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1301.0 - Year Book Australia, 2002  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 25/01/2002   
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UNDERSTANDING AGRICULTURAL EXPORTS DATA


INTRODUCTION


The Australian Bureau of Statistics has had a long history of producing international trade statistics. These are used by economic analysts and policy advisers to monitor, evaluate and forecast developments in Australia's external trade and the general level of economic wellbeing. However, measuring the importance of this trade has, for the agricultural industry, become increasingly difficult and complex as the economy develops.

In relation to agricultural production and exports this article illustrates how different classifications, methodologies and assumptions can be used with the same body of data to provide quite different outcomes, depending on the perspective from which users wish to view the data, and the purpose of the analysis. Like most economic statistics, agricultural export and production data are based on underlying assumptions relating to industry and commodity classification, as well as market and business functions. In addition, the methodology used in collecting export data from customs records introduces its own set of limitations.

The article seeks to provide an understanding of the most appropriate methods available for comparing agricultural production with exports. The year selected for the comparison is 1997-98; however, due to fluctuations in agricultural production, overseas market access, availability of stocks etc., any comparison undertaken on the basis of a single year needs to be treated with caution.


Background

Since settlement a proportion of Australia's agricultural output has been exported. Initially, measuring the importance of agricultural exports was relatively straightforward as most of the exports were in raw form, and could be easily identified and compared with agricultural production. However, as the Australian economy developed, proportionally more agricultural output was exported in a processed or manufactured form, such as processed meat products, wine and woollen products.

In situations where agricultural production is directly exported as a raw or unprocessed product one can compare production quantities or values with export quantities or values for individual commodities, although in comparing values one needs to take account of the differences between the valuation basis for production ('farm gate') and that for exports ('free on board' (f.o.b.)). Difficulties arise, however, for those agricultural commodities which have undergone some manufacturing process and are indirectly exported as part of the manufactured product. For example, how might analysts compare the value of grape production with the value of a transformed agricultural product such as wine?

Making legitimate comparisons between production and trade is further complicated by the variety of trade data available. ABS merchandise trade data can be manipulated and grouped in a number of ways by both the ABS and external clients, depending on the use being made of the data.


Agricultural export statistics

The ways in which agricultural export data can be presented include:

  • a commodity based approach
  • an industry based approach
  • a balance of payments approach
  • an input-output approach
  • an embedded commodities approach
These approaches are discussed below.


Commodity based data

For exports, the ABS uses the Australian Harmonised Export Commodity Classification (AHECC). The details and descriptions of the statistical codes of the AHECC are identified in the Australian Harmonised Export Commodity Classification (1233.0).

Commodity-based trade data are useful for monitoring changes in levels of trade over time. For example, for a particular commodity, or group of commodities, monthly or yearly data can be compared to provide an accurate picture of changes in the levels of those commodities exported. However, commodity based trade data alone should not be used to measure the complete proportion of agricultural output which is exported. This measure offers no method of calculating the agricultural component in exported processed goods.


S4.1 VALUE OF SELECTED AGRICULTURAL COMMODITIES PRODUCED AND EXPORTED - 1997-98

Commodity
Agricultural production (a)
$ '000
Unprocessed exports (b)
$ '000

Wool
2,753,936
(c)2,276,797
Cattle
(d)4,138,239
(e)352,348
Sheep
(d)1,066,217
(e)200,159
Pigs
(d)709,806
(e)1,065
Grapes
998,197
(f)82,438
Apples
272,720
37,961
Wheat
3,801,497
3,629,554
Canola
329,847
256,216
Potatoes
493,149
9,984
Oats
223,269
30,305
Sugar cane
1,247,744
(g)3
Milk
2,816,977
(h)67,451

(a) Agricultural production is Gross Value of Agricultural Commodities Produced (GVACP), and is the value measured at the metropolitan market in each State or Territory. It is not the 'farm gate' value of production.
(b) Exports are valued on a free on board (f.o.b.) basis which includes the value of distribution and other costs incurred between the farm and the point of export.
(c) Exports of greasy wool, not carded or combed.
(d) The value of livestock at slaughtering and other disposals (including net exports of live animals).
(e) Exports of live animals. Does not include the export of carcasses and cuts of beef ($2,700m), mutton/lamb ($653m) and pig meat ($51.7m),because these commodities are considered to be manufactured products.
(f) Does not include the export of wine ($874m) because wine is considered to be a manufactured product.
(g) Contains $3,000 of exported sugar cane. Does not include the export of raw sugar ($1,159m) because raw sugar is considered to be a manufactured product.
(h) Milk contains some non-agricultural value added as a result of the pasteurisation process undertaken prior to the sale of milk.

