***Restructuring the System of Agricultural Statistics in Hungary***

***Eva Laczka, PhD.***

**1. Agriculture in Hungary**

Due to its natural conditions and historical traditions agriculture and
food industry have always played a definitive role in the economy of
Hungary. The cultivated agricultural land area is 63 percent of the
total land area, while 6 percent of the active earners are employed in
agriculture. The share of agriculture in the GDP is about 3 percent, and
that of the food industry is more than 4 percent. According to the Farm
Structure Survey 2003 7600 agricultural enterprises and more than
766 000 households were engaged in some kind of agricultural activity.

In the recent years fundamental changes have taken place as regards the
ownership and the structure of agriculture. In the earlier years a
relatively small number of large-scale agricultural and food processing
enterprises existed. In the years of transition a large number of small
and medium size farms were established on which hardly any data were
available. This change in ownership structure significantly impacted the
statistical tools used for the collection of data on agricultural
production.

**2. Sharing of efforts in the field of agricultural statistics**

Apart from the Hungarian Central Statistical Office (HCSO) the key user
and significant producer of agricultural statistics is the Ministry of
Agriculture and Rural Development (MARD). Under the effective Act on
Statistics HCSO has the main responsibility for agricultural statistics
within the frame of the official statistical service. MARD gathers data
to satisfy its own information needs changing from year to year. In
addition to the operational information yield estimates are made and
data are collected on the output, income and costs of production. MARD
is also responsible for forestry and fishery statistics and remote
sensing.

In 1999 the leaders of the two organisations signed an agreement on
sharing the efforts, which has been effective since that date (Annex 1).

**3. Impact of the structural changes**

The Hungarian statistical service has been collecting agricultural data
since 1867. Since 1895 agricultural censuses were carried out on seven
occasions, the latest ones taking place in 2000 and 2003. Agricultural
censuses were followed in 1959 by the nationwide census of orchards, in
1960 by the census of agricultural machines and in 1965 by the census of
vineyards. In 2001 another survey of orchards and vineyards followed the
agricultural census.

In each case regular annual surveys were built on the results of the
preceding agricultural census. The key feature was that observations
were restricted to the legal forms of farming that were deemed crucial
in agricultural production; accordingly only the state farms and
cooperative farms were obliged to submit regular statistical reports in
the fifties, sixties and seventies. In these years small producer farms
were respondents of agricultural censuses only, and the reports of
large-scale enterprises included their key figures.

Considering the fact that - in contrast to land use - animal breeding
was not restricted at that time, the increasing livestock of households
became subject of statistical surveys starting from 1950. At the
beginning data collection was carried out in the form of censuses, and
from 1957 regular sample-based surveys covered the livestock of small
producer farms.

The nineties brought a fundamental change in the social and economic
environment, followed by changes in statistics. Sample surveys of
private farms first covered crop production and later land use as well
(see Annex 2).

These were the years when - facing the challenge of the system of
agricultural statistics of the European Union - the Hungarian
statisticians realized the need for the revision of the agricultural
data collection system. In 1999 the revision and harmonization with the
system of agricultural statistics of the EU of the Hungarian
agricultural statistics was completed. The Economic Accounts for
Agriculture (EAA) were first compiled. The data input requirement of the
EAA impacted some changes of the earlier system. Owing to many years of
effort the current Hungarian agricultural statistics system is almost
fully harmonized.

Every year HCSO conducts more than 20 surveys falling into the two
distinct groups of agricultural surveys, one is the group of surveys to
meet the physical data needs, the second one to meet the data needs of
the Economic Accounts for Agriculture (see Annexes 3 and 4).

A general characteristic of the surveys is that all agricultural
enterprises (legal entities) are obliged to report, whereas the private
farms (households) report as part of a sample survey. In the case of
private farms the sample selected is typically 5 per cent of the private
farms. Agricultural enterprises report by mail, whereas private farms
are visited by surveyors. The frequency and scope of the surveys is
compliant with the relevant regulations of the European Union.

