4610.0.55.008 - Experimental Estimates of the Gross Value of Irrigated Agricultural Production, 2000–01

4610.0.55.008 - Experimental Estimates of the Gross Value of Irrigated Agricultural Production, 2000–01 - 2008–09

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ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 29/11/2010

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Explanatory Notes
Description of Commodity Groups (Appendix 1)
Data Item Comparability (Appendix 2)
Quality Declaration

EXPLANATORY NOTES

INTRODUCTION

1 These tables present experimental statistics showing the Gross Value of Irrigated Agricultural Production (GVIAP). Annual data are presented for the reference periods from 2000–01 to 2008–09 for Australia, States and Territories, for the Murray-Darling Basin for selected years (2000–01, 2005–06, 2006–07, 2007–08 and 2008–09) and for Natural Resource Management (NRM) regions from 2005–06 to 2008–09, for key agricultural commodity groups.

2 The tables also present the total gross value of agricultural commodities (GVAP) and the Volume of Water Applied (in megalitres) to irrigated crops and pastures.

WHAT IS GVIAP?

3 GVIAP refers to the gross value of agricultural commodities that are produced with the assistance of irrigation. The gross value of commodities produced is the value placed on recorded production at the wholesale prices realised in the marketplace. Note that this definition of GVIAP does not refer to the value that irrigation adds to production, or the "net effect" that irrigation has on production (i.e. the value of a particular commodity that has been irrigated "minus" the value of that commodity had it not been irrigated) - rather, it simply describes the gross value of agricultural commodities produced with the assistance of irrigation.

4 ABS estimates of GVIAP attribute all of the gross value of production from irrigated land to irrigated agricultural production. For this reason, extreme care must be taken when attempting to use GVIAP figures to compare different commodities - that is, the gross value of irrigated production should not be used as a proxy for determining the highest value water uses. Rather, it is a more effective tool for measuring changes over time or comparing regional differences in irrigated agricultural production.

5 Estimating the value that irrigation adds to agricultural production is difficult. This is because water used to grow crops and irrigate pastures comes from a variety of sources. In particular, rainwater is usually a component of the water used in irrigated agriculture, and the timing and location of rainfall affects the amount of irrigation water required. Other factors such as evaporation and soil moisture also affect irrigation water requirements. These factors contribute to regional and temporal variations in the use of water for irrigation. In addition, water is not the only input to agricultural production from irrigated land - fertiliser, land, labour, machinery and other inputs are also used. To separate the contribution that these factors make to total production is not currently possible.

DATA SOURCES

Gross value of agricultural production

6 These estimates are based on data from Value of Agricultural Commodities Produced (cat. no. 7503.0), which are derived from ABS agricultural censuses and surveys. During the processing phase of the collections, data checking was undertaken to ensure key priority outputs were produced to high quality standards. As a result, some estimates will have been checked more comprehensively than others.

7 It is not feasible to check every item reported by every business, and therefore some anomalies may arise, particularly for small area estimates (e.g. NRM regions). To present these items geographically, agricultural businesses are allocated to a custom region based on where the business reports the location of their 'main agricultural property'. Anomalies can occur if location details for agricultural businesses are not reported precisely enough to accurately code their geographic location. In addition, some businesses operate more than one property, and some large farms may operate across custom region and NRM boundaries, but are coded to a single location. As a result, in some cases, a particular activity may not necessarily occur in the area specified and the Area of Holding and other estimates of agricultural activity may exceed or not account for all activities within that area. For these reasons, the quality of estimates may be lower for some NRMs and other small area geographies.

8 Gross value of agricultural production (GVAP) is the value placed on recorded production of agricultural commodities at the wholesale prices realised in the market place. It is also referred to as the Value of Agricultural Commodities Produced (VACP).

9 In 2005–06, the ABS moved to a business register sourced from the Australian Taxation Office's Australian Business Register (ABR). Previously the ABS had maintained its own register of agricultural establishments.

