Value of Farm Capital

Detailed information for 2019

Status:

Active

Frequency:

Annual

Record number:

3471

The value of capital estimates the market value of capital employed in the production of agricultural commodities, regardless of whether the capital is owned or leased.

Data release - May 26, 2020

Description

The value of farm capital, at July 1, is estimated annually. It represents the value of capital used in the production of agricultural commodities, regardless of whether the capital is owned or leased. The three components of farm capital are land and buildings, livestock and poultry, and farm machinery and equipment.

Agriculture and Agri-Food Canada and other federal and provincial departments use the data to develop, administer and evaluate agricultural policies and programs. Government, universities and the private sector also use the data for industry performance measurement and market development.

Reference period: July 1

Collection period: During the six-week period prior to release.

Subjects

  • Agriculture
  • Farm financial statistics

Data sources and methodology

Target population

All Canadian agriculture operations as defined by the Census of Agriculture.

Instrument design

This methodology does not apply.

Sampling

This methodology type does not apply to this statistical program.

Data sources

Data are collected from other Statistics Canada surveys and/or other sources.

Livestock and poultry inventory estimates are benchmarked every five years to the Census of Agriculture. Values per head are estimated by the Agriculture Division's Canadian Agricultural Financial Statistics Section in consultation with provincial statisticians and administrative data on market prices.

The value of land and buildings is benchmarked to the Census of Agriculture. Farm Credit Canada surveys farmland values every year. These data are used to calculate land and building values between censuses.

The value of machinery and equipment is benchmarked to the Census of Agriculture. Data obtained through the Industrial Product Price Index (record number 2318), Consumer Price Index (record number 2301), Alberta Farm Input Prices survey, Association of Equipment Manufacturers and The Farm Financial Survey (record number 3450) are used to calculate the values between census benchmarks.

Error detection

Livestock and poultry numbers, land and building values and machinery and equipment values are benchmarked to the Census of Agriculture and are based on commodity surveys which are subject to their own editing procedures during collection and processing stages. For instance, automated edits identify processing errors at the data-capture stage and subsequent editing identifies, among other things, errors, inconsistencies and extreme values in the captured data. Top contributors at the provincial level are often further analysed.

The administrative data used in the series are assessed based on historical and current trends, subject matter expertise, and information obtained through discussion with industry authorities. Much of the administrative data are already audited by the source organization. Any anomalies or inconsistencies detected are verified with the source, and, where necessary, adjustments are made to reconcile data with the conceptual framework of the capital value series.

The component estimates for capital value are verified for large year-to-year changes, analyzed for time series consistency, links to current economic events, issues arising from the source data, and for coherence with other sources.

Imputation

This methodology type does not apply to this statistical program.

Estimation

The value of livestock and poultry is estimated for each province, based on farm inventories and average farm values per head for cattle, hogs, sheep (Livestock Survey, record number 3460), hens and chickens, turkeys (Production of Poultry and Eggs, record number 5039), mink and fox (Annual Fur Farm Survey - Mink and Fox, record number 3426). Estimates of livestock numbers on farms are as of July 1. The values per head are estimated by the Agriculture Division's Canadian Agricultural Financial Statistics Section in consultation with provincial statisticians.

Provincial estimates of the total area of land are made by multiplying the previous year's estimate by the annualized change in the total area of land between the two previous censuses.

The value of farm land per acre is estimated for each province by multiplying the previous year's estimate by the change ratios obtained from Farm Credit Canada's survey of farm land values.

The values of automobiles and trucks are calculated for each province by multiplying the previous year's estimate by price and quantity change indicators. Year-over-year changes in the Consumer Price Index (CPI) for the purchase of passenger vehicles, published by Statistics Canada, are used as provincial price change indicators.

The value of other machinery is estimated using a constant dollar, perpetual inventory model which accounts for investment and depreciation. Other farm machinery is valued at the aggregate level only, as the information needed to prepare estimates by type of farm machinery is not available. Estimates of national investment are made by multiplying the previous year's estimate by a change indicator which is primarily derived from data on sales of farm machinery, excluding repair parts, by Association of Equipment Manufacturers (AEM) members. AEM is a trade association that provides services for companies that manufacture equipment for industries such as Agriculture. National investment is allocated provincially using proportions derived from the Census of Agriculture and the biennial Financial Farm Survey.