The production (output) surveys comply with the required accuracy level
however the surveys linked with the Economic Accounts for Agriculture
require substantial expert estimation, which is along the lines of the
international practice.

To sum up, the changes in the system of agricultural statistics impacted
the topics of surveys to lesser degree, and manifested rather in the
increasing number and rolling out to private farms of sample surveys of
the agricultural activity of the households.

**4. Impact of the National Accounts**

With respect to the National Accounts - though this term was unknown at
that time - Hungarian statistics looks back to over 100 years of
history. The first attempt to define and compile the value of national
income and national wealth in Hungary was made in 1855. In the middle of
the 1930s the compilation of national income formed part of the official
work program of the Hungarian Central Statistical Office.

The 1950s opened a new era in the preparation of National Accounts of
the COMECON (Council of Mutual Economic Assistance) member countries,
when the national balances were prepared in material terms. In the 1960s
a unique system of accounting was created in Hungary that equally served
the needs of the tables of the Material Production System (MPS) and the
calculation of indices under the UN system of National Accounts (SNA).
Owing to these efforts Hungarian statistics later made the transition to
the SNA of a market economy without any major shocks.

The introduction of SNA at the beginning of the 1990s precipitated a
number of fundamental changes in the Hungarian statistical system, such
as the replacement of earlier balances with the system of accounts,
implementation of the new classification by NACE and sectorial breakdown
compliant with the ESA account system of the EU. Practically all these
activities were completed without any additional surveys and resources.
At the moment HCSO has reached the limits of its internal reserves,
therefore any new development and upgrades are only possible if
additional funding is available.

As a result of methodological development quarterly GDP calculations
were launched in 1996; in the same year the first regional GDP
calculations were made for year 1994. These accounts are now prepared
regularly. In these development efforts existing databases and surveys
were used.

Up until the beginning of the 1970s the agricultural accounts were
prepared at the Department of National Accounts of HCSO. The data in
physical terms collected by the Department of Agriculture were passed on
to the Department of National Accounts for processing. The then existing
sources of data satisfied the demand. The most crucial distinction in
comparison with the current practice is that data were collected from
the reports of the then dominating state farms and cooperative farms,
including those relating to the agricultural activity of households.

From the beginning of the 1970s the Department of Agriculture
transmitted to the Department of National Accounts the gross production
value (GPV)[^1] of agricultural products. The Department of Agriculture
prepared estimates on the non-agricultural activity of farms used also
in compiling the agricultural accounts. There was no need to deploy new
surveys since calculations of the gross production value have been
prepared at the Department of Agriculture since 1938. The reports of
large-scale farms satisfied the data needs.

**5. Impact of Economic Accounts for Agriculture (EAA)**

A quantum leap took place in 1999 when the Section of Agricultural
Accounts was established under the aegis of the Department of
Agriculture. The other responsibility of this Section is to carry out
surveys on price statistics and publish the results. Since 1999 the
Department of Agriculture has been publishing annual EAA, and in 2003
the regional EAA was compiled and published, too.

Due to the long-standing tradition of meticulous detail of surveys on
agricultural output there was no need to supplement the available data
to obtain production figures under the definition of gross output. Still
EAA has had an unparalleled impact on the system of surveys.

New survey(s) were required to cover agricultural services, the share of
which in agricultural output has been growing.

The output of non-agricultural secondary activities is calculated partly
on the basis of data borrowed from other sources to supplement the
available ones such as industrial statistics, and partly by the
multi-purpose design of surveys implemented under the EU harmonization
such as dairy statistics.

The income- and capital accounts of the system of accounts were first
compiled in 2001 using the input from slightly modified existing surveys
such as rents of farm land, or through access to administrative sources
such as agrarian subsidies, interests, and also making use of ad-hoc
surveys such as consumption of fix capital.