Source: Agriculture, Australia (7113.0).


In analysing table S4.1, the following points should be noted:
  • Many commodities (e.g. wool) can draw on stocks accumulated in previous years, which can distort yearly comparisons of exports and production.
  • Unprocessed commodities only are shown. Any embedded agricultural output contained in processed goods, such as meat, sugar, canned fruit, processed wool, woollen products, wine etc. are not included. In other words, the table shows only direct exports of agricultural commodities.
  • Different valuation bases are used for measuring production and exports. Value of production is the gross value received by the farmer at the market place, which in general is the metropolitan market in each State and Territory. Exports are valued at the point of export (f.o.b.), and therefore include any distributional and marketing costs incurred up until the point of export.


Industry based data

Export data are also available on an 'Industry of origin' basis. The Australian and New Zealand Standard Industrial Classification (ANZSIC) is the standard classification used by the ABS for the presentation and analysis of industry statistics. It provides a framework for classifying businesses to industries according to the predominant activities undertaken by a business.

The classification is used in international merchandise trade statistics to provide an indication only of the industry which is determined to have produced the goods which are exported or imported. This is undertaken by allocating AHECC items to the ANZSIC industry which is considered to have ultimately produced the commodity. Any agricultural commodity that has undergone any form of processing is, under the ANZSIC classification system, coded to the manufacturing industry.

Therefore while raw cows' milk production is classified to the Agricultural ANZSIC Class 0130 'Dairy cattle farming', the sale of pasteurised liquid whole milk would be classified to the Manufacturing ANZSIC Class 2121 'Milk and cream processing'.

In addition, any exported items that have confidentiality restrictions on the publication of value details are not classified to their industry of origin, but are instead included in the category 'Other industries'. In 1997-98, no exported commodity items that would be allocated to agriculture under the 'Industry of origin' classification had confidentiality restrictions, but this is not always the case.

Table S4.2 shows data for exports emanating from agriculture on an 'Industry of origin' basis, and data for production from agricultural holdings classified to those ANZSIC industries. The production data shown for each Agricultural class relate to the total value of agricultural production from holdings that are primarily involved in the activity to which the class relates. For example a holding that is primarily involved in vegetable farming would be classified to the ANZSIC Class 0113, 'Vegetable growing'. The value of production data for that holding which is attributed to Class 0113 includes the value of all agricultural commodities produced by that holding, which may include commodities such as livestock, fruit and other non-vegetable crops. However, the export data for that holding would be classified on an 'Industry of origin' basis and any non-vegetable commodities exported from that holding would be classified to a different ANZSIC class.

S4.2 VALUE OF AGRICULTURAL COMMODITIES PRODUCED AND EXPORTED, by Industry - 1997-98(a)

ANZSIC
industry class
Description
Agricultural production(b)
$ '000
Exports (c)
$ '000

0111Plant nurseries
506,866
5,624
0112Cut flower and flower seed growing
150,830
24,325
0113Vegetable growing
1,803,250
244,149
0114Grape growing
917,041
82,438
0115Apple and pear growing
448,910
62,267
0116Stone fruit growing
154,176
24,479
0117Kiwifruit growing
5,135
2,892
0119Fruit growing n.e.c.
1,030,860
203,301
0121Grain growing
4,845,010
4,556,510
0122Grain-sheep and grain-beef cattle farming
4,069,771
-
0123Sheep-beef cattle farming
1,168,076
-
0124Sheep farming
1,663,012
2,476,956
0125Beef cattle farming
2,576,120
352,348
0130Dairy cattle
3,472,001
-
0141Poultry farming (Meat)
1,045,567
1,156
0142Poultry farming (Eggs)
386,942
2,524
0151Pig farming
662,170
1,065
0152Horse farming (d)
19,646
63,813
0153Deer farming (d)
810
-
0159Livestock farming n.e.c.
61,204
34,215
0161Sugar cane growing
1,273,127
3
0162Cotton growing
1,420,464
(e)-
0169Crop and plant growing n.e.c.
330,960
93,770
Total
28,011,946
8,231,835

(a) The value of production of a business is classified to an industry based on the predominant activity of that business. Export data are classified to the most likely industry to have produced the commodity.
(b) Agricultural production is the Gross Value of Agricultural Commodities Produced (GVACP), and is the value measured at the metropolitan market in each State or Territory.
(c) Exports are valued on a free on board (f.o.b.) basis which includes the value of distribution and other costs incurred between the farm and the point of export.
(d) The sale of horses and deer is out of scope for VACP. The values of Class 0152 and Class 0153 come from valuing crops and other livestock sales for holdings allocated to the respective industries.
(e) The export of cotton lint is not classified to subdivision 01 Agriculture, but to subdivision 02 Services to Agriculture, Hunting and Trapping, Class 0211 'Cotton Ginning'.

