Gathering information on total household income within an

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Gathering information on total household income
within an industry oriented survey on
agriculture
Benedetto Rocchi Department of Agricultural and
Resource Economics University of Florence
FAO, Rome 12/06/2009
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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

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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 multi-dimensional,
  multi-sector, dynamic approach

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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

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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

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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)

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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
  socio-economic 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

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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

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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

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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)

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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

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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

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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)

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    Activities Agricultural Holdings Factors Factors Institutions Institutions Institutions
    Activities Agricultural Holdings Factors Factors Households Firms Government
Activities Activities Intermediate consumption       Final consumptions Final consumptions Final consumptions
Agricultural Holdings Agricultural Holdings Gross Value Added payments to holdings           Transfers to agricultural holdings
Factors Factors Gross value added payments to factors Net value added payments to factors          
Factors Factors Gross value added payments to factors Net value added payments to factors          
Institutions Hholds   Agricultural incomes to farmers Distribution of net factor incomes to institutions Distribution of net factor incomes to institutions Distributed profits, social security and other transfers Distributed profits, social security and other transfers Distributed profits, social security and other transfers
Institutions Firms     Distribution of net factor incomes to institutions Distribution of net factor incomes to institutions Distributed profits, social security and other transfers Distributed profits, social security and other transfers Distributed profits, social security and other transfers
Institutions Governt Net taxes and transfers on production and imports Taxes on production and imports Taxes and transfer on factors Taxes and transfer on factors Direct taxes Direct taxes  
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The agricultural holdings account for Italy
(2002, million of )
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The distribution of agricultural income in Italy
(2002, million of )
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Household income nominal multiplier (Italy, 2002)
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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

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Concluding remarks

• Design information to gather according to the
  general purposes of the survey (structural vs.
  business) and to country-specific features of
  agriculture
• Contextual community-level surveys on markets and
  prices
• Harmonized concepts of income

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Tank you for attention

• benedetto.rocchi_at_unifi.it