10 The ABR-based register consists of all businesses on the ABR classified to an 'agricultural' industry, as well as businesses which have indicated they undertake agricultural activities. All businesses with a turnover of $50,000 or more are required to register on the ABR. Many agricultural businesses with a turnover of less than $50,000 have also chosen to register on the ABR.

11 Moving to the ABR-based register required changes to many of the methods used for compiling agriculture commodity and water statistics. These changes included: using new methods for determining whether agricultural businesses were 'in-scope' of the collection; compiling the data in different ways; and improving estimation and imputation techniques.

12 The ABR-based frame was used for the first time to conduct the 2005–06 Agricultural Census. This means that Value of Agricultural Commodities Produced (VACP) data are not directly comparable with historical time series for most commodities. For detailed information about these estimates please refer to the Explanatory Notes in Value of Agricultural Commodities Produced (cat. no. 7503.0).

13 Statistics on area and production of crops relate in the main to crops sown during the reference year ended 30 June. Statistics of perennial crops and livestock relate to the position as at 30 June and the production during the year ended on that date, or of fruit set by that date. Statistics for vegetables, apples, pears and for grapes, which in some states are harvested after 30 June, are collected by supplementary collections. For 2005–06 to 2007–08, the statistics for vegetables, apples, pears and for grapes included in this product are those collected in the 2005–06 Agriculture Census at 30 June 2006, the 2006–07 Agricultural Survey at 30 June 2007 and the Agricultural Resource Management Survey 2007–08 at 30 June 2008, not those collected by the supplementary collections. For this reason the GVAP (VACP) estimates may differ from the published estimates in the products Agricultural Commodities: Small Area Data, Australia, 2005–06 (cat. no. 7125.0) and Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0).

14 Further, the GVAP (Gross Value of Agricultural Production, also referred to as VACP) and GVIAP estimates for 2005–06 and 2006–07 shown in this product have been revised where necessary, for example, when a new price has become available for a commodity after previous publications.

15 The VACP Market Prices survey collected separate prices for undercover and outdoor production for the first time in 2005–06. This enabled the ABS to better reflect the value of undercover and outdoor production for nurseries and cut flowers. The value of the commodity group “nurseries, cut flowers and cultivated turf” was significantly greater from 2005–06, reflecting an increase in production and an improved valuation of undercover production for nurseries and cut flowers.

Volume of water applied

16 'Volume of water applied' refers to the volume of water applied to crops and pastures through irrigation.

17 This information is sourced from the ABS Agriculture Census for 2000–01 and 2005–06 and from the ABS Agricultural Survey for all other years, except for 2002–03 when ABS conducted the Water Survey, Agriculture. As explained above in paragraphs 9–12, there was a change to the register of businesses used for these collections, which may have some impact on the estimates. For further information refer to the Explanatory Notes for Water Use on Australian Farms (cat. no. 4618.0).

18 Volume of water applied is expressed in megalitres. A megalitre is one million litres, or one thousand kilolitres.

AGRICULTURAL COMMODITY GROUPS

19 GVIAP is calculated for each irrigated 'commodity group' produced by agricultural businesses. That is, GVIAP is generally not calculated for individual commodities, rather for groups of "like" commodities according to irrigated commodity grouping on the ABS Agricultural Census/Survey form. The irrigated commodity groups vary slightly on the survey form from year-to-year. The commodity groups presented in this publication are:

cereals for grain and seed
total hay production
pastures for seed production
cotton
rice
sugar cane
other broadacre crops (see Appendix 1 for detail)
fruit trees, nut trees, plantation or berry fruits (excluding grapes)
grapes
vegetables for human consumption and seed
nurseries, cut flowers and cultivated turf
dairy production
production from meat cattle
production from sheep and other livestock (excluding cattle)

20 Note that the ABS Agricultural Census/Survey collects area and production data for a wide range of individual commodities within the irrigated commodity groups displayed in the list above. Appendix 1 provides more detail of which commodities comprise these groupings.