Source: ABS data available on request, Value of Agricultural Production, 1997-98; International Merchandise Trade, 1997-98.



Table S4.2 suffers from the same limitations as the data in table S4.1, in that a run-down of stocks can influence export levels and only direct agricultural exports are included. It is important to realise that the production and export data in tables S4.1 and S4.2 are derived from the same source, but that table S4.2 is classified on the basis of industry rather than commodity.


Balance of payments exports data

The balance of payments (BOP) exports data are based on international trade statistics, adjusted where necessary for timing, coverage, classification and valuation in order to meet the change of ownership conventions and classification requirements contained in the international statistical standards for BOP statistics. For example, wool exported to stockpile abroad before being sold will be excluded from the BOP when shipped, but included when sold. The ABS publication Balance of Payments and International Investment Position, Australia, Concepts, Sources and Methods 1998 (5331.0) provides a detailed description of balance of payments methods.

The broadest level commodity breakdown for general merchandise goods credits (exports) shown in BOP is 'Rural' and 'Non-rural', followed by more detailed commodity dissections within those groupings. Allocation to these groupings is largely in terms of Section(s) or Division(s) of the Standard International Trade Classification (SITC). This commodity breakdown was adopted by the ABS in the early 1960s in response to user demand.


S4.3 RURAL MERCHANDISE EXPORTS, Balance of Payments Basis(a) - 1997-98

Description
$m

Rural goods(b) -
- Meat and meat preparations
3,731
- Cereal grains and cereal preparations
5,094
- Wool and sheepskins
4,020
- Other rural
9,285
Total
22,130

(a) Exports are valued on a free on board (f.o.b.) basis which includes the value of distribution and other costs incurred between the farm and the point of export.
(b) For confidentiality reasons, excludes sugar, sugar preparations and honey.

Source: International Trade in Goods and Services, Australia (5368.0).


The category 'rural goods' is broad, and attempts to provide an indication of those exports most closely associated with the agriculture, forestry and fishing industries. For example, while meat and meat preparations, cereal preparations, canned fruit salad and timber boards are all classified as 'rural goods', beverages (including wine) are excluded. Non-rural exports, therefore, can include agricultural production embedded in other products. Because of this, and because of different valuation bases, BOP and production data cannot be directly compared.


Input-output based data

Input-output tables show the flows of inputs into and outputs from each industry for a country's entire production system for a given period. In doing this, input-output tables identify which goods and services are produced by each industry and how they are used (for example goods and services used in the production of more goods and services, or goods and services consumed by final consumers). The tables are based on the principle that the value of the output of each industry can be expressed as the sum of the values of all inputs to that industry, including any profits made. All exports data used in input-output analysis undergo some transformation, including conversion from an f.o.b. basis to a basis of 'basic prices' (for agriculture, basic prices are those received at the 'farm gate'). This has the effect of removing transport and distribution margins, and product taxes, from the export values so that the values are consistent with those received by producers. Similarly, agricultural output is also valued at basic prices in input-output tables.

Input-output tables are produced using the Input-Output Industry Classification (IOIC) and the Input-Output Product Classification (IOPC). These classifications have been specifically developed for the compilation and the application of Australian Input-Output tables. Additional information on input-output tables can be found in Australian National Accounts: Input-Output Tables (5209.0)


Value of exports from an industry

Input-output tables provide a means of tracing flows of goods and services step by step through the production process, and this information can be used to calculate the contribution made by various industries to the final value of a commodity. It is therefore possible to derive the value of the output from the agricultural industry which is embedded in products produced by other industries, and therefore to derive the value of agricultural output contained in exports of these products. This is illustrated in table S4.4.


S4.4 INPUT-OUTPUT APPROACH: VALUE(a) of AGRICULTURAL OUTPUT PRODUCED AND EXPORTED, By Industry - 1997-98

IOIC Industry Class
Australian production(b)

$m
Direct exports from the agricultural industry

$m
Share of production

%
Agricultural output embedded in indirect
exports (c)

$m
Share of
production

%
Total exports of agricultural
output

$m
Share of
production

%

0101 Sheep
3,708
1,395
37.6
888
23.9
2,283
61.6
0102 Grains
6,267
4,043
64.5
1,305
20.8
5,348
85.3
0103 Beef Cattle
3,783
312
8.3
1,906
50.4
2,218
58.6
0104 Dairy cattle
3,002
0
0
1,025
34.1
1,025
34.1
0105 Pigs
601
1
0.1
267
44.4
268
44.6
0106 Poultry
1,484
2
0.1
428
28.8
430
29.0
0107 Other agriculture
9,738
857
8.8
2,051
21.1
2,908
29.9
01 Total agriculture

