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# Gross Value of Irrigated Agricultural Production methodology

Reference period
2017-18 financial year
Released
31/05/2019
Next release Unknown
First release

## Explanatory notes

### Introduction

1 These tables present statistics showing the Gross Value of Irrigated Agricultural Production (GVIAP) and Gross Value of Agricultural Production (GVAP). Annual data are presented for the reference period 2017-18 for Australia, States and Territories, the Murray-Darling Basin and Natural Resource Management (NRM) regions, for key agricultural commodity groups.

### What is GVIAP?

2 GVIAP refers to the gross value of agricultural commodities that are produced with the assistance of irrigation. The gross value of commodities produced is the value placed on recorded production at the wholesale prices realised in the marketplace. This definition of GVIAP does not refer to the value that irrigation adds to production i.e. the 'net effect' that irrigation has on production. GVIAP is not a measure of productivity, so extreme care must be taken if attempting to use GVIAP to compare different commodities. Rather, it is a more effective tool for measuring changes over time or comparing regional differences in agricultural production.

3 Estimating the value that irrigation adds to agricultural production is difficult. This is because water used to grow crops and irrigate pastures comes from a variety of sources. In particular, rainwater is usually a component source of the water used in agriculture. However, the timing and location of rainfall affects the amount of additional irrigation water required. Other factors such as evaporation and soil moisture also affect irrigation water requirements. These factors contribute to regional and temporal variations in the use of water for irrigation. In addition, water is not the only input to agricultural production from irrigated land - fertiliser, land, labour, machinery and other inputs are also used. Quantifying the separate contribution that these factors make to total production is not currently possible.

### Data sources

4 Estimates of GVIAP are based on production, commodity price and water use data, that are derived from Australian Bureau of Statistics' (ABS) Rural Environment and Agricultural Commodities Survey (REACS), as well as from non-ABS sources, including marketing authorities and industry bodies.

5 For detailed information on data sources, scope and coverage of ABS sources used in GVIAP, please refer to the Explanatory Notes contained in the following publications:

6 GVAP is the value placed on recorded production of agricultural commodities at the wholesale prices realised in the market place. It is also referred to as the Value of Agricultural Commodities Produced (VACP). VACP is published annually in Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0)

### Scope

7 The scope for the 2017-18 survey was all agricultural businesses with an Estimated Value of Agricultural Operations (EVAO) of $40,000 or greater. This is a change from previous collections, where a scope of EVAO of$5,000 or greater was used, and is a continuation of the scope used in the 2015-16 Agricultural Census. For more information about EVAO, refer to the Explanatory Notes contained in the publication Agricultural Commodities, Australia (cat. no. 7121.0).

8 The scope change impacts on all components of GVIAP. Where information is sourced from the survey there will be an impact on estimates, including for crops and horticulture where production information is now only collected from businesses with a value of agricultural operations of $40,000 or greater. 9 As a result of the change in scope, the 2017-18 GVIAP will not be directly comparable to GVIAP outputs published prior to 2015-16. To address this, additional estimates will be made available on request for a number of GVIAP releases from 2010-11 to 2014-15 using an EVAO of$40,000 or greater.

### Agricultural commodity groups

10 GVIAP is calculated for each irrigated 'commodity group' produced by agricultural businesses. That is, GVIAP is generally not calculated for individual commodities, but for groups of 'like' commodities according to irrigated commodity groupings on the agricultural censuses and survey forms. The irrigated commodity groups vary slightly on the survey form from year-to-year. The commodity groups presented in this publication are:

• pastures and cereal crops cut for hay
• rice
• cereals for grain and seed
• cotton
• sugar cane
• fruit and nuts (excluding grapes)
• vegetables
• nurseries
• grapes
• dairy production (excluding dairy cattle for beef production)
• production from meat cattle
• production from sheep and other livestock.

11 The agricultural censuses and surveys collect area and production data for a wide range of individual commodities within the irrigated commodity groups shown in the list above. Further detail on the data items included in each agricultural commodities group can be found in the Appendix attached to this publication.

### Method used to calculate GVIAP

12 The statistics presented here calculate GVIAP at the unit (farm) level, using three simple rules:

1. If the area of the commodity group irrigated = the total area of the commodity group grown/sown, then GVIAP = GVAP for that commodity group;
2. If the area of the commodity group irrigated is greater than zero but less than the total area of the commodity group grown/sown, then a 'yield formula' is applied, with a 'yield difference factor', to calculate GVIAP for the irrigated area of the commodity group;
3. If the area of the commodity group irrigated = 0, then GVIAP = 0 for that commodity group.

13 These three rules apply to most commodities; however there are some exceptions as outlined below in paragraph 18. It is important to note that the majority of cases follow rules 1 and 3; that is, the commodity group on a particular farm is either 100% irrigated or not irrigated at all. For example, in 2004–05, 90% of total GVAP came from commodity groups that were totally irrigated or not irrigated at all. Therefore, only 10% of GVAP had to be 'split' into either 'irrigated' or 'non-irrigated' using the 'yield formula' (described below). The yield formula is explained in full in: Information Paper: Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006).

### Yield formula

14 Outlined here is the yield formula referred to in paragraph 13:

$$\LARGE{G V I A P=A_{i} Y_{i} P}$$

Where

$$\LARGE{Y_{i}=\frac{Q}{\frac{A_{d}}{Y_{d i f f}+A_{i}}}}$$

Hence

$$\LARGE{G V I A P=A_{i} \times \frac{Q}{\frac{A_{d}}{Y_{d i f f}+A_{i}}} \times P}$$

Where:

$$A_{i}$$ = area of the commodity under irrigation (ha)

$$Y_{i}$$ = estimated irrigated yield for the commodity (t/ha or kg/ha)