Price index of Price index of AgriculturalAgricultural Output and Output and

InputInput

Hana Tubi Idit OfekHana Tubi Idit Ofek CBSCBS

February 2012February 2012

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The indices goalThe indices goal

• To estimate the impact of changes in prices on farmers' income from marketed produce (output), and on their expenditures for the purchase of materials, goods, and services (input).

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Uses of agricultural pricesUses of agricultural prices

• To deflate value series of inputs and outputs in Agriculture, ( to change the presentation of value

series from current to constant prices)• To calculate the terms of trade in Agriculture

according to prices (and not, for example, according to the influence of marketed produce

quantities and of technological changes);• To update calculations used to determine prices

of agricultural produce and policies for provision of subsidies.

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The Price Index of Input in Agriculture measures changes in changes in prices of purchasesprices of purchases of products and services by farmers, products and services by farmers, which are required as inputswhich are required as inputs

Purpose and UsesThe purpose of the index is to provide information on trends in

purchase prices of agricultural production.

– The index is used as a deflator of nominal values for uses of national accounts.

– Indexation - In Israel, most of the financial agreements are protected by indexation. This allows for sharing of risks between the parties.

– Research tool for analysts.

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Products and Services, Prices and Geographical Coverage

The Agricultural Input index is an INPUT TOTAL INDEX

It includes goods and servicesgoods and services currently consumed in agriculture, as well as Machinery and other equipment, and Machinery and other equipment, and Tractors andTractors and farm buildingsfarm buildings..

We collect prices of domestic and imported goods from domestic manufacturers and distributors. Prices collected from employers refer to wages.

The prices do not include VAT. Discounts and credit terms are taken into account.

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Base PeriodBase Period

Weights are determined in a periodic survey, which reflects the expenditure for inputs made by farmers over the base year.expenditure for inputs made by farmers over the base year.

Weights are determined for all levels.Weights are determined for all levels.

Weights are updated every 5 to 10 years.every 5 to 10 years.

Sources for weightsSources for weights Price index of input in agriculture: Different sources

Base PeriodBase Period: Average 2000

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Data CollectionData CollectionComputer Assisted Telephone Interviews (CATI), post, e-mail, fax, personal interviews

145 questionnaires, 1100 observations

Data EditingData EditingElementary index (observation index): The index is chained from month to month.

Upper level Index: From the item price index to the groups of items price index, and up to the total index - Laspeyers formula

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Data Editing - Index AggregationData Editing - Index Aggregation

Observation Index – Cherry tomato seed

Item Index – tomato seed

Sub-group Index - Seed for vegetables and field crops

Group index - Seed

Main Group index - Seed, bulbs and saplings

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Publication and DisseminationPublication and Dissemination

Monthly publications are published on the Internet, and in press releases that accompany press conferences.

All Input indices are published in the table “Index of Input Prices by Groups and Sub-groups”.

Current Updates:Current Updates: For example - revisions of weights are published via the Internet together with other PPI metadata.

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Fodder

100

120

140

160

180

200

220

2007 2008 2009 2010 2011

pric

e in

dex

price index of input in agriculture - generalfodderconcentrated mixed foddercattle's fodder

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Fertilizers

100

150

200

250

300

350

400

450

500

550

2007 2008 2009 2010 2011

pri

ce

in

de

x

fertilizers nitrous fertilizer phoshorous fertilizer

potassic fertilizer compound fertilizer organic fertilizer

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Agricultural produce that was manufactured Agricultural produce that was manufactured during the year. during the year.

Output includes:Output includes: marketed produce, home marketed produce, home consumption on the farm, changes in livestock consumption on the farm, changes in livestock inventory, intermediate produce and inventory, intermediate produce and investment in new plantations and investment in new plantations and afforestation.afforestation.

AgricultureAgriculture OutputOutput

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Agriculture Output by DestinationAgriculture Output by Destination

• Local Consumption

• Export

• Local Manufacturing

• Intermediate produce

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Data sourcesData sources

• Wholesalers and food industry• Exporters • Marketing boards and production councils• Animal Husbandry Organizations and corporations• Ministry of Agriculture

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Price indexPrice index

Price index Price and quantity index

Formula laspeyres paasche

Base year 2000 Current year

Content All products Only the products in two consecutive years

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Output Price Index - purposeOutput Price Index - purpose

• Measure the percent of change over time in revenue obtained for a fixed basket of goods

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Output Price Index – weightsOutput Price Index – weights laspeyres laspeyres

• Reflect the relative importance of the various kinds of output within the overall output during the base year.

• The weight is based on the value of output in the base year (2000)

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Weighting schemeWeighting scheme laspeyres laspeyres

GRAND TOTAL 1,000.0

CROPS – TOTAL 557.9

FIELD CROPS 72.8

Cereals and legumes 13.9

Wheat 3.1

Barley, sorghum, etc. 0.8

Corn on cob 6.3

Peas for canning 1.3

Miscellaneous legumes for grains 2.4

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Output Price Index - calculationOutput Price Index - calculation

• Laspeyres formula

• According to the weighted mean of the quantity of every product marketed at 2000.

• The indices calculated for products and aggregative means.

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Indices

          2000

2010 2009 2008 2007 2006 weights

GRAND TOTAL 148.0 145.3 144.2 128.6 124.8 1,000.0

CROPS – TOTAL 158.0 153.2 149.0 134.9 132.0 557.9

FIELD CROPS 142.0 145.3 144.6 127.0 124.5 72.8

Cereals and legumes 144.2 152.5 137.8 136.6 133.9 13.9

Wheat 177.4 220.9 182.6 175.2 152.0 3.1

Barley, sorghum, etc. 123.9 137.4 127.9 114.5 106.2 0.8

Corn on cob 145.0 144.0 130.4 134.7 144.2 6.3

Peas for canning 98.1 85.9 90.7 101.1 98.7 1.3

Miscellaneous legumes for grains 131.2 127.3 128.5 117.8 111.1 2.4

Industrial and oil crops 146.5 139.5 140.8 126.8 128.2 34.7

Cotton 137.7 110.8 116.1 122.6 103.6 9.0

Groundnuts 127.0 121.0 109.5 161.3 138.3 7.4

Sunflowers 142.8 131.0 131.0 106.1 135.1 5.5

Spices, medicinal herbs, etc. 165.6 174.0 180.5 118.7 136.7 12.8

Rough fodder 134.3 149.6 153.8 121.7 113.9 24.2

Hay 143.1 154.2 151.1 126.6 115.1 7.1

Green fodder and silage 135.3 150.7 159.5 120.7 111.9 12.6

Straw 117.5 139.4 142.3 117.0 117.8 4.5

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Expected challengesExpected challenges

• Updating the base year

• Different destination (local, export)

• Changes in the varieties of agricultural products

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3.2 3.31.9

5.6

7.3

2.23.3

-3.3

1.60.8

12.1

3.1

5.1

0.4

6.6

12.4

7.1

4.6

-4

-2

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009 2010

Per

cent

age

of a

nnua

l cha

nge

Output Input

1.- PERCENTAGES OF CHANGE IN PRICE INDICES OF OUTPUT AND INPUTIN AGRICULTURE

Annual Average – Percentage of Change Compared with Previous Year2002–2010

Thanks for your attention