Value of Production in Agriculture: Meaning, Measurement, and Implications in a WTO Context Lars Brink

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1 Value of Production in Agriculture: Meaning, Measurement, and Implications in a WTO Context Lars Brink Annual Meeting, International Agricultural Trade Research Consortium (IATRC) San Diego, California, 9-11 December 212 Lars.Brink@hotmail.com

2 Why worry about Value of Production? Key measurement in Agreement on Agriculture De minimis thresholds Exemptions for distorting support 5% or 1% of VOP Exemptions motivate much concern in Doha 5% was thought too large

3 De minimis percentage of selected countries Total AMS commitment? De minimis percentage 5% 8.5% 1% Positive NIL EU Japan Norway Russia United States China Brazil India Indonesia Mexico Philippines Turkey

4 More important but often overlooked Increasing support in developing countries How soon will they hit 1%? Have some already done so? This requires data on their VOP

5 Consistency and quality of VOP data Not a WTO principle Important for analysis, assessment, projection Differences in VOP measurements? Among countries? Over time?

6 Review VOP concept Outline Examine VOP data series Twelve countries VOP series in different sources how close? VOP versus value-added in agriculture

7 WTO Sources of agr sector VOP data Notifications (some members; many notif s missing) Secr 21 Doha paper (some members; up to 28) data base PSE data base (some countries) National sources + World Bank value-added in agriculture

8 VOP definitions Few countries publish Value of Production Can be part of National Accounts But not defined in SNA System of National Accounts Contrast to Value Added in Agriculture WB: VA in agriculture, hunting, fishing, forestry VOP definitions vary across countries Different wording, similar concepts Coverage can differ (commodity, pricing, timing, etc.)

9 Examples USDA: Value of agricultural sector production is the gross value of the commodities and services produced Eurostat: The valuation of output at basic prices. Australia: The value estimates are derived by the multiplication of price and quantity estimates of agricultural commodities. Canada:... total value of production, which represents the value of the farm sector's gross output. : Value of gross production has been compiled by multiplying gross production in physical terms by output prices at farm gate. : National sources (inconsistent definitions?)

10 BRL billion Brazil: VOP data by source WTO notif

11 CNY billion 6, China: VOP data by source 5,5 5, 4,5 4, 3,5 3, 2,5 2, WTO notif. 1,5 1, 5 11

12 EUR billion 4 EU: VOP data by source WTO notif. * 1 5 * EC15, EC25, EC27 12

13 INR billion 12, India: VOP data by source 11, 1, 9, 8, 7, 6, 5, 4, WTO notif. (est). National sources 3, 2, 1, Notes: No data. National data is sum of crops and livestock. 13

14 IDR billion 1,2, Indonesia: VOP data by source 1,, 8, 6, 4, 2, Note: WTO notifications show no VOP 14 data

15 JPY billion 13, Japan: VOP data by source 12, 11, 1, 9, 8, 7, 6, 5, WTO notif. 4, 3, 2, 1, 15

16 1991 pesos billion 1 Mexico: VOP data by source WTO notif

17 NOK billion 3 Norway: VOP data by source WTO notif. (est.) National stats. 5 17

18 PHP billion 13 Philippines: VOP data by source National stats Note No VOP in WTO notif. No data 18

19 RUB billion 2,75 Russia: VOP data by source 2,5 2,25 2, 1,75 1,5 1,25 1, Accession data National stats Note No data 19

20 TRL million 2, Turkey: VOP data by source 18, 16, 14, 12, 1, 8, (est.) National stats. National stats. marketable 6, 4, 2, 2

21 USD billion 4 United States: VOP data by source WTO notif

22 Value added in agriculture World Bank data Value added in agriculture Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. Agriculture corresponds to ISIC divisions 1-5 and includes forestry, hunting, and fishing, as well as cultivation of crops and livestock production. WB data overstates value added in agriculture Significance varies by country and type of economy

23 BRL billion 3 Brazil: VOP and VA data WTO notif. VA in agr (WB)

24 CNY billion 6, China: VOP and VA data 5,5 5, 4,5 4, 3,5 3, 2,5 2, WTO notif. VA in agr (WB) 1,5 1, 5 24

25 EUR billion EU: VOP and VA data WTO notif * 1 5 VA in agr (WB) * EC15, EC25, EC27 25

26 INR billion 15, India: VOP and VA data 14, 13, 12, 11, 1, 9, 8, 7, 6, 5, WTO notif. National sources VA in agr (WB) 4, 3, 2, 1, Notes: No data. National data is sum of crops and livestock. 26

27 IDR billion 1,2, Indonesia: VOP and VA data 1,, 8, 6, 4, VA in agr (WB) 2, Note: WTO notifications show no VOP 27 data

28 JPY billion 13, Japan: VOP and VA data 12, 11, 1, 9, 8, 7, 6, 5, 4, WTO notif. VA in agr (WB) 3, 2, 1, 28

29 1991 pesos billion 1 Mexico: VOP and VA data WTO notif. VA in agr (WB)

30 NOK billion 4 Norway: VOP and VA data WTO notif. (est.) National stats. VA in agr (WB) 1 5 3

31 PHP billion 13 Philippines: VOP and VA data National stats. VA in agr (WB) Note No VOP in WTO notif. No data 31

32 RUB billion 2,75 Russia: VOP and VA data 2,5 2,25 2, 1,75 1,5 1,25 1, Accession data National stats. VA in agr (WB) Note No data 32

33 TRL million 2, Turkey: VOP and VA data 18, 16, 14, 12, 1, 8, 6, (est.) National stats. National stats. marketable VA in agr (WB) 4, 2, 33

34 USD billion 4 United States: VOP and VA data WTO notif. VA in agr (WB)

35 Value added in agriculture Expect more developed countries to use more intermediate inputs in production Means smaller share of Value-added in VOP Rank 12 countries by GDP per capita Show share of value-added in VOP Broadly consistent with expectation Indonesia and Norway outliers Forestry and fisheries?

36 % 16 Share of Value-Added and Intermediate inputs in VOP Value-added as % of VOP 6 4 Intermediate inputs as % of VOP 2 36

37 Implications VOP data from several sources WTO notifications, country submissions to WTO,,, national sources Measurements do not fully coincide Timing and small definitional differences More serious: large differences between: WTO notifications vs. other sources Submissions to WTO vs. notifications

Conclusions Members report different kinds of VOP to WTO Marketed vs. total production? Measuring value-added? Larger VOP used for WTO than in other outlets?

38 Conclusions Members report different kinds of VOP to WTO Marketed vs. total production? Measuring value-added? Larger VOP used for WTO than in other outlets? Larger VOP gives higher de minimis threshold Some countries, but not all, use larger VOP for WTO What difference does it make? If VOP in WTO is 1% mis-reported & dm percentage is 1% 11%, or 9%, of VOP can make big difference in tight situation Extreme: one country, with $1 billion VOP, seemingly 1% off? Uncertainty in monitoring compliance What about product-specific VOP?

39 Thank you for your attention!

Worldwide trends in support to agriculture

Worldwide trends in support to agriculture Lars Brink Symposium on Agricultural Policy, Trade and the Environment University of Lethbridge, Alberta, Canada 25 October 2013 Lars.Brink@hotmail.com Setting