Value of Inventory Change (VIC)

Detailed information for 2021

Status:

Active

Frequency:

Annual

Record number:

5227

The value of inventory change measures the value of the change in producer-owned inventories between the beginning and the end of the calendar year, for most major crops and livestock.

Data release - May 25, 2022; November 28, 2022 (revised data)

Description

The value of inventory change measures the value of the change in producer-owned inventories between the beginning and the end of the calendar year. The annual value of inventory change (whether positive or negative), along with farm cash receipts and income in kind, represents the gross value of agricultural production.

Many agricultural commodities, particularly grains, are produced in a given year and stored or held until they are marketed. In years of above-average production, farm inventories tend to be built up, only to be drawn down and sold when production returns to average or below-average levels.

Receipts from the sale of grains can be deferred and then cashed or liquidated in the next year. As a result of the methods used to derive cash grain receipts, which take into account the deferments and liquidations, an adjustment is made to the value of inventory change. This adjustment is required to take into account the grains delivered, but for which payment has not yet been received and for the subsequent payments (liquidations) when no grain was delivered.

The value of inventory change is estimated for durum wheat, wheat except durum, oats, barley, rye, corn, flaxseed, canola, soybeans, potatoes, tobacco (up until 2009), mustard seed, sunflower seed, lentils, canary seed, dry peas, chick peas, cattle, calves, sheep, lambs, hogs, and poultry (hens, chickens and turkeys). Deferred grain receipts and liquidations of deferred grain receipts, as mentioned above, are also included.

Value of inventory change data are used in the calculation of Total net farm income (record number 3473).

Reference period: Calendar year

Subjects

  • Agriculture and food (formerly Agriculture)
  • Farm financial statistics

Data sources and methodology

Target population

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

Instrument design

Not applicable.

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.

Data are estimated using data from the Census of Agriculture (record number 3438); Field Crop Reporting Series (record number 3401); Producer deliveries of major grains (table 32-10-0351-01); Potato Area and Yield Survey (record number 3446); Livestock Survey (record number 3460); Production of Poultry and Eggs (record number 5039); Farm Product Prices Survey (record number 3436); and supply and disposition balance sheets from the Farm cash receipts series (record number 3437).

Error detection

Macro editing is used. Editing is done at the provincial level.

Data for individual commodities in the value of inventory change series 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.

Because the value of inventory change is a component of net farm income, the resulting changes to the various measures of farm income are also analyzed for time series consistency, links to current economic events and coherence.

In addition, the source data are subject to their own quality-control procedures during collection and processing stages. For instance, computerized checks 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 Farm Income series.

Imputation

This methodology type does not apply to this statistical program.

Estimation

The value of inventory change series is an estimate of the value of the change in producer-owned inventories of agricultural products during a calendar year. The physical change in inventories is valued at weighted average annual market prices in the case of crops and at simple average annual prices for livestock commodities. This simple average is based on the value per animal at January 1, July 1 and December 31 of each year.

In the case of crops, supply and disposition balance sheets are used to establish the beginning and ending inventories on a calendar year basis. Inventories at the end of each crop year and production levels for each crop are based on producer surveys. Monthly disposition items, including marketings, home consumption, feed, waste and dockage, and seed use, are obtained from various sources.

Physical inventory levels at calendar year-end are established for each crop by adding estimates of crop year beginning inventories to estimates of production and then deducting estimates of monthly disposition.

Physical inventory levels for livestock items are established from the quinquennial Census of Agriculture. Between Censuses, semi-annual producer surveys are used to derive inventory levels.

The value of inventory change is adjusted to account for the deferment and liquidation of grain receipts. This adjustment consists of adding to the value of inventory change an amount equal to that shown for deferred grain receipts. Similarly, an amount equal to the value of liquidations is deducted from the value of inventory change.

Quality evaluation

Estimates of the value of inventory change are prepared using both administrative and survey data. These data reflect typical Statistics Canada standards for quality assurance and, therefore, their quality is considered to be good. However, it is important to note that these data are subject to the general sampling and non-sampling errors present in all types of survey and administrative data.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects that 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

Annual value of inventory change data are published twice each year, at the end of May and at the end of November. At each release, data for the previous two calendar years are subject to revision. Every five years a historical revision is done based on the results of the Census of Agriculture (record number 3438).

Data accuracy

Data accuracy measure is a numeric value, or symbol corresponding to numeric values, which quantifies or summarizes the likely magnitude and important sources of differences between the published data and the quantities that the survey was designed to estimate.

No direct measures of the margin of error in the value of inventory change 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.

Value of inventory change is estimated using both administrative and survey sources of data. Where necessary, data are adjusted to ensure conceptual consistency with the receipts series. Much of the data obtained from administrative sources have been summarized from the financial transactions of individual producers. These summarized data are often subject to audit by independent professional accountants and/or are used to make payments to individual producers. As a result, the quality of these data is considered to be very good. The survey data used in the receipts series reflect typical Statistics Canada standards for quality assurance and, therefore, the quality of these data is considered to be good.

However, it is important to note that the value of inventory change data is subject to error. Administrative data may contain non-sampling error such as keying mistakes, while survey data may suffer from both non-sampling and sampling error. Users should also note that the quality of individual estimates may not be consistent between commodities or between provinces because the data sources and their quality may vary.

Estimates of the value of inventory change can also be very volatile. Inventory change can be either positive or negative, depending on whether inventories have increased or decreased. Revisions to any of the supply or disposition items will have a direct effect on inventory levels, and even small revisions could change the sign on inventory change. Furthermore, calendar year inventory levels are often derived residually. As a result, the value of inventory change series is very sensitive and often subject to substantial revision.

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