Monitoring and Evaluation of policies is intrinsically challenging and requires a very high level of technical capacity. Appropriate statistical indicators have to be selected and calculated to satisfy the needs of final users, linking the date to statistical demand. Appropriate classifications and definitions are also essential, while different data-sources and highly disaggregated estimations are needed; for instance, for small areas estimations and rural areas. Furthermore, Evaluation of a policy is a specific purpose, different from monitoring a project or long run economic analysis. The paper try to address the argument from a National Account prospective, rely on the assumption that this is an appropriate macro-economic framework for statistics and to base scientific studies.National Accounts, Monitoring&Evaluation, Agriculture, Rural Development Statistics, Agricultural Households Income, Agricultural and Food Policy, E01,

Ciaccia, Domenico

Pizzoli, Edoardo

English

Research Papers in Economics

                                        
Copyright 2011 by Domenico Ciaccia, Edoardo Pizzoli. All rights reserved. Readers may make 
verbatim copies of this document for non-commercial purposes by any means, provided that this 
copyright notice appears on all such copies. 
 
Paper prepared for the 122
nd EAAE Seminar 
"EVIDENCE-BASED AGRICULTURAL AND RURAL POLICY MAKING: 
METHODOLOGICAL AND EMPIRICAL CHALLENGES OF POLICY 
EVALUATION" 
Ancona, February 17-18, 2011 
 
 
 
 
 
Tracking Results in Agriculture and Rural Development in 
Developed Countries:  
Methodological Issues on a National Accounts Prospective  
 
 
Ciaccia D.
1 and Pizzoli E.
1 
 
1 National Accounts Division, Italian National Institute of Statistics, Rome, Italy 
 
Pizzoli@istat.it  
 
 
 
 
 
 
 
    Ancona - 122
nd EAAE Seminar 
"Evidence-Based Agricultural and Rural Policy Making” 
Page 1 of 6 
Tracking Results in Agriculture and Rural Development in 
Developed Countries:  
Methodological Issues on a National Accounts Prospective  
Ciaccia D. and Pizzoli D.  
 
Abstract 
Monitoring and Evaluation of policies is intrinsically challenging and requires a very high level 
of technical capacity. Appropriate statistical indicators have to be selected and calculated to 
satisfy  the  needs  of  final  users,  linking  the  date  to  statistical  demand.  Appropriate 
classifications  and  definitions  are  also  essential,  while  different  data-sources  and  highly 
disaggregated  estimations  are  needed;  for  instance,  for  small  areas  estimations  and  rural 
areas. Furthermore, Evaluation of a policy is a specific purpose, different from monitoring a 
project or long run economic analysis. 
The  paper  try  to  address  the  argument  from  a  National  Account  prospective,  rely  on  the 
assumption that this is an appropriate macro-economic framework for statistics and to base 
scientific studies. 
 
Keywords:  National  Accounts,  Monitoring&Evaluation,  Agriculture,  Rural  Development 
Statistics, Agricultural Households Income 
 