Quality evaluation

Data are analyzed for time series consistency, links to current economic events, issues arising from the source data, and respect to coherence. Anomalies are thoroughly investigated prior to release. The data that are used to calculate the value of farm capital are derived from various surveys and administrative sources. The majority of the data are already validated or audited by the source organizations. An interpretative analysis is conducted for the series on its own and as it relates to the other components.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Revisions and seasonal adjustment

Data are published twice each year, at the end of May and at the end of November. In May, preliminary estimates for the previous calendar year July 1 are released, and data for July 1 prior to the reference year is subject to revision. In November, data for the previous two years may be revised. Every five years a historical revision is done based on the results of the Census of Agriculture (record number 3438). The results of the latest intercensal revision, based on the 2016 Census of Agriculture apply to the period 2010 to 2016.

Data accuracy

No direct measures of the margin of error for the capital value estimates can be calculated. The quality of the estimates can be inferred from analysis of revisions and from a subjective assessment of the data sources and methodology used in the preparation of the estimates. In general, weaknesses in the source data are from either undercoverage or from inappropriate concepts and definitions. The data used to estimate capital value are quite varied in coverage, details, definitions and concepts and often these factors may not coincide with those required. They must be thoroughly examined and adjusted for consistency and coverage, using carefully designed estimating procedures.

Administrative data are generally compiled for an organization's own needs, and not for statistical purposes, however much of the data are already audited by the source organizations. The administrative agencies used are considered to be the best sources available, and data received from them is judged to be of very good quality, even in those circumstances where adjustments have been made to cohere with the conceptual frame work of the capital value series.

The processing procedures for the surveys used in the capital value series help minimize the occurrence of non-sampling errors such as errors introduced during editing, and response errors. Because they are based on a sample rather than the total population, they are subject to sampling errors. For more detail on data accuracy, please see Livestock Survey (record number 3460), Farm Financial Survey (record number 3450).

The results of the latest intercensal revision, based on the 2016 Census of Agriculture, decreased total farm capital value in 2016 by 5.8% at the Canada level. The value of land and buildings decreased by 7.3%. Revisions to the value of machinery and equipment resulted in a 7.0% increase. The value of livestock and poultry revisions decreased by 3.1%. For more detail on data accuracy, please see the results of the Census of Agriculture (record number 3438).

The following are some comments on the coverage of the capital value series.

The value of livestock and poultry estimates the market value of cattle, hogs, sheep, chickens, turkeys, mink and fox on farms. Estimates of livestock and poultry numbers are based on the following surveys: Livestock Survey (record number 3460), Production of Poultry and Eggs (record number 5039), Annual Fur Farm Survey - Mink and Fox (record number 3426). Based on the 2016 Census of Agriculture, the value of animals not included (horses, ponies, goats, rabbits, bee colonies, elk, buffalo, llamas, ostriches, etc.) is estimated to equal 5% of the published value of livestock and poultry. Horses and ponies account for 55% of the value of all animals not accounted for.

The value of land and buildings estimates the market value of real estate used for agricultural production. It includes the value of all property operated by the holding, whether owned or rented from others, but excludes the value of property rented to others. It also excludes the value of farm offices not located on farm holdings, even though they are assets used to produce agricultural products. The impact of this limitation on the data is considered to be insignificant.

Investment is estimated using the value of all sales of farm machinery and equipment by manufacturers as a proxy, and may be underestimated because:

1) farmers may purchase used machinery and equipment from outside the agriculture sector;

2) farmers may be making purchases of capital assets not classified as agricultural implements. Although the estimate includes the value of agricultural implements sold to non-farmers, such as cemeteries, parks, and commercial or private users, these sales outside the agriculture sector account for very little of the total sales, and the overall investment estimate is judged to be underestimated. The preliminary change indicator for investment is based on the year-over-year change of the value of the Association of Equipment Manufacturers (AEM) members' sales, which does not include the value of smaller, specialized manufacturers who are not AEM members. This change is assumed to be equivalent to the year-over-year change of the industry's sales.

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