21 There were differences in data items (for production, area grown and area irrigated) collected on the Agricultural Census/Surveys in different years. This affects the availability of some commodities for some years. Appendix 2 outlines some of the specific differences and how they have been treated in compiling the estimates for this publication, thereby enabling the production of GVIAP estimates for each of the commodity groups displayed in the list above for every year from 2000–01 to 2008–09.

22 Note that in all GVAP tables, “Total GVAP” includes production from pigs, poultry, eggs, honey (2001 only) and beeswax (2001 only), for completeness. These commodities are not included in GVIAP estimates at all because irrigation is not applicable to them.

METHOD USED TO CALCULATE GVIAP

23 The statistics presented here calculate GVIAP at the unit (farm) level, using three simple rules:

24 These three rules apply to most commodities; however there are some exceptions as outlined below in paragraph 26. It is important to note that the majority of cases follow rules 1 and 3; that is, the commodity group on a particular farm is either 100% irrigated or not irrigated at all. For example, in 2004–05, 90% of total GVAP came from commodity groups that were totally irrigated or not irrigated at all. Therefore, only 10% of GVAP had to be "split" into either "irrigated" or "non-irrigated" using the “yield formula” (described below). The yield formula is explained in full in the information paper Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006).

Yield formula

25 Outlined here is the yield formula referred to in paragraph 20:

Where

Hence

Where:

_diff

Yield difference factors

26 Yield difference factors are the estimated ratio of irrigated to non-irrigated yield for a given commodity group. They are calculated for a particular commodity group by taking the yield (production per hectare sown/grown) of all farms that fully irrigated the commodity group and dividing this "irrigated" yield by the yield of all farms that did not irrigate the commodity group. The yield difference factors used here were determined by analysing data from 2000–01 to 2004–05 and are reported for each commodity group in Appendix 1 of the information paper Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006). It is anticipated that the yield difference factors will be reviewed following release of data from the 2010-11 Agriculture Census.

27 In this report "yield" is defined as the production of the commodity (in tonnes, kilograms or as a dollar value) per area grown/sown (in hectares).

Commodity groups for which the yield formula is used

28 The GVIAP for the following commodities have been calculated using the yield formula, with varying yield differences:

Note: a yield difference of 1 implies no difference in yield between irrigated and non-irrigated production.

29 However not all agricultural commodity groups can be satisfactorily calculated using this formula, so the GVIAP for a number of commodity groups has been calculated using other methods:

30 For more information on the “area formula” for calculating GVIAP please refer to the information paper Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006).

Production formula

31 In 2008–09, cotton, grapes and sugar were the only commodities for which the production formula was used to estimate GVIAP. This formula is based on the ratio of irrigated production (kg or tonnes) to total production (kg or tonnes) and is outlined in the information paper Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006). The production formula is used for these three commodities because in 2008–09 they were the only commodities for which actual irrigated production was collected on the ABS agricultural censuses and surveys. Note that prior to 2008–09, cotton was the only commodity for which irrigated production data was collected, except in 2007–08, when there were no commodities for which this data was collected.

= PQ_i

Where

Livestock

32 Most of the irrigated commodity groups included in these tables are irrigated simply by the application of water directly on to the commodity itself, or the soil in which it is grown. The exception relates to livestock, which obviously includes dairy. For example, the GVIAP of "dairy" simply refers to all dairy production from dairy cattle that grazed on irrigated pastures or crops. Estimates of GVIAP for dairy must be used with caution, because in this case the irrigation is not simply applied directly to the commodity, rather it is applied to a pasture or crop which is then eaten by the animal from which the commodity is derived (milk). Therefore, for dairy production, the true net contribution of irrigation (i.e. the value added by irrigation, or the difference between irrigated and non-irrigated production) will be much lower than the total irrigation-assisted production (the GVIAP estimate).

33 The difference between (a) the net contribution of irrigation to production and (b) the GVIAP estimate, is probably greater for livestock grazing on irrigated crops/pastures than for commodity groups where irrigation is applied directly to the crops or pastures.

34 Similarly, estimates of GVIAP for all other livestock (meat cattle, sheep and other livestock) must be treated with caution, because as for dairy production, the issues around irrigation not being directly applied to the commodity also apply to these commodity groups.

