Gross Value of Irrigated Agricultural Production methodology

1 These tables present statistics showing the Gross Value of Irrigated Agricultural Production (GVIAP) and Gross Value of Agricultural Production (GVAP). Annual data are presented for the reference period 2017-18 for Australia, States and Territories, the Murray-Darling Basin and Natural Resource Management (NRM) regions, for key agricultural commodity groups.

2 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. This definition of GVIAP does not refer to the value that irrigation adds to production i.e. the 'net effect' that irrigation has on production. GVIAP is not a measure of productivity, so extreme care must be taken if attempting to use GVIAP to compare different commodities. Rather, it is a more effective tool for measuring changes over time or comparing regional differences in agricultural production.

3 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 source of the water used in agriculture. However, the timing and location of rainfall affects the amount of additional 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. Quantifying the separate contribution that these factors make to total production is not currently possible.

4 Estimates of GVIAP are based on production, commodity price and water use data, that are derived from Australian Bureau of Statistics' (ABS) Rural Environment and Agricultural Commodities Survey (REACS), as well as from non-ABS sources, including marketing authorities and industry bodies.

5 For detailed information on data sources, scope and coverage of ABS sources used in GVIAP, please refer to the Explanatory Notes contained in the following publications:

• Agricultural Commodities, Australia (cat. no. 7121.0);
• Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0);
• Water Use on Australian Farms (cat. no. 4618.0).
   

6 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). VACP is published annually in Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0)

7 The scope for the 2017-18 survey was all agricultural businesses with an Estimated Value of Agricultural Operations (EVAO) of $40,000 or greater. This is a change from previous collections, where a scope of EVAO of $5,000 or greater was used, and is a continuation of the scope used in the 2015-16 Agricultural Census. For more information about EVAO, refer to the Explanatory Notes contained in the publication Agricultural Commodities, Australia (cat. no. 7121.0).

8 The scope change impacts on all components of GVIAP. Where information is sourced from the survey there will be an impact on estimates, including for crops and horticulture where production information is now only collected from businesses with a value of agricultural operations of $40,000 or greater.

9 As a result of the change in scope, the 2017-18 GVIAP will not be directly comparable to GVIAP outputs published prior to 2015-16. To address this, additional estimates will be made available on request for a number of GVIAP releases from 2010-11 to 2014-15 using an EVAO of $40,000 or greater.

10 GVIAP is calculated for each irrigated 'commodity group' produced by agricultural businesses. That is, GVIAP is generally not calculated for individual commodities, but for groups of 'like' commodities according to irrigated commodity groupings on the agricultural censuses and survey forms. The irrigated commodity groups vary slightly on the survey form from year-to-year. The commodity groups presented in this publication are:

• pastures and cereal crops cut for hay
• rice
• cereals for grain and seed
• cotton
• sugar cane
• other broadacre crops
• fruit and nuts (excluding grapes)
• vegetables
• nurseries
• grapes
• dairy production (excluding dairy cattle for beef production)
• production from meat cattle
• production from sheep and other livestock.
   

11 The agricultural censuses and surveys collect area and production data for a wide range of individual commodities within the irrigated commodity groups shown in the list above. Further detail on the data items included in each agricultural commodities group can be found in the Appendix attached to this publication.

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

1. If the area of the commodity group irrigated = the total area of the commodity group grown/sown, then GVIAP = GVAP for that commodity group;
2. If the area of the commodity group irrigated is greater than zero but less than the total area of the commodity group grown/sown, then a 'yield formula' is applied, with a 'yield difference factor', to calculate GVIAP for the irrigated area of the commodity group;
3. If the area of the commodity group irrigated = 0, then GVIAP = 0 for that commodity group.
    

13 These three rules apply to most commodities; however there are some exceptions as outlined below in paragraph 18. 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: Information Paper: Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006).

15 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) 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: Information Paper: Methods of estimating the Gross Value of Irrigated Agricultural Production (cat. no. 4610.0.55.006).

16 In this publication 'yield' is defined as the production of the commodity per area grown.

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

• Pastures and cereal crops cut for hay - yield formula with yield difference of 2;
• Other cereals for grain and seed - yield formula with yield difference of 2;
• Sugar cane - yield formula with yield difference of 1.3;
• Other broadacre crops - yield formula with yield difference of 2;
• Fruit and nuts (includes fruit trees, nut trees, plantation and berry fruits; excludes grapes) - yield formula with yield difference of 2;
• Grapes - yield formula with yield difference of 1.2;
• Vegetables - yield formula with yield difference of 1;
• Nursery production - yield formula with yield difference of 1.
   

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

18 Not all agricultural commodity groups can be satisfactorily calculated using the yield formula, in particular dairy production - It is assumed that if there is any irrigation of grazing land on a farm that is involved in any dairy production, then all dairy production on that farm is classified as irrigated.