**6. Impact of the characteristics of Agriculture**

The farm structure of the new Member States of the European Union
significantly differs from that of the majority of the EU-15 Member
States. This difference is mainly attributed to the exceedingly large
number of farms producing for family consumption giving rise to a
situation whereby units that otherwise do not qualify as farms in
economic terms are covered in these countries by the statistical
observations. Speaking about the restructuring of the agrarian
statistical system one should remember these peculiarities as well. So
how do these peculiarities manifest themselves?

**6.1. The farm concept in statistical terms**

The mission of agricultural statistics is to offer the most accurate
possible representation of agriculture and to cover by observations
almost the entire agriculture of a given country. This can only be
achieved if the scope of observation is defined, i.e. what units should
be included in the survey. In a way, the scope of the survey is
determined by the type of activity and legal form of farming, yet the
size of this activity needs to be determined inevitably for statistical
purposes. There is a need for a limit to sort out entities engaging in a
given activity that need not be covered by the observation. This limit
in statistics is the threshold value; entities above the threshold
constitute population of agricultural censuses and surveys, and they are
defined as farms in statistical terms. The threshold value defines the
farm concept in statistical terms practically on the basis of the size
of parameters of the given activity. Now let us take a look at the
recommendations and standards of international organizations relating to
censuses.

## 

## 6.1.1. Farm concept in the FAO World Censuses

With the exception of the period between 1953 and 1968 Hungary has been
the member of the Food and Agriculture Organization of the United
Nations (FAO), therefore FAO has played a crucial role in the
international relations of Hungarian agricultural statistics for many
decades. Of the six censuses conducted so far five were completed in
accordance with the methodical recommendations of FAO.

The farm concept by FAO recommendations defines the activity to be
observed on the basis of the international activity nomenclature. In
contrast to the relevant standards of the European Union the FAO
methodology excludes from the scope of observation entities involved
exclusively in agricultural services.

The criteria of the FAO farm concept highlights the comprehensive
statistical observation of the output of agriculture. No suggestion has
ever been set forth to restrict the scope of surveys to market oriented
farms; moreover, the farm concept applied insists on setting the
threshold value to the lowest possible level. The concept of the farm is
practically identical in the recommendations of FAO and the European
Union, both in technical and economic terms.

### 6.1.2. Farm concept in the EU Farm Structure Surveys

The key pillar of the Community's agricultural statistics is the system
of Farm Structure Surveys, in which the farm concept required is
defined. By the stipulations of the relevant regulations the farm shall
mean a single unit, both technically and economically, which has a
single management and which produces agricultural products.

The surveys shall cover:

-   agricultural holdings where the agricultural area utilized for
    farming is one hectare or more,

-   agricultural holdings where the agricultural area utilized for
    farming is less than one hectare, if they produce a certain
    proportion for sale or if their production unit exceeds certain
    physical thresholds.

However, Member States which use a different survey threshold commit
themselves to fixing this threshold at a level excluding only the
smallest holdings which together contribute 1 percent or less to the
total Standard Gross Margin (SGM).

Accordingly no universal threshold value -- or farm concept -- mandatory
for all Member States is stipulated in the regulations; it is flexible
enough to allow all the Member States to define national threshold
values in accordance with the national characteristics of agriculture,
provided such definition guarantees the requisite coverage.

The suggestion made in May 2003 is a marked shift towards the farm
structure of the acceding countries, whereby the future Farm Structure
Surveys shall cover

-   agricultural holdings where the agricultural area utilized for
    farming is one hectare or more,

-   agricultural holdings producing an SGM value equal to or exceeding
    one European Size Unit (ESU).

According to the above definition holdings cultivating an agricultural
area smaller than one hectare and those producing an SGM value below one
ESU should be termed „small farms". By no means has it meant any
exclusion of the small farms from the scope of observation; they are
rather distinguished from the larger ones, which also qualify as farms
in economic terms.

The new proposal is expected to be applied the first time in the Farm
Structure Survey 2005; until that time the suggestion will be on the
agenda of a number of working meetings. It is topic of the Future of
Agricultural statistics Task Force as well. At the May 2003 meeting the
suggestion was rather powerfully welcome; only certain parts of the
suggestion were disputed. One of the representatives of a Member States
disputed the component of the suggested threshold value equal to 1
hectare agricultural area, because in her view the production value
achievable on 1 hectare agricultural area may equally be much lower or
much higher than 1 European Size Unit.