PRICE DATA

35 The estimates presented in this product are underpinned by estimates of the Value of Agricultural Commodities Produced (VACP), published annually in the ABS publication Value of Agricultural Commodities Produced (cat. no. 7503.0). VACP estimates (referred to as GVAP in this product) are calculated by multiplying the wholesale price by the quantity of agricultural commodities produced. The price used in this calculation is the average unit value of a given commodity realised in the marketplace. Price information for livestock slaughterings and wool is obtained from ABS collections. Price information for other commodities is obtained from non-ABS sources, including marketing authorities and industry sources. It is important to note that prices are state-based average unit values.

36 Sources of price data and the costs of marketing these commodities vary considerably between states and commodities. Where a statutory authority handles marketing of the whole or a portion of a product, data are usually obtained from this source. Information is also obtained from marketing reports, wholesalers, brokers and auctioneers. For all commodities, values are in respect of production during the year (or season) irrespective of when payments were made. For that portion of production not marketed (e.g. hay grown on farm for own use, milk used in farm household, etc.), estimates are made from the best available information and, in general, are valued on a local value basis.

37 It should be noted that the estimates for GVIAP are presented in current prices; that is, estimates are valued at the commodity prices of the period to which the observation relates. Therefore changes between the years shown in these tables reflect the effects of price change.

MURRAY-DARLING BASIN (MDB)

38 The gross value of irrigated agricultural production for the MDB is presented for 2000–01 and 2005–06 through to 2008–09. The 2000–01 and 2005–06 data are available because they are sourced from the Agricultural Census which supports finer regional estimates, while the 2006–07, 2007–08 and 2008–09 data are able to be produced because of the improved register of agricultural businesses (described in paragraphs 9–12).

39 The data for the Murray-Darling Basin (MDB) presented in this publication for 2000–01 were derived from a concordance of Statistical Local Area (SLA) regions falling mostly within the MDB. The data for the MDB for 2006–07, 2007–08 and 2008–09 were derived from a concordance of National Resource Management (NRM) regions falling mostly within the MDB. The MDB data for 2005–06 were derived from geo-coded data. As a result, there will be small differences in MDB data across years and this should be taken into consideration when comparisons are made between years.

COMPARABILITY WITH PREVIOUSLY PUBLISHED ESTIMATES

40 Because of this new methodology, the experimental estimates presented here are not directly comparable with other estimates of GVIAP released by ABS in Water Account, Australia, 2000–01 (cat. no. 4610), Characteristics of Australia’s Irrigated Farms, 2000–01 to 2003–04 (cat. no. 4623.0), Water Account, Australia, 2004–05 (cat. no. 4610) and Water and the Murray-Darling Basin, A Statistical Profile 2000–01 to 2005–06 (cat. no. 4610.0.55.007). However, the GVIAP estimates published in the Water Account Australia 2008–09 are the same as those published in this publication.

41 As described above, 'Volume of water applied' refers to the volume of water applied to crops and pastures through irrigation. The estimates of 'Volume of water applied' presented in this publication are sourced directly from ABS Agricultural Censuses and Surveys and are the same as those presented in Water Use On Australian Farms (cat.no. 4618.0). Note that these volumes are different to the estimates of agricultural water consumption published in the 2008–09 Water Account Australia (cat. no. 4610.0) as the Water Account Australia estimates focus on total agricultural consumption (i.e. irrigation plus other agricultural water uses) and are compiled using multiple data sources (not just ABS Agricultural Censuses and Surveys).

42 The differences between the methods used to calculate the GVIAP estimates previously released and the method used to produce the estimates presented in this product, are explained in detail in the information paper Methods of estimating the Gross Value of Irrigated Agricultural Production, 2008 (cat. no. 4610.0.55.006).

43 In particular some commodity groups will show significant differences with what was previously published. These commodity groups include dairy production, meat production and sheep and other livestock production.

