Regulation (EC) No 138/2004 of the European Parliament and of the Council of 5 December 2003 on the economic accounts for agriculture in the Community (Text with EEA relevance)

Article 1

Subject matter

This Regulation sets up the economic accounts for agriculture in the Community (hereinafter referred to as ‘EAA’), by providing for:

(a) an EAA methodology (common standards, definitions, classifications and accounting rules), intended to be used for compiling accounts on comparable bases for the purposes of the Community, and for the transmission of data in accordance with Article 3;

(b) time limits for the transmission of the agricultural accounts compiled in accordance with the EAA methodology.

Article 2

Methodology

Those delegated acts shall be adopted only where they do not change the underlying concepts in Annex I, they do not require additional resources for producers within the European Statistical System for their implementation and they do not impose a significant additional burden on Member States or on the respondents.

The Commission shall duly justify the statistical actions provided for in those delegated acts, using, where appropriate, input from relevant experts based on a cost-effectiveness analysis, including an assessment of the burden on the respondents and of the production costs, as referred to in point (c) of Article 14(3) of Regulation (EC) No 223/2009 of the European Parliament and of the Council (¹).

Article 3

Transmission to the Commission

However, the first transmission of data for the regional economic accounts for agriculture (‘REAA’) at NUTS 2 level within the meaning of Regulation (EC) No 1059/2003 of the European Parliament and of the Council (²) shall take place by 30 September 2023.

Those delegated acts shall not impose a significant additional burden on the Member States or on the respondents.

The Commission shall duly justify the statistical actions provided for in those delegated acts, using, where appropriate, input from relevant experts based on a cost-effectiveness analysis, including an assessment of the burden on the respondents and of the production costs, as referred to in point (c) of Article 14(3) of Regulation (EC) No 223/2009.

Article 3a

Dissemination of statistics

Without prejudice to Regulation (EC) No 1367/2006 of the European Parliament and of the Council (³) and Regulation (EC) No 223/2009, the Commission (Eurostat) shall disseminate the data transmitted to it in accordance with Article 3 of this Regulation online, free of charge.

Article 3b

Quality assessment

Article 4

Exercise of the delegation

Article 4a

Committee procedure

Article 4b

Derogations

Article 5

Final provision

This Regulation shall enter into force on the 20th day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX I

FOREWORD

The revision of the European system of accounts (ESA 2010) (⁴) has led to some revisions of the basic methodology used for the EAA, to guarantee consistency with the ESA to allow harmonisation of the EAA both between Member States and with the central framework of the national accounts and to ensure that the changes to be made were feasible. This manual has been drawn up with these considerations in mind as, in addition to the concepts, principles and basic rules for compiling the EAA, it also refers to any adaptations to specific characteristics in the field of agriculture.

I. GENERAL FEATURES OF THE ACCOUNTS

A. INTRODUCTION

1.01. A system of integrated economic accounts should provide an overview of economic activities which is systematic, comparable and as complete as possible, to serve as a basis for analyses, forecasts and political measures. The vast number and variety of economic transactions and units covered by the system therefore have to be classified according to general criteria and set out clearly and simply in a coherent system of accounts and tables.

1.02. The European system of integrated economic accounts, which is derived from the United Nations revised system of national accounts ( 2008 SNA) (⁵) , was created in response to the specific needs of the European Union. It lays down concepts, definitions, accounting rules and uniform classifications to be used by the EU Member States.

1.03. The economy of a country is the sum of the activities of a very large number of units engaged in many different types of transaction with a view to producing, financing, insuring, distributing and consuming. Units and groups of units considered in the context of a system of national accounts have to be defined in terms of the economic models under examination.  The ESA 2010 is characterised by the use of two types of unit and two corresponding ways of subdividing the national economy.

1.04. In order to analyse flows involving income, capital, financial transactions and assets, it is essential to select units which depict the interaction between economic operators (institutional units). In order to analyse the production process, it is crucial to select units which illustrate technico-economic relationships (i.e. kind-of-activity units at local level and units of homogeneous production).

1.05. Thus, the economy may be broken down in two different ways:

1.06. The main purpose of the EAA is to analyse the production process and primary income generated by it. The accounts are therefore based on the industry concept.

1.07. The EAA are a satellite account providing complementary information and concepts adapted to the particular nature of the agricultural industry. Although their structure very closely matches that of the national accounts, their compilation requires the formulation of appropriate rules and methods.

1.08. A distinction needs to be made between the income generated by agricultural production and the income of agricultural households, the latter including, apart from income from agricultural activity, income from other sources (from property, social transfers, etc.) that agricultural households may have.  These two types of income (income generated by agricultural production and the income of agricultural households) are measured for two distinct purposes, which require two distinct methods of breaking down the economy: the first, for the EAA, is based on production units, which are defined by reference to an economic activity; the second is based on households (i.e. institutional units) whose main source of income is independent agricultural activity.

