United Nations Economic Commission for Africa
African Centre for
Statistics
Expert Group Meeting
Handbook on SUT: Compilation, Application, and
Good Practices
Economic Statistics and National Accounts Section
African Centre for Statistics
24-28 October 2011
Kaleb Hotel, Addis Ababa, Ethiopia
Outline of Presentation
Chapter 2: “The Use of Commodity Flow Approach:
Consistency and Missing Values”
• Commodity flow: Concepts and Formula
• Application and examples of commodity flow:
– Filling missing value: Household consumption
expenditure of poultry meat
– Consistency check: Household consumption
expenditure of tobacco
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Statistics
Commodity Flow: Basic SUT Equation
DP + IMP = IC + GFCE + HFCE + NPISH + GFCF + Δ INV + EXP
»
»
»
»
»
»
DP: Domestic production
IMP: Imports of goods and services
IC: Intermediate consumption
GFCE: Government final consumption expenditure
HFCE: Household final consumption expenditure
NPISH: Final consumption expenditure of non-profit institutions
serving households
» GFCF: Gross fixed capital formation
» Δ INV: Change in inventories
» EXP: Exports of goods and services
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Commodity Flow: Modified Equation
DP + IMP + TM + TC + TAX – SUB = IC + GFCE + HFCE + NPISH + GFCF
+ Δ INV + EXP
» TM: Trade margins;
» TC: Transport costs;
» TAX: Taxes on products; and
» SUB: Subsidies on products (minus).
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Commodity Flow: Functions
• Commodity flow: When the equation is used for an
individual good or service it is usually described as
“commodity flow.”
• Functions of commodity flow:
– Ensuring consistency between the supply and uses side
– For estimating a missing values, either on the supply or uses
side
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Statistics
Commodity Flow: Application
• Application and examples of commodity flow:
– Filling missing value: Household consumption
expenditure of poultry meat
– Consistency check: Household consumption
expenditure of tobacco
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Statistics
Filling Missing Value: Information
Poultry meat: missing value for household consumption
expenditure
• Information: All poultry is domestically produced.
– The total numbers of poultry in the country, take-off
(slaughter) rates and average prices per bird obtained from
various sources such as the Ministry of Agriculture and the
Veterinary Department.
– Pet food manufacturers have reported purchases of 1,000 and
– Exports of poultry meat come to 45.
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Filling Missing Value: Assumptions
Poultry meat: missing value for household consumption expenditure
• Assumptions :
– Transport charges = 1% of the value of domestic production
– Retail margins on poultry for domestic consumption are
estimated at just over 2%.
– “Other trade margins” to represent the margin on sales of
poultry meat to the pet food manufacturers = 10
– Inventories are always very small because of the problems of
storing the slaughtered poultry for any length of time so it is
reasonable to assume zero change in inventories.
African Centre for
Statistics
Box 1. CF Calculation for Poultry
Supply
Domestic production (value at farm gate)
6,500
plus Imports (c.i.f.)
0
plus Taxes on poultry
0
less Subsidies on poultry
0
plus Trade margins (on household consumption)
130
plus Trade margins (other)
10
plus Transport charges
65
equals Total supply
Uses
6,705
Intermediate consumption (for pet food)
1,000
plus Household final consumption expenditure
Unknown
plus Government final consumption expenditure
0
plus Gross fixed capital formation
0
plus Change in inventories
0
plus Exports
45
equals Total known uses
Residual calculation
1,045
Total supply
6,705
less Total known uses
1,045
equals Final consumption expenditure by households
5,660
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Statistics
Filling Missing Value: Conclusions
• Conclusions from the Commodity Flow Framework:
– HFCE on poultry (5660) = the estimated TS at purchasers’ prices
(6,705) – total known uses at purchasers prices (1,045)
• Three firm pieces of information:
– Domestic production of poultry
– Purchases by pet-food manufacturers for intermediate
consumption, and
– Exports of poultry
• Estimates:
– Trade margins
– Transport costs
– Changes in inventories
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Statistics
Consistency Check: Information
Consistency check: Household consumption expenditure of tobacco
• Last HES reported expenditure on tobacco at 7,000.
• Updating this value by the CPI gives 8,000 for the current year.
• The latest industrial census shows domestic production at basic
prices came to 8,200.
• Imports (c.i.f.) are 1,200.
• MoF reports that sales taxes and import duties on tobacco, which
are each levied at a rate of 5%, amounted to 940 for the year.
• The tobacco companies reported a fall in inventories of tobacco
of 10.
• Exports of 350 were recorded in the merchandise trade statistics.
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Statistics
Consistency Check: Assumptions
Consistency check: Household consumption expenditure of tobacco
• There is no firm information on trade margins or
transport costs. Some assumptions will be needed:
– A trade survey some years showed that wholesale and retail
margins added about 10% to the basic prices plus excise taxes
so trade margins are set at 10% or 1,340.
– A neighboring country made a transport survey recently and
found that for all consumer goods, transport margins were
about 3% of values at basic prices plus product taxes.
Transport charges are estimated at 3% or, roughly 300.
African Centre for
Statistics
Box 2. CF Calculation for Tobacco
Supply
Domestic production (basic prices)
8200
plus Imports (c.i.f.)
1200
plus Taxes on tobacco
less Subsidies on tobacco
plus Trade margins (on household consumption)
plus Transport charges
equals Total supply
Uses
Intermediate consumption
plus Household final consumption expenditure
940
0
1340
300
11,980
0
8000
plus Government final consumption expenditure
0
plus Gross fixed capital formation
0
plus Change in inventories
–10
plus Exports
350
equals Total uses
Discrepancy
Total supply
8,340
11,980
less Total uses
8,340
equals Discrepancy
3,640
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Statistics
Consistency Check: Conclusions
• The commodity flow method is used to check the consistency of
our estimates. The problem is that our estimate of total supply is
bigger than our estimate of total uses by 3,640. Now what?
• All the supply components are based on reliable sources and the
taxes received are consistent with the value of domestic
production and imports.
• Similarly, the change in inventories and the value of exports are
considered to be fairly firm estimates.
• HESs are renowned for underestimating the true value of tobacco
consumption and so the estimate of 8,000 from the household
expenditure survey is replaced by 11,640, which is the balance
between the total supply (11,980) and the uses other than
household final consumption expenditure (340).
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Statistics
Comments and Suggestions
• Through two examples, Chapter 2 clearly demonstrates
how to apply of the commodity flow approach in (a)
filling the data gaps and (b) consistency check.
• As in Chapter 1, there are some other uses of SUT in
addition to the above two, it would be very helpful if
similar examples are also provided to those uses.
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Points for Discussion
• How useful is the “commodity flow approach” according
to your experience?
• What are the other uses of the “commodity flow
approach” besides filling the data gaps and consistency
check?
• What data sources do you normally use for applying the
“commodity flow approach”?
• What estimating methods do you often use in your
countries when the data are not available?
•
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United Nations Economic Commission for Africa
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Statistics
Thank you
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