JEL classification: E01  
1.  INTRODUCTION  
National Accounts (NA) are a natural instrument to monitor development and evaluate 
policies  at  national  and  regional  level.  Nowadays  in  developed  countries,  numerous 
measurements, periodical surveys and administrative data, assure a flow of information for NA 
that allows to produce regular estimates, updating long time series. ISTAT data on NA are fully 
available  and  accessible  for  monitoring  and  evaluation  (M&E)  purposes  on  the  website. 
Analysts can monitor the trend of developments in key variables of the economy, understanding 
the evolution of the full system, any incoming disequilibrium in flows, the effects of policies 
interventions on them and the state of stocks in each accountancy year. 
In this statistical framework agriculture and the rural economy are just a subdivision of 
the total economy and a territorial identification of estimates, intended also as  a subdivision of  
aggregates of variables, is also possible. A coherent framework, as it is by contraction the NA, 
allows a relative evaluation of this share of the economy with respect other industries and the 
rest of the economy.  
The methodology behind NA, that is accountancy rules and definitions - classifications, 
have to be carefully considered to read the signals coming from the data, to understand socio-
economic phenomena and if this framework is appropriate to check the changes, or if it should Ancona - 122
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"Evidence-Based Agricultural and Rural Policy Making” 
Page 2 of 6 
be modified over time. The purpose of this paper is to highlight some of these features of NA 
and the signals of a changing agriculture in the 21st century economy. 
2.  AGRICULTURE IN NATIONAL ACCOUNTS  
In  NA,  Agriculture  is  a  subset  of  the  national  economy,  with  corresponding  sub-
aggregates,  statistically  defined  as  an  Industry  (section  A,  in  ISIC  -  International  Standard 
Industrial  Classification  of  All  Economic  Activities).  Any  reference  to  Agriculture  in  the 
statistical  system  has  to  consider  the  conventional  borders,  even  if  based  on  theoretical 
categories, of this industry.  
In NA different redefinitions, with extensions or narrowing of agricultural industry, are 
also possible based on ISIC groups and classes and reclassifications of institutional units. An 
example is the satellite account for agriculture produced for EUROSTAT that introduce, even if 
limited, differences with respect to the main NA. 
3.  INDUSTRIES AND INSTITUTIONAL UNITS  
A set of statistical definitions of objects and international classification are the base to 
aggregate and disaggregate objectives variables. In this statistical representation of the economy 
and  society,  institutional  units  are  involved  in  economic  activities  of  production  and 
consumption of products. Institutional units are organized, at territorial level, in local Kind-of-
Activity Units (KAU) with a principal, secondary and ancillary activities. Classification of units 
with respect to principal activities allows their aggregation in Industries. 
A limitation of this micro-classification of the economy is that institutional units are of a 
different  nature  and  belongs  to  sub-  populations  of units;  furthermore, they  are  grouped in 
cooperatives and enterprise groups, depending on the institutional and legal framework of the 
country; finally, local KAU are normally involved in more than one activity and produces more 
than a single product. 
This  feature  of  the  economic  organization  are  particularly  true  for  units  involved  in 
agricultural  activity  because  their  products  are  normally  input  for  food  products  or  row 
materials in the manufacturing and energy industry. Producers compensate price instability, 
high  market  competition  and  low  values  added producing,  directly  or as a  part of a larger 
organization, other products at the end of the supply chain. NA allows to reassemble these data, 
to  reconstruct  agri-food  or  other  chains,  as  the  base  classifications  are  exhaustive  of  the 
economy and guarantee compatibility within the estimated variables.    
Finally, activities at the boundaries of the classification and new areas activities, typically 
indicated as “services”, have to be reconsidered over time and they can change the dimensions 
of the industries and the statistical representation given with NA. An example is the support and 
secondary activity in the agricultural industry. Ancona - 122
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"Evidence-Based Agricultural and Rural Policy Making” 
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4.  SUPPORT AND SECONDARY ACTIVITY IN AGRICULTURE 
The first group considered is Agricultural and animal husbandry (“connected”) service 
activities (A.014, ISIC Rev.3.1; NACE, ATECO). It includes activities (for farms, in farms, for 
agricultural products) on a fee or contract basis: 
·  provision of agricultural machinery with operators and crew;  
·  harvesting  and  preparation  of  crops  for  primary  markets  (excluding  processing  of 
agricultural products), other farm activities. 
Finally, it includes landscape gardening and measures for protecting the environment and 
nature. 
This classification has changed in 2008 (ISIC Rev.4; NACE, ATECO) and the group is 
now Related service activities - Support activities to agriculture and post-harvest crop activities 
(A.016). This group includes activities incidental to agricultural production done on a fee or 
contract basis: 
·  provision of agricultural machinery with operators and crew; 
·  not undertaken for production purposes (in the sense of harvesting agricultural products). 
Also included are post-harvest crop activities, aimed at preparing agricultural products for 
the primary market; 
Finally, it includes activities aimed at improving the propagation quality of seed. 
The  second  grouping  considered  here,  it  concerns  all  secondary  activities  of  a  local 
agricultural KAU. It includes any activity of production done in the institutional unit different 
than agriculture, that share the same factors of production and are not separated in economic and 
management terms.  
The  set  of  these  activities  are  growing  in  the  real  world  as  units  of  production 
differentiate their activity and search any possible source (production activities or transfers) of 
income. 
In  Italy,  in  2009  production  from  support  activities  reached  5,3  billion  Euro,  with  a 
continuous trend of increase over the last decade. If secondary activities are also considered, 1,5  
billion Euro  have to be added and this group of activities becomes one of the most important in 
agricultural industry. Only support activities are 11,6% of the total production and are lower 
only to meats (20,2%) and potatoes and vegetables (16,2%) productions. A few years ago, the 
production of this group of activity was lower also to cereals and milk production, two key 
products in agriculture. 
These is a signal of a clear change in this industry, where fluctuations of prices and 
income stimulated producers to integrate and looking for more stable sources of income from 
the same means of productions. 
Local implications are also quite strong, as specific characteristics of a region in terms of 
institutional framework and land-climate resources can facilitate or create a constrain to these 
processes of restructuring in the industry. Ancona - 122
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"Evidence-Based Agricultural and Rural Policy Making” 
Page 4 of 6 
5.  AGRICULTURAL INCOME AND INCOME OF AGRICULTURAL HOUSEHOLDS 
In NA for agriculture income indicators relate to the income generated in the agricultural 
industry, that is by units (local KAU) with principal activity in agriculture. Income is mainly 
from agriculture but also non-agricultural secondary activities are important.  
Three main indicators are calculated by EU countries: indicators A, index of the real 
income  of  factors  in  agriculture  per  annual  work  unit;  B,  index  of  real  net  agricultural 
entrepreneurial  income  per  unpaid  annual  work  unit;  and  C,  net  entrepreneurial  income  of 
agriculture. 
The agricultural income does not constitute the total income and the disposable income of 
farming  households:  in  addition,  to  a  share  of  agricultural  income,  in  aggregated  terms, 
households receive income from other non –agricultural sources: salaries, social benefits, rents, 
interests and capital gain.  
NA allows the calculation of disposable income of households and socio-professional 
sub-groups,  as  agricultural  households,  and  to  compare  income  between  them.  In  different 
accounts, it is possible to follows income from the generation of value added in the industry, to 
the primary and secondary distribution to institutional units.  
An example of a set of indicators to monitor agricultural income behaviour from different 
prospective and compared with other EU countries is the following: 
 