B. THE BASIC UNIT AND THE AGRICULTURAL INDUSTRY

1.09. In order to analyse flows occurring in the process of production and in the use of goods and services, it is necessary to choose units which emphasise relationships of a technico-economic kind. This requirement means that as a rule institutional units must be partitioned into smaller and more homogeneous units with regard to the kind of production. Local kind-of-activity units (local KAUs) are intended to meet this requirement as an operational approach (ESA 2010, 2.147) (⁶).

1.10. The local kind-of-activity unit (local KAU) is the part of a KAU which corresponds to a local unit. The local KAU is called an establishment in the 2008 SNA and ISIC Rev.4. A KAU groups all the parts of an institutional unit in its capacity as a producer contributing to the performance of an activity at class level (four digits) of the NACE Rev. 2 (the reference classification for economic activities, cf. 1.55) and corresponds to one or more operational subdivisions of the institutional unit. The institutional unit's information system must be capable of indicating or calculating for each local KAU at least the value of production, intermediate consumption, compensation of employees, the operating surplus and employment and gross fixed capital formation (ESA 2010, 2.148). The local unit is an institutional unit, or part of an institutional unit, producing goods or services situated in a geographically identified place.

1.11. Although a local KAU may correspond to an institutional unit or part of an institutional unit in its capacity as a producer, it can never belong to two distinct institutional units. Since, in practice, most institutional units producing goods and services are involved in a number of different activities at once (a principal activity and one or more secondary activities), they can be broken down into the same number of local KAUs, if necessary information is available. Ancillary activities (purchases, sales, marketing, accounting, transport, warehousing, maintenance, etc.; cf. 1.27), however, cannot lead to the creation of a local KAU, unless they are carried out in a separate location, located in a region other than the local KAU they serve (ESA 2010, 3.13).

1.12. Basically, as many local KAUs should be recorded as there are secondary activities, but it can happen that statistical (accounting) information does not make it possible to separate a local KAU's secondary activities or parts of those activities from its principal activities. If an institutional unit producing goods or services contains a principal activity and also one or several secondary activities, it is subdivided into the same number of KAUs, and the secondary activities are classified under different headings from the principal activity. The ancillary activities are not separated from the principal or secondary activities. But KAUs falling within a particular heading of the classification system can produce products outside the homogeneous group on account of secondary activities connected with them which cannot be separately identified from available accounting documents. Thus a KAU may carry out one or several secondary activities. (ESA 2010, 2.149).

1.13. An activity can be said to take place when resources such as equipment, labour, manufacturing techniques, information networks or products are combined, leading to the creation of specific goods or services. An activity is characterised by an input of products (goods and services), a production process and an output of products. The principal activity of a local KAU is the activity where the value added of such activity exceeds that of any other activity carried out within the same unit. The classification of the principal activity is determined by reference to NACE rev. 2, first at the highest level of the classification and then at more detailed levels (ESA 2010, 3.10).

1.14. By grouping all local KAUs engaged in the same type of activity, it is possible to establish an industry. This makes it possible to break down the economy by industry. The classification of these industries depends on the principal activity of the units thus grouped together.  At the most detailed level of classification, as defined by ESA 2010, 2.150, an industry includes all local KAUs in the same class (four digit level) of NACE Rev. 2 and therefore engaged in the same principal activity as that defined in NACE Rev. 2.

1.15. Although the agricultural industry was formerly defined as a grouping of units of homogeneous agricultural production, the local KAU was chosen as the basic unit of description for the EAA so as (i) to approach the EAA from the economic situation of agriculture, i.e. to take the existence of certain inseparable non-agricultural secondary activities into full account when measuring the total productive activity of agricultural units and (ii) to remain consistent with the rest of the national accounts. This represents a shift from an analytical approach based on the concept of the unit of homogeneous production and homogeneous branch to a statistical approach based on the concept of the KAU at local level and industry.

1.16. Inseparable, non-agricultural secondary activities are activities whose costs cannot be observed separately from those of the agricultural activity. Examples are the processing of farm products on the farm, forestry, logging, tourism. The output of the agricultural industry thus results from two kinds of activity:

1.17. The agricultural holding, which is the unit currently used for statistical studies of agriculture (censuses, surveys of the structure of agricultural holdings), is the local KAU most appropriate to the agricultural industry (even though certain other units, such as wine or olive oil cooperatives, or units performing contract work, etc., have to be included in it). Nevertheless, it should be pointed out that the variety of agricultural activities that can be performed on agricultural holdings makes them a special type of local KAU.  The strict application of the ESA rule to units and their group should in fact result in a division of the agricultural holding into several separate local KAUs in cases where several activities of the NACE Rev. 2 four-digit class are performed on the same holding and the information required according to paragraph 1.10 is available. The adoption of the agricultural holding as the local KAU of the agricultural industry in the national accounts and EAA is based on a statistical approach.