44 The main reason for these differences is that previous methods of calculating GVIAP estimates for these commodity groups were based on businesses being classified to a particular industry class (according to the industry classification ANZSIC), however the new method is based on activity. For example, for dairy production, previous methods of calculating GVIAP only considered dairy production from dairy farms which were categorised as such according to ANZSIC. The new method defines dairy production, in terms of GVIAP, as “all dairy production on farms on which any grazing land (pastures or crops used for grazing) has been irrigated”. Therefore, if there is any irrigation of grazing land on a farm that is involved in any dairy production (regardless of the ANZSIC classification of that farm), then all dairy production on that particular farm is classified as irrigated.

CONFIDENTIALITY

45 Where figures for individual states or territories have been suppressed for reasons of confidentiality, they have been included in relevant totals.

RELIABILITY OF THE ESTIMATES

46 The experimental estimates in this product are derived from estimates collected in surveys and censuses, and are subject to sampling and non-sampling error.

SAMPLE ERROR

47 The estimates for gross value of irrigated agricultural production are based on information obtained from respondents to the ABS Agricultural Censuses and Surveys. These estimates are therefore subject to sampling variability (even in the case of the censuses, because the response rate is less than 100%); that is, they may differ from the figures that would have been produced if all agricultural businesses had been included in the Agricultural Survey or responded in the Agricultural Census.

48 One measure of the likely difference is given by the standard error (SE) which indicates the extent to which an estimate might have varied by chance because only a sample was taken or received. There are about two chances in three that a sample estimate will differ by less than one SE from the figure that would have been obtained if all establishments had been reported for, and about nineteen chances in twenty that the difference will be less than two SEs.

49 In this publication, sampling variability of the estimates is measured by the relative standard error (RSE) which is obtained by expressing the SE as a percentage of the estimate to which it refers. Most national estimates have RSEs less than 10%. For some States and Territories, and for many Natural Resource Management regions with limited production of certain commodities, RSEs are greater than 10%. Estimates that have an estimated relative standard error higher than 10% are flagged with a comment in the publication tables. If a data cell has an RSE of between 10% and 25, these estimates should be used with caution as they are subject to sampling variability too high for some purposes. For data cells with an RSE between 25% and 50% the estimate should be used with caution as it is subject to sampling variability too high for most practical purposes. Those data cells with with an RSE greater than 50% indicate that the sampling variability causes the estimates to be considered too unreliable for general use.

Relative Standard Errors, Gross Value of Irrigated Production of Selected Commodities - at 30 June 2009

Relative Standard Errors, Gross Value of Irrigated Production of Selected Commodities - at 30 June 2009

Relative Standard Errors , Gross Value of Irrigated Productoin of Selected Commodities, selected NRM regions - at 30 June 2009

NON-SAMPLE ERROR

50 Errors other than those due to sampling may occur because of deficiencies in the list of units from which the sample was selected, non-response, and errors in reporting by providers. Inaccuracies of this kind are referred to as non-sampling error, which may occur in any collection, whether it be a census or a sample. Every effort has been made to reduce non-sampling error to a minimum in the collections by careful design and testing of questionnaires, operating procedures and systems used to compile the statistics.

ROUNDING

51 Where figures have been rounded, discrepancies may occur between sums of the component items and totals.

ACKNOWLEDGEMENT

52 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.

FUTURE DATA RELEASES

53 It is anticipated that ABS will release these estimates on an annual basis.

RELATED INFORMATION

Agricultural Commodities, Australia (cat. no. 7121.0)
Agricultural Commodities: Small Area Data, Australia (cat.no. 7125.0)
Characteristics of Australia’s Irrigated Farms, 2000–01 to 2003–04 (cat. no. 4623.0)
Methods of estimating the Gross Value of Irrigated Agricultural Production (Information Paper) (cat. no. 4610.0.55.006).
Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0)
Water Account Australia (cat. no. 4610.0)
Water and the Murray-Darling Basin, A Statistical Profile, 2000–01 to 2005–06 (cat. no. 4610.0.55.007)
Water Use on Australian Farms, Australia (cat. no. 4618.0)