ICELAND: ESTIMATES OF SUPPORT TO AGRICULTURE

Contact person: Osamu Kubota

Email: osamu.kubota@oecd.org 

Tel : (33-1) 45 24 95 35 Fax :(33-1) 45 24 18 90

DEFINITIONS AND SOURCES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e. all agricultural commodities produced in the country. Definitions of basic data sets refer to the specific name of the programmes with specific sources indicated in square brackets. For the Producer Support Estimates (PSE) and Consumer Support Estimates (CSE), the description of policy measures indicates the commodities covered by the measures, as well as the method of allocation of the corresponding transfers among commodities. "MPS commodities", which vary across countries, are those for which market price support is explicitly calculated in Table 2.

Market Price Support (MPS) and Consumer Support Estimates (CSE) by commodity in Table 2 are calculated for the following commodities: milk, beef and veal, pigmeat, poultry meat, sheep meat, wool, and eggs. Definitions are provided only for basic data sets from which all the other data sets in this table are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.

Producer Support Estimates (PSE) by commodity in Table 3 are calculated only for commodities produced in the country within a common set of commodities (wheat, maize, barley, oats, rice, sorghum, soybeans, sunflower, rapeseed, sugar, milk, beef and veal, pigmeat, poultry meat, sheep meat, wool, and eggs), provided that the value of production of that commodity exceeds 1 per cent of the total value of production in the country concerned. All data sets in the calculation of PSE by commodity come from Tables 1 and 2 where definitions are included.

Definitions of the indicators, criteria of classification of programmes included, and methods of calculation can be seen in OECD, Methodology for the measurement of support and use in policy evaluation [http://www.oecd.org/agr/policy].

Table 1. ICELAND: Total Support Estimate

Definitions:

I. Total value of production (at farm gate): Total agricultural production valued at farm gate prices, i.e. value (at farm gate) of all agricultural commodities produced in the country [1].

1. Of which share of MPS commodities (%): Share of commodities for which MPS is explicitly calculated (in Table 2) in the total value of agricultural production.

II. Total value of consumption (at farm gate): Consumption of all commodities domestically produced valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x100].

1. Of which MPS commodities: Sum of the value of consumption (at farm gate prices) of the MPS commodities as indicated in Table 2.

III.1 Producer Support Estimate (PSE): Associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].

A. Market Price Support: On quantities domestically produced (excluding for on-farm feed use -- excess feed cost) of all agricultural commodities, estimated by increasing the MPS for the MPS commodities according to their share in the total value of agricultural production [(A.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the MPS (net of price levies and excess feed cost) for the MPS commodities as calculated in Table 2.

B. Payments based on output

1. Based on unlimited output

Refund of feed levies: payment per tonne on quantities sold of pigmeat, poultrymeat and eggs to compensate for taxes on imported feed.

2. Based on limited output

Disaster payments: Budgetary expenditure on payments to farmers to compensate for production loss due to disasters or accidents in the sheep and cattle industries.

Deficiency payments: payment per tonne of milk and sheepmeat (1986-1995) produced under quota limits.

C. Payments based on area planted/animal numbers

1. Based on unlimited area or animal numbers

2. Based on limited area or animal numbers

Diversion payments: payments per head under the Agricultural Productivity Fund for leasing milk and sheepmeat quotas. Abolished in 1994.

D. Payments based on historical entitlements

1. Based on historical plantings/animal numbers or production

Payments for sheepmeat: payments per tonne on 1986-88 sheepmeat quota level.

2. Based on historical support programmes

E. Payments based on input use

1. Based on use of variable inputs

Grants: Half of the budgetary expenditures on ad hoc contributions for purchasing various agricultural inputs, including unpaid loans for purchasing variable inputs, allocated to commodities according to their share in the total value of production [the other half is included under E.3. Based on use of fixed inputs].

Fertiliser payment: Budgetary expenditures on payment to the state-owned fertiliser plant for covering costs associated with reduced prices to farmers. Allocated to commodities according to the shares estimated by the Ministry of Agriculture.

Feed payments: budgetary expenditures on grants and loan write-offs to feed plants for covering costs associated with reduced prices to farmers. Allocated to commodities according to the shares estimated by the Ministry of Agriculture.

2. Based on use of on-farm services

Labour replacement: Budgetary expenditure to finance the relief service, allocated to commodities according to the shares estimated by the Ministry of Agriculture.