Though the adoption of this definition is a future task still it is a
valid statement that the farm concept (threshold value) applied in
agricultural statistics depends from the farm structure and level of
development of the statistical system of the given country.

**6.1.3. Farm concept in statistical terms applied in Hungary**

Starting from the agricultural census of 1972 the concept of the
agricultural farm has been defined in Hungarian statistics as a
combination of physical indicators. The farm concept of censuses
recurring at a ten-year frequency has only changed marginally in the
past 30 years to assure long-term comparability of the data.

**Thresholds used in the Censuses of 1972-2003**

  -------------------------- ---------- ---------- ---------- ---------- ----------
  **Description**            **1972**   **1981**   **1991**   **1994**   **2003**

                             **year of                                   
                             the                                         
                             census**                                    

  Total arable land area,    0.15       0.15       0.15       0.15       0.15
  hectare                                                                

  Orchard, vineyard, garden, 0.08       0.08       0.08       0.08       0.05
  hectare                                                                

  Cattle, heads              1          1          1          1          1

  Pig, heads                 1          1          1          1          1

  Horse, heads               1          1          1          1          1

  Sheep, heads               1          1          1          1          1

  Poultry, heads             50         50         50         50         50

  Bee colonies, pc           20         20         25         25         5

  Rabbit, heads              20         20         25         25         25

  Other small animals, heads \-         \-         25         25         25
  -------------------------- ---------- ---------- ---------- ---------- ----------

The threshold value applied selected a population in 2003 including 60
per cent of farms producing for family consumption and a 12 per cent
producing for the market. The share of units producing both for family
consumption and for the market was less than 30 per cent (28%).

**6.2. The farm concept in economic terms**

In the reference literature two fundamental types of organizations are
discerned, i.e. households and businesses. Households produce to cover
their own needs; businesses strive to make profit. The objective of the
business is to earn profit exceeding the dollar value of investments;
therefore they manage their operations in a way essentially differing
from that of the households. Though the two basic types of units do not
exist in a "chemically pure" form, the definition of the farm concept in
economic terms can be interpreted as the borderline between production
for family use and production for the market.

On the basis of my analyses I propose to

-   the statistical farm concept must be defined as a combination of
    physical indicators already used (in Hungary) in year 2003, because
    this method of the survey is easily manageable. At the same time the
    farm concept in economic term must be defined by a value indicator,
    such as ESU, GPV

-   Economic organizations can be qualified as farms -- in economic
    terms - by their legal form and type of activity.

-   in the case of private farms the above criteria are complemented by
    the volume of activity, too. Private farms qualify as farms in
    economic terms only if they reach a certain economic size. The
    definition of the farm concept in economic terms in the case of
    private farms means the demarcation of the line between production
    for family consumption and for selling the surplus with a purpose to
    earn income.

-   I suggest to accept for the Hungarian private farms the 1 ESU (Gross
    Production Value = 750 thousand HUF) value of the agricultural
    activity as the threshold (lower limit) of the economic farm
    concept. The average production value of farms, the specific product
    indicators, the per capita consumption values and the attributes of
    the clusters of farms describing the objective of production prove
    that this proposal is acceptable. In my view private farms that
    reach or exceed 1 ESU economic size must be regarded as farms in
    economic terms in the future.

**Conclusion**

The quality of the system of agricultural statistics depends on user
needs. The translation of user needs into the terms under the
agricultural statistical system is a relatively simple task in the case
of physical data.

The situation is the opposite when speaking about the Economic Accounts
for Agriculture under the National Accounts. In these cases information
needs must be integrated into the system of agricultural statistics the
majority of which is incorporated practically "unnoticeably" into the
system of accounts.

The change of the statistical units calls for fundamental changes, and
such changes take place in the case of economic and social
transformation. In the majority of the Central and East European
countries -- in Hungary as well - the small number of large enterprises
was replaced by the large number of households.

