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Methodological explanation for the news release:


Economic Accounts for Agriculture at constant prices


Calculation method

For each of the goods or services calculated in the Economic accounts in agriculture at constant prices, the quantity and price measures are constructed by the following formula:

value index = price index x volume index

This means that each change of the value must be attributed to either a price change or a change in volume, or a combination of the two. Changes in volume are measured using Laspeyres - type indices, changes in the quantities of elementary series are weighted by the value in the base year.

, where


p0 - the price recorded in the base year;
pn - the price recorded in the year n;
q0 - the quantity recorded in the base year;
qn - the quantity recorded in the year n;
V0 - the value recorded in the base year, V0=p0q0

The most accurate way to measure changes in volume from one year to another is to use the most recent base year available. This approach guarantees that weights are relatively up-to-date and to avoid the problems linked to weighting products that are no longer produced and new products that have emerged. It is for this reason that the calculation of Economic Accounts in agriculture measures the changes in volume by using the weights for the preceding year.

Value added constitutes the balancing item of the production account. As such, it is not possible to split value added directly into a price component and a volume component. Therefore, for calculating value added at constant prices, the method of double deflation is used.

Gross value added expressed in prices of the preceding year is defined as a difference between output measured at prices of the preceding year and intermediate consumption measured at prices of the preceding year.

Net value added at prices of the preceding year is defined as a difference between gross value added at prices of the preceding year and consumption of fixed capital at prices of the preceding year.

Data sources

For calculation of the economic accounts at preceding year prices, input-output price indices are used, which are published in the Release for price indices of agricultural products, recalculated on the basis of the pervious year.

For certain products, the indices from the corresponding group of products are used, or directly calculated from the average prices used for that product.

Definitions

Base year - the year from which the prices are used to compile the weighting scheme.

Reference year - the year used for data comparison while calculating the data at constant prices.

Gross value added - is a balancing item of the production account in the Economic Accounts for Agriculture. It is a key item of measuring the productivity of agriculture in the economy and it is calculated as a difference between agricultural output on the one hand and total intermediate consumption on the other hand.

Net value added - is obtained by deducting consumption of fixed capital from gross value added.



Last updated: 29.06.2012


   

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  Methodological explanations for: Economic Accounts for Agriculture 
  
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