative trend for Indicator A in 2012 compared with 2005: Cyprus, Luxembourg, Malta, Ireland and Italy (Table 2).

Higher intermediate consumption and stable labour input

Value of intermediate consumption was higher in 2012 than 2011

In 2012, at the EU level, the value of intermediate consumption increased by 1.8 % in real terms compared with 2011, due to a combination of higher prices (+3.3 %) partially offset by a decrease in volume (-1.5 %). As regards the components of intermediate consumption, values for most items rose moderately: financial intermediation services indirectly measured (+4.5 %); feedingstuffs (+3.3 %); energy and lubricants (+3.2 %) and plant protection products (+1.9 %). The only declines compared with the previous year were observed in the values of seeds and planting stocks (-1.9 %) and veterinary expenses (-1.1 %). (Table 3)

The value of intermediate consumption rose in twenty-two EU Member States in 2012, compared with the previous year. The most marked increases were recorded in Latvia (+12.6 %), Luxembourg (+8.6 %) and Estonia (+8.0 %). Out of the five countries which reported a decrease in 2012, the steepest declines were observed in Romania (-17.4%), Slovakia (-5.6%) and Malta (-4.9%).

Energy prices rose in all Member States in 2012, compared with 2011 (except Denmark, where a slight decrease, -1.3 %, was recorded). The increase of energy prices ranged from 1.1 % in the United Kingdom to 11.1 % in France. The largest increases in the prices of fertilisers and soil improvers were recorded in Bulgaria (+14.9 %), France (+12.6 %), Greece (+11.8 %) and Romania (+10.1 %).

Agricultural labour input remained at the same level in 2012

In 2012, the agricultural labour input decreased slightly in thirteen Member States compared with the previous year; it remained almost stable in eight and increased in six. The steepest declines were seen in Slovakia (-5.7 %), Sweden (-4.7 %) and Finland and the Netherlands (-3.3 %). (Figure 6)

For EU-27, agricultural labour input remained at the same level in 2012 compared with 2011; however, it decreased markedly (-19.8 %) compared with 2005 and even more so (-32.2 %) relative to 2000. The labour input used in agriculture in EU-15 decreased in 2012 (-1.1%) compared with 2011, (2012 vs. 2005, -13.9%; 2012 vs. 2000, -22.0 %). For Member States which joined the EU in 2004 and 2007 on the other hand, the agricultural labour input increased by 0.7 % compared with 2011, (2012 vs. 2005, +25 %; 2012 vs. 2000, +40 %).

Concerning the two EFTA countries for which agricultural labour input data were available, a decrease in 2012 compared with 2011 was reported by Switzerland (-1.7 %) and Norway (-4.0 %). In Croatia, the labour input decreased in 2012 (-2.0 %) compared with the previous year (2012 vs. 2005, -13.3 %).

Data sources and availability

Concepts and definitions: The estimates of the economic accounts for agriculture (EAA) published in this issue of ‘Statistics in focus’ are provisional. The compilation is based on information available up to the end of January 2012, which is also uploaded on Eurostat databases.

The results have been compiled by the national authorities in the Member States of the European Union, Norway and Switzerland, in accordance with the methodology of the EAA (which is close to the methodology of the national accounts, ESA95, but incorporates a number of changes to take account of the special features of the agricultural economy).

What is agricultural income? The income indicators relate to the income generated by agricultural activities (as well as inseparable nonagricultural, secondary activities) over a given accounting period, even though in certain cases the corresponding revenues will not be received until a later date. It does not, therefore, constitute the income effectively received in the course of the accounting period itself. Moreover, they are not indicators of total income nor the disposable income of farming households; in addition to their purely agricultural income, households often receive income from other sources (non-agricultural activities, salaries, social benefits, income from property). In other words, agricultural income must not be regarded as the income of agricultural households. In the present context, emphasis is placed on the Indicator A of agricultural income per work unit. Its development is presented as indices based on the figures of the previous year for short-term development, and on 2005 for medium. The indicator is defined as follows:

  • Indicator A: Index of the real income of factors in agriculture, per annual work unit

This indicator corresponds to the real (i.e. deflated) net value added at factor cost of agriculture, per total annual work unit. 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 the (other) subsidies less taxes on production. The detailed data may be found at the Eurostat website.

  • Other indicators: Two other indicators for agricultural income are also calculated: Indicator B: Index of real net agricultural entrepreneurial income, per unpaid annual work unit, and Indicator C: Net entrepreneurial income of agriculture.

Changes in recording of subsidies: Implementation of the Single Farm Payment (SFP) in the framework of the recent CAP started in several Member States in 2005. Since the Member States do not apply the SFP system in the same way, only limited comparisons of output values at basic prices, values of subsidies and value added amongst Member States and time periods (particularly 2004-2007) can be made. In general, implementation of the SFP resulted in a drop in output values at basic prices, and an increase in other subsidies on production, while values at producer prices and the income indicators A, B and C were not affected by this change.

Technical notes:

  • 2. The aggregates measured in real terms for the European Union as a whole are obtained by, first, deflating the nominal values at current prices recorded in the various Member States (by applying the implicit price index of GDP of the country concerned) and then by converting them into euro (at 2005 exchange rates for the medium-term analysis and at 2011 rates for the short-term analysis). The results are then added to obtain the real values for the European Union. It is on the basis of these aggregates that the developments for the European Union are calculated in real terms, which means that an ‘EU deflator’ is never explicitly used.
  • 3. In order to take account of part-time and seasonal work, agricultural labour or changes therein are measured in annual work units (AWU). One AWU corresponds to the input, measured in working time, of one person engaged in agricultural activities in an agricultural unit on a full-time basis over an entire year.

Context

The income indicators relate to the income generated by agricultural activities (as well as inseparable nonagricultural, secondary activities) over a given accounting period, even though in certain cases the corresponding revenues will not be received until a later date. It does not, therefore, constitute the income effectively received in the course of the accounting period itself. Moreover, they are not indicators of total income nor the disposable income of farming households; in addition to their purely agricultural income, households often receive income from other sources (non-agricultural activities, salaries, social benefits, income from property). In other words, agricultural income must not be regarded as the income of agricultural households.

In the present context, emphasis is placed on the Indicator A (see definition in Data sources and availability of agricultural income per work unit. Its development is presented as indices based on the figures of the previous year for short-term development, and on 2005 for medium.

Further Eurostat information

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Agriculture (t_agri)
Economic Accounts for Agriculture (t_aact)

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Agriculture (agri)
Economic Accounts for Agriculture (aact)

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