19 Meat cattle, sheep and other livestock – in some previous releases of GVIAP data the estimates were derived by taking the average of two separate models:

1. Calculate the ratio of the area of irrigated grazing land to the total area of grazing land and multiply this ratio by the total production for the commodity group (this is referred to as the 'area formula'). Note: Area formula - GVIAP = (area of irrigated pastures/crops for grazing) / (total area of grazing land) * GVAP;
2. If the farm has any irrigation of grazing land then assume that all livestock production on the farm is irrigated.
    

From 2009-10 onwards the methodology was revised slightly, to better take into account those farms where several different types of livestock are grazing, as follows:

1. If meat cattle are grazing on a farm with irrigated pastures/crops for grazing, and there are no other grazing livestock present on the farm, assume that all meat cattle will graze on the irrigated land; therefore GVIAP for meat cattle = GVAP for meat cattle on that farm;
2. If sheep/other livestock are grazing on a farm with irrigated pastures/crops for grazing, and there are no other grazing livestock present on the farm, assume that all sheep/other livestock will graze on the irrigated land; therefore GVIAP for sheep/other livestock = GVAP for sheep/other livestock on that farm;
3. If dairy cattle, meat cattle and sheep/other livestock are all grazing on a farm with irrigated pastures/crops for grazing, assume that all dairy cattle will graze on the irrigated land and estimate the GVIAP of the meat cattle and sheep/other livestock grazing on the irrigated pastures using the area method. Note: the area method provides a relatively small estimate of GVIAP, which is appropriate because it is assumed that it is more likely that the dairy cattle will be the only livestock grazing on the irrigated land;
4. If dairy cattle and meat cattle are both grazing on a farm with irrigated pastures/crops for grazing, assume that all dairy cattle will graze on the irrigated land (see paragraph 20) and estimate the GVIAP of the meat cattle grazing on the irrigated pastures using the area method. Note: the area method provides a relatively small estimate of GVIAP, which is appropriate because we are assuming that it is more likely that the dairy cattle will be the only livestock grazing on the irrigated land;
5. If dairy cattle and sheep/other livestock are both grazing on a farm with irrigated pastures/crops for grazing, assume that all dairy cattle will graze on the irrigated land (see paragraph 20) and estimate the GVIAP of the sheep/other livestock grazing on the irrigated pastures using the area method. Note: the area method provides a relatively small estimate of GVIAP, which is appropriate because we are assuming that it is more likely that the dairy cattle will be the only livestock grazing on the irrigated land;
6. If there are no dairy cattle present but meat cattle and sheep/other livestock are both grazing on a farm with irrigated pastures/crops for grazing, estimate the GVIAP of the meat cattle and sheep/other livestock grazing on the irrigated pastures using a combination (average) of the area method and 'total' methods (the 'total' method is simply the assumption that GVIAP = GVAP). Note: the area method provides a relatively small estimate of GVIAP, which is not appropriate in this case because it is likely that at least one of the two categories of livestock will be grazing on the irrigated land. The 'total' method assumes that all livestock are grazing on the irrigated land, which overestimates GVIAP. An average of the estimate derived from the two methods should provide a more accurate estimate;
7. Pigs, poultry, eggs and goats are included in the 'Sheep and Other livestock' category.
    

20 Most of the irrigated commodity groups included in these tables are irrigated 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 includes dairy. For example, the GVIAP of 'dairy' simply refers to all dairy production (i.e. milk) from dairy cattle that grazed on irrigated pastures or crops. Estimates of GVIAP for dairy production must be used with caution, because in this case the irrigation is not 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).

21 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.

22 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.

23 The estimates presented in this product are underpinned by estimates of the VACP, published annually in Value of Agricultural Commodities Produced, Australia (cat. no. 7503.0). VACP estimates (referred to as GVAP in this publication) 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 slaughtering and wool is obtained from our collections. Price information for other commodities is obtained from a combination of our collections and non-ABS sources, including marketing authorities and industry sources. It is important to note that prices are state-based average unit values.

24 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.

25 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.

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

27 The estimates for gross value of irrigated agricultural production are based on information obtained from 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 surveys or responded in the agricultural census.

28 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 agricultural businesses had responded, and about nineteen chances in twenty that the difference will be less than two SEs.

29 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 published estimates have RSEs less than 10%. For some states and territories with limited production of certain commodities, RSEs are greater than 10%. Estimates that have an estimated RSE between 10% and 25% should be used with caution as they are subject to sampling variability too high for some purposes. Estimates with an RSE between 25% and 50% should also be used with caution as they are subject to sampling variability too high for most practical purposes. Estimates with an RSE greater than 50% are considered too unreliable for general use.

30 RSEs for all published estimates are available on request.

31 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 and 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.

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

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

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