Advisory: Budgetary expenditure on advisory services provided by the Agricultural Society of Iceland. Allocated to commodities according to the shares estimated by the Ministry of Agriculture

Pest and disease control: Budgetary expenditure to compensate sheep farmers who have been ordered to slaughter their sheep flock due to disease prevention measures.

3. Based on use of fixed inputs

Grants: Half of budgetary expenditures are on ad hoc contributions for purchasing various agricultural inputs, including expenditures on unpaid loans for purchasing of fixed inputs, allocated to individual commodities according to their share in the total value of production [the other half is included under E.1. Based on use of variable inputs].

Land and animal breed improvement: Payments to farmers for land improvement and breeding programmes, allocated to commodities according to the shares estimated by the Ministry of Agriculture.

Infrastructure: Budgetary expenditure by the Agricultural Productivity Fund to promote the development of on-farm projects to reduce the reliance on traditional agriculture, allocated to commodities according to the share estimated by the Ministry of Agriculture.

F. Payments based on input constraints

1. Based on constraints on variable inputs

2. Based on constraints on fixed inputs

3. Based on constraints on a set of inputs

G. Payments based on overall farming income

1. Based on farm income level

2. Based on established minimum income

H. Miscellaneous payments

1. National payments

2. Sub-national payments: Not available.

III.2 Percentage PSE [(III.1) / ((I) + (Sum of B to H)) x 100]

III.3 Producer NPC: For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / border price (also at the farm gate).

III.4 Producer NAC [1 / (100 - (III.2)) x 100]

IV. General Services Support Estimate (GSSE): Total budgetary expenditure to support general services provided to agriculture [ Sum of I to O] .

I. Research and development

Budgetary expenditure on research and development institutions, mostly through the Agricultural Research Institute.

J. Agricultural schools

Budgetary expenditure to finance the operation of the agricultural colleges.

K. Inspection services

Budgetary expenditure to finance part of veterinary services.

L. Infrastructure

Budgetary expenditures under the Agricultural Productivity Fund providing funds in order to promote the development of off-farm infrastructure or programmes that will reduce the reliance on traditional agriculture.

M. Marketing and promotion

Budgetary expenditure under the Agricultural Production Board to finance various marketing projects and promotion activities (especially on dairy products and sheepmeat), plus expenditure on meat grading until 1992.

N. Public stockholding

Budgetary expenditure to finance inventory costs and cost of storage mainly through covering interest expenses.

O. Miscellaneous

1. National expenditure

2. Sub-national expenditure

V.1 Consumer Support Estimate (CSE): Associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed -- excess feed cost. [Sum of P to S; when negative, the amounts represent an implicit tax on consumers].

P. Transfers to producers from consumers: Associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the values of transfers from consumers to producers associated with market price support for the MPS commodities as calculated in Table 2.

Q. Other transfers from consumers: Transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the transfers to the budget associated with market price support on the quantities imported of the MPS commodities as calculated in Table 2.

R. Transfers to consumers from taxpayers

Refund of feed levies: Budgetary expenditure to processors of maize, other grains and oilseeds to reduce their wholesale prices, allocated to commodities according to the shares estimated by the Ministry of Agriculture.

Consumer aids: Granted at the wholesale level for milk, sheepmeat, beef (until 1993), and for wool, allocated to commodities according to the shares estimated by the Ministry of Agriculture.

Consumer levies: Levies paid on livestock products at the wholesale level to the Agricultural Investment Fund to finance payments to farmers, allocated to commodities according to the shares estimated by the Ministry of Agriculture.

Interest concessions: Subsidised loans from the Agricultural Investment Fund to processors of livestock products under the price guarantee regime.

S. Excess Feed Cost: Associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Table 2.

V.2 Percentage CSE [(V.1) / ((II) - (R)) x 100]

V.3 Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).

V.4 Consumer NAC [(1 / (100 -(V.2)) x 100]

VI. Total Support Estimate [(III.1) + (IV) + (R)] and [(T) + (U) - (V)]

T. Transfers from consumers [(P)+(Q)]

U. Transfers from taxpayers [(III.1)-(P)+(IV)+(R)]

V. Budget revenues [(Q)]

 

Sources:

Icelandic Agricultural Information Service, Icelandic Agricultural Statistics, Reykjavik.

Agricultural Economic Institute, Agricultural Accounts, Hvanneyri.

National Economic Institute, Agriculture 1945-1989, Reykjavik.

 

Table 3. Producer Support Estimate by commodity

 

Definitions and Sources: see Tables 1 and 2 above.