Benedetto Rocchi Department of Agricultural and Resource Economics University of Florence Gathering information on total household income within an “industry oriented” survey on agriculture FAO, Rome 12/06/2009 Summary From an agricultural to a rural perspective Agricultural households in a SAM framework Structural linkages between industries and sectors at the production unit level Getting data on THI: an “industry oriented” approach 2 A rural perspective A focus on agriculture is no longer perceived as suitable in studying rural development A “rural” perspective asks to study developing processes following a multidimensional, multi-sector, dynamic approach 3 Agriculture is still important in rural economies Agriculture uses the largest part of rural space: country stewardship function The contribution of agriculture to the economy is concentrated in rural areas In developing economies farming still plays a fundamental role in livelihood strategies of rural households Rural Development policy is usually part of agricultural policy 4 Linkages between agriculture and rural economy at the household level Diversification of family farming towards non-agricultural activities (tourism, food processing) Family labour allocation between farm and external rural-based activities Livelihood strategies affects the way households manage farming 5 The SAM framework “…a comprehensive, flexible and disaggregated framework that elaborates and articulates the generation of income by activities of production and the distribution and redistribution of income between social and institutional groups” (Round, 2003) 6 Agricultural hholds within the SAM framework Two fundamental ways to disaggregate the economy in a SAM framework Classifying activities of production by industries following technical criteria Classifying institutions by sectors following socioeconomic criteria The group of agricultural households results from crossing a sector with an industry The proper level to study this structural linkage is the production unit: agricultural holding 7 Agricultural holdings in the SAM framework Agricultural holding as socio-technical system working as an interface between institutional goals and technical features of the production process Non-separability between production and consumption decisions For social accounting purposes it becomes necessary to gather joint information on production units and institutions 8 Gathering data on hholds income: “sector” oriented surveys Shortcomings of LSMS in surveying income of agricultural households Problems in the quantification of income from self-managed production activities Technical problems in implementing an “agriculture” module within a multipurpose survey on households (recall period, technical aspects) Biased sampling of the agricultural households sub-sector 9 Gathering data on hholds income: “industry” oriented surveys - 1 A supplementary survey on a sampling frame of holdings during the periodical census (FAO, 2005: chapt. 10) to collect data on costs and revenues A supplementary item to survey “…whether holding is part of an agricultural households” (FAO, 2005: item 0701) 10 Gathering data on hholds income: “industry” oriented surveys - 2 The technical focus of the survey is likely to support more reliable estimates of mixed income from farming A good estimate of mixed income could facilitate the valuation of other sources of income through comparison A sample of holdings properly representing agriculture as an industry also ensure a sample of agricultural households with good statistical properties 11 An example: the ISTAT Farm Business Survey (REA) A sample of agricultural holdings Data on gross value added formation in agriculture for national accounting purposes (universe: agriculture as an industry) Both structural (land and labour use) and economic data A module for collecting information on total household income 12 A case study for Italy: including holdings accounts in the SAM The REA dataset have been used to include accounts for agricultural holdings within a SAM of Italian economy for 2002 Holdings have been classified into three groups: self-consumption capital constrained professional Households managing agricultural holdings have been classified by income quintiles and by composition of THI (agricultural vs. non agricultural) 13 Institutions Activities Activities Intermediate consumption Agricultural Holdings Gross Value Added payments to holdings Factors Gross value added payments to factors Agricultural Holdings Households Firms Government Final consumptions Transfers to agricultural holdings Net value added payments to factors Agricultural incomes to farmers Hholds Factors Distribution of net factor incomes to institutions Distributed profits, social security and other transfers Firms Institutions Governt Net taxes and transfers on production and imports Taxes on production and imports Taxes and transfer on factors Direct taxes 14 The agricultural holdings account for Italy (2002, million of €) self consumption capital constrained professional Total Gross value added at market prices Transfers to productions 525 214 2 734 305 15 800 2 251 19 059 2 770 Total inflows of agricultural households 739 3 039 18 051 21 829 145 97 8 0 292 764 48 -46 1 448 6 255 845 -924 1 886 7 116 902 -970 489 1 980 10 426 12 895 Taxes on production Wages Rents for land Corporate farms mixed income Agricultural self employed labour mixed income 15 The distribution of agricultural income in Italy (2002, million of €) self consumption capital constrained professional Total Agricultural self employed labour mixed income 489 1 980 10 426 12 895 Agricultural hholds I Agricultural hholds II Agricultural hholds III Agricultural hholds IV Agricultural hholds V Other hholds I Other hholds II Other hholds III Other hholds IV Other hholds IV 98 16 15 5 0 127 74 150 3 0 534 191 195 58 0 393 137 384 88 1 175 515 1 196 2 182 5 907 247 10 131 64 1 806 721 1 406 2 245 5 907 767 220 666 155 2 16 Household income nominal multiplier (Italy, 2002) self consumption capital constrained professional Average Agricultural hholds I Agricultural hholds II Agricultural hholds III Agricultural hholds IV Agricultural hholds V Other hholds I Other hholds II Other hholds III Other hholds IV Other hholds IV 0.135 0.025 0.025 0.016 0.032 0.441 0.480 0.713 0.654 1.225 0.179 0.067 0.070 0.028 0.037 0.428 0.475 0.710 0.778 1.408 0.012 0.031 0.070 0.127 0.350 0.232 0.314 0.431 0.543 0.995 0.109 0.041 0.055 0.057 0.140 0.367 0.423 0.618 0.658 1.209 Total Targeting index 3.745 6% 4.179 9% 3.105 19% 3.677 11% 17 Concluding remarks The inclusion of a set of questions on THI within questionnaires designed for industry oriented surveys as a “good practice” in a international system of statistics on agricultural households income and wealth The 2010 Census Programme is an opportunity to test modules on THI for “industry based” surveys The inclusion of item 0701 in 2010 censuses may represent a useful benchmark for future more specific surveys and should be strongly recommended and possibly tested in some countries 18 Concluding remarks Design information to gather according to the general purposes of the survey (structural vs. business) and to countryspecific features of agriculture Contextual community-level surveys on markets and prices Harmonized concepts of income 19 Tank you for attention benedetto.rocchi@unifi.it