Figure 1. Income Indicators: Italy Compared to EU Countries 
Source: ISTAT – NA, EUROSTAT 
 
In the last 10 years, are evident the trend deviations among EU countries and different 
components of agricultural income; differences will be also evident between households groups 
0,60
0,70
0,80
0,90
1,00
1,10
1,20
1,30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Indicator A-IT
Indicator A-ES
Indicator A-DE
Indicator A-EU27
VA-IT
Support activities- IT
Disposable Income Households-IT Ancona - 122
nd EAAE Seminar 
"Evidence-Based Agricultural and Rural Policy Making” 
Page 5 of 6 
if the disposable income for agricultural households will be calculated (at the moment, official 
estimates are available only for the total of households). 
6.  CONCLUSIVE REMARKS  
National accounts are a powerful instrument for monitoring of  agricultural industry and 
for  evaluation  of  rural  development  policies  at  national  and  regional  levels.  First  of  all,  it 
accounts  of  the  fundamental  relationship  between  units  and  industries,  that  is  important  to 
follow macro and micro-economic phenomena. Secondary, allows an exhaustive monitoring of 
income from the generation of value added in in the industries to its primary and secondary 
distribution  to  the  institutional  units.  Finally,  a  careful  reading  trough  the  classification  of 
activities allow understanding emerging phenomena in the economy. 
National accounts division in ISTAT is particularly involved in this activity of monitoring 
and  evaluation  of  agricultural  and  rural  development  policies:  in  collaboration  with 
EUROSTAT,  participating  to  the  working  group  on  agricultural  accounts  and  producing 
indicators A, B and C, and other national Institutions, INEA and ISMEA, producing periodical 
reports and analysis. 
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Tracking Results in Agriculture and Rural Development in Developed Countries: Methodological Issues on a National Accounts Prospective

Tracking Results in Agriculture and Rural Development in Developed Countries: Methodological Issues on a National Accounts Prospective

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