The responsibility of agricultural statisticians is to develop
cost-effective systems to satisfy the information needs. The solution is
to roll out the use of sample surveys and administrative sources,
provided such sources are up to the professional criteria of statistics.

The methodology development should also respect the peculiarities of
national farm structure. A Hungarian example of this approach is given
in the definition of farm concept in statistical and economic terms.

### [Annex 1]{.smallcaps}

### 

### [division of labour between HCSO and MARD, the harmonisation of agricultural statistics according to the chapters of the compendium]{.smallcaps}

**(June 2004)**

+-----------+-----------------------+--------------------+------------+
| # **F     | ##                    | ##                 | ##         |
| orm of**  |                       |                    |            |
|           | ##                    | ## Gent            | ## A p     |
| #  **reg  | Juridical obligations | lemen's agreements | urely volu |
| ulation** |                       |                    | ntary base |
|           |                       |                    |            |
| **Level   |                       |                    |            |
| of**      |                       |                    |            |
|           |                       |                    |            |
| **harmon  |                       |                    |            |
| isation** |                       |                    |            |
+-----------+-----------------------+--------------------+------------+
| **Fully   | **612. Remote         | **611. Land use    |            |
| har       | sensing**             | statistics**       |            |
| monised** |                       |                    |            |
|           | **612. LUCAS**        | **633.             |            |
|           |                       | Agricultural price |            |
|           | **621. Farm structure | statistics**       |            |
|           | survey**              |                    |            |
|           |                       | **634.             |            |
|           | **621. Community      | Agricultural       |            |
|           | typology,**           | labour input       |            |
|           |                       | (ALI)\             |            |
|           | **622. Eurofarm       | statistics**       |            |
|           | database**            |                    |            |
|           |                       | **642. Supply      |            |
|           | **623. Statistics on  | balance sheets for |            |
|           | viticulture**         | crop\              |            |
|           |                       | products**         |            |
|           | **631. Economic       |                    |            |
|           | accounts for          | **643. Harvest     |            |
|           | agriculture**         | forecast           |            |
|           |                       | (agromet)**        |            |
|           | **624. Statistics on  |                    |            |
|           | fruit growing**       | **653. Supply      |            |
|           |                       | balance sheets for |            |
|           | **641. Crop           | animal\            |            |
|           | production            | products**         |            |
|           | statistics**          |                    |            |
|           |                       |                    |            |
|           | **651. Livestock      |                    |            |
|           | statistics**          |                    |            |
|           |                       |                    |            |
|           | **652. Animal         |                    |            |
|           | products statistics** |                    |            |
|           |                       |                    |            |
|           | **694. Aquaculture    |                    |            |
|           | statistics**          |                    |            |
|           |                       |                    |            |
|           | **FADN**              |                    |            |
+-----------+-----------------------+--------------------+------------+
| **Partly  | **681. Forestry       | **632. Income of   | **635.     |
| har       | statistics**          | the agricultural\  | SPEL**     |
| monised** |                       | households         |            |
|           |                       | sector**           | **661.     |
|           |                       |                    | Food       |
|           |                       | **654. Fodder      | industry** |
|           |                       | balance sheets**   |            |
+-----------+-----------------------+--------------------+------------+
| #         |                       |                    |            |
| ### New o |                       |                    |            |
| bjective  |                       |                    |            |
+-----------+-----------------------+--------------------+------------+

**HCSO, MARD, Co-operation with main responsibility of HCSO,
co-operation with main responsibility of MARD**

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Annex 3

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height="6.343055555555556in"}

[^1]: ^\*^ GPV is a value estimated on the basis of average prices and
    yields rather than the actual output of the private farms. The
    product balances form the basis of the calculations. The product
    balance is a report on quantities and values including the
    production, export and import of agricultural products,
    procurements, sales, captive use, losses and changes in the
    inventory whether or not the output of the farm in question is below
    or above the threshold value.