1.18. Thus, the accounts for the agricultural industry are essentially similar to the accounts of agricultural holdings (production and generation of income accounts). In order to avoid any ambiguity, however, it should be pointed out that the agricultural accounts are not accounts of enterprises whose principal activity is agricultural: firstly, they do not include all of these holdings' non-agricultural activities (those which can be separated from agricultural activities are excluded). Moreover, they include the agricultural activities of enterprises whose principal activity is not agricultural. Consequently, the adoption of the agricultural holding as the base unit for the EAA does not alter the fact that the agricultural accounts are agricultural industry accounts.

1.19. Since, according to ESA 2010, an industry comprises a group of units which carry out as their principal activity the same or similar types of activity, the definition of the agricultural industry in the EAA depends on the identification of the characteristic activities and units in that industry. The resultant selection of characteristic agricultural activities and units may lead to some differences between the EAA agricultural industry accounts and the national accounts (cf. 1.93).

1.20. The agricultural industry is treated as a grouping of all KAUs at local level which perform the following economic activities, as principal or secondary activity (cf. 1.60 to 1.66 for the precise definition of the agricultural industry):

1.21. In addition to agricultural holdings, the agricultural industry comprises units made up of groups of producers (e.g. cooperatives) which produce wine and olive oil and specialised units which provide machines, material and labour for the performance of contract work.

1.22. Specialised units which provide machines, equipment and personnel for the performance of contract work at the agricultural production stage (commercial enterprises engaged in contract work or agricultural holders providing services as contractors) are treated as part of the agricultural industry. Under a stricter interpretation, these units, which must be included in the agricultural industry, must perform work which (a) is part of the agricultural production process, (b) is linked to the production of agricultural products, (c) is customarily performed by the agricultural holdings and (d) is actually performed entirely by specialist units providing machines, material and labour.

1.23. If, however, the contract work is not performed entirely by specialised units (e.g. if holders hire machines but employ their own workers), this activity must be recorded in Division 77 of NACE Rev. 2 (Rental and leasing activities); in this case, amounts paid by the holders to enterprises working under contract must be recorded as ‘other goods and services’ under ‘intermediate consumption’ (cf. 2.108).

1.24. Since the purpose of the EAA is to measure, describe and analyse the formation of income from agricultural economic activity (which, in the EU Member States, is almost exclusively a commercial activity), it was decided to exclude units for which the agricultural activity represents solely a leisure (⁷) activity. In contrast, units engaged in subsistence farming are included in the EAA. It should be pointed out that agricultural output for own final consumption by agricultural holdings must be recorded in the EAA.

1.25. The use of the local KAU as the basic unit for the agricultural industry entails recording non-agricultural secondary activities where they cannot be isolated from the main agricultural activity.

1.26. Inseparable non-agricultural secondary activities of local agricultural KAUs are defined in the EAA as activities closely linked to agricultural production for which information on any of output, intermediate consumption, compensation of employees, labour input or GFCF cannot be separated from information on the main agricultural activity during the period of statistical observation.

1.27. The main characteristics of these inseparable non-agricultural secondary activities are as follows:

1.28. Only that part of a specific non-agricultural secondary activity which is inseparable must be included. As a consequence, a given non-agricultural activity will be included in the agricultural industry if it is impossible to separate it from the main agricultural activity of a local KAU, but will be excluded if it can be separated from the main agricultural activity, in which case the secondary activity gives rise to a non-agricultural local KAU. The selection criterion for inseparable non-agricultural secondary activities is not so much the nature of the product as the type of activity (⁸). For example, agro-tourism services provided by a farm must only be included if they cannot be separated from its agricultural activities. This would probably not be the case when these activities become important. Thus, non-agricultural products accounted for in the production of the agricultural industry may vary geographically and over time.

1.29. Two main types of inseparable non-agricultural secondary activity may be distinguished:

1.30. The list of non-agricultural secondary activities (cf. 1.29) is however given by way of illustration and does not apply in every country. On the contrary, each country has to compile its own list of inseparable non-agricultural secondary activities, depending on the characteristics of its agriculture. The list must be drawn up in collaboration with the national accounts departments so as to ensure that the EAA is compatible with the agricultural branch accounts and the accounts for these non-agricultural activities as compiled for national accounts purposes (i.e. to ensure that no activity is omitted or double-counted).