(d)28,583
6,610
23.1
7,871
27.5
(d)14,481
50.7

(a) All values are at basic prices (i.e. farm gate) which remove distribution costs, including commodity taxes, associated with sale or export of the product.
(b) Includes the value of livestock used for breeding purposes. Also includes an estimate of the value of production by private households for own consumption.
(c) Estimated using total requirements coefficients contained in 1994-95 input-output tables.
(d) Derived by summing the components.

Source: ABS data available on request, Input-Output Section.


Table S4.4 shows that $7.9b of agricultural output is exported indirectly through the export of processed products. For example, much food, which is a basic output of agriculture, requires some processing before being exported. From table S4.4 it can be seen that indirect exports from the beef cattle industry ($1.9b) are more than direct exports ($312b). On the other hand, direct exports of grains ($4.0b) are more than indirect exports from the grains industry ($1.3b).

From table S4.4 it can be established, using the input-output approach, that the total value of agricultural production exported directly or indirectly in 1997-98 was $14.5b. It is important to realise that a number of factors, such as run-down of stocks, weather conditions and changes in the availability of export markets, mean that this is a short period on which to make long term judgements on the overall level of agricultural output exported.

In addition, certain basic assumptions apply when analysing both direct and indirect exports estimates calculated using the input-output approach. These are:
  • Commodities exported from a particular industry consist of the same quality and content as those sold on the domestic market. It follows that, if the proportion of agricultural output embedded in an exported processed food product is significantly different to the average for that product, any estimate of the value of agricultural output exported will be deficient to that extent.
  • Export prices are similar to domestic prices for the output of a particular industry. It follows that, if prices paid for output which is indirectly exported are significantly higher than domestic prices, the value of output exported indirectly would be underestimated.

Proportion of industry output exported

Estimating the proportion of total agricultural output which is exported adds further complexities.

The simplest approach would be to use the value of production shown in table S4.4 as the denominator. Doing so provides an estimate of approximately 51% for 1997-98. This estimate has been calculated without making any adjustments for agricultural output that is subsequently consumed within the agricultural industry. If such adjustments are made, a similar estimate is derived because, using the input-output approach, the reduction in the value of agricultural output is almost exactly offset by a proportional reduction in the value of indirect exports. However, for certain analyses it may be appropriate to deduct from the estimate of value of production the value of livestock produced for breeding purposes (on the basis that this production is not available for sale until the livestock is slaughtered) and the value of commodities produced for own account consumption (on the basis that this production is not available to the market). If both of these adjustments are made, the proportion of agricultural output that is exported under the input-output approach rises to about 56%.


Embedded commodities approach

This approach estimates the volumes of agricultural commodities contained in indirect exports using factors which calculate the percentage of raw product contained in various processed goods. These volumes are then added to the volumes of direct exports of agricultural commodities. The value of exports for any commodity is derived by multiplying the gross unit value received by farmers for that commodity by the volume of product exported.

When this method is used, production estimates need to be adjusted to remove production used within the agriculture industry, in order to derive the denominator necessary to calculate the proportion of agricultural output that is exported. The denominator can also be adjusted to take account of the value of livestock produced for breeding purposes and commodities produced for own-account consumption. Using this approach, the Australian Bureau of Agricultural and Resource Economics (ABARE), has estimated that the proportion of agricultural output exported in 1997-98 was approximately 65%.


Conclusion

Analysis of data about the exports of agricultural commodities requires an understanding of the concepts, classifications and methodology.

This article illustrates that the value of agricultural output finally exported is very much influenced by the value of agricultural output included in processed exports. For example, table S4.4 shows that, using the input-output approach, the percentage of output exported from the beef cattle industry increases from 8% (direct exports), to 58% (direct and indirect). Equally importantly, this article shows that the assumptions used in defining agricultural output and exports, and the methodologies used to derive these estimates, can also affect results, and users need a basic understanding of these methodologies in order to interpret the data effectively.

Given the variety of methodologies used to estimate exports and production, and the assumptions required to use these methodologies, any estimate of the proportion of agricultural output which is exported will only be an approximation, and should not be interpreted as an exact result. Finally, while this article presents some illustrative estimates in respect of 1997-98, agricultural production and exports of agricultural commodities can vary from year to year, and users are cautioned about making firm conclusions based on only one year's data.

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