Measuring Agriculture’s Contribution to
Gross Domestic Product
Paul
Sundell
Each issue of Amber Waves
includes a set of indicators relevant to the farming,
rural, natural resource, and food sectors of the
U.S. economy. Among those indicators are two measures
designed to capture agriculture’s contribution
to Gross Domestic Product (GDP). Recently, a new
methodology for calculating those measures was introduced
in Amber Waves. Under the new methodology, the scope
of the agriculture measure is essentially the same.
For the measure that captures agriculture and related
industries, however, the scope has narrowed with
the new methodology.
Until September 2005, the measures
published in Amber Waves—food and
fiber sector share and farm sector share—came
from ERS’s food and fiber system (FFS) data
series, which was discontinued in 2002. The current
measures, introduced in September 2005, are derived
using value-added industry estimates from the Bureau
of Economic Analysis (BEA) National Income and Product
Accounts. The value-added or net output of an industry
is its gross output less the value of inputs obtained
from outside the industry. The new measure defines
the share of GDP attributed to agriculture and related
industries more narrowly than the previous measure
(which was called the food and fiber sector share).
Specifically, agricultural and
related industry sector output is defined as the
sum of the valued-added outputs of the following
industries: farms, forestry, fishing, hunting, processed
food, beverage, and tobacco products, textile and
leather apparel, restaurants and drinking establishments.
Some value-added payments reflect agricultural activities
generated by nonagricultural demands. These industries
were chosen to be included in the measure because
of the key role of agricultural inputs in these
industries and the availability of industry value-added
data. BEA computes industry value-added estimates
by using the actual gross output levels of each
sector and the input output relationships within
and across sectors.
In 2004, agriculture and related
industries had a 4.8 percent value-added share of
nominal GDP, consisting of a 1.0-percent share for
farms; a 1.4-percent share for processed food, beverage,
and tobacco products; a 1.8-percent share for food
service and drinking establishments; a 0.4-percent
share of textile and leather apparel; and a 0.3-percent
share for forestry, fishing, and hunting.
For
a detailed discussion of FFS methodology see
. . . |
| Measuring the Economywide
Effect of the Farm Sector: Two Methods,
by William Edmondson, Mindy Petrulis, and
Agapi Somwaru, TB-1843, USDA, Economic Research
Service, July 1995.
The
Food and Fiber System: Contributing to the
U.S. and World Economies, Kathryn
L. Lipton, William Edmondson, and Alden Manchester,
AIB-742, USDA, Economic Research Service,
July 1998.
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