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Year XV-No 81

April/June 2011

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Capital Productivity Using the Brazilian Agribusiness Censuses

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Capital Productivity Using the Brazilian

Agribusiness Census

Carlos Feu Alvim

Chief-Editor of the e&e periodical

Claudio David Dimande

PhD. PENO/COPPE/UFRJ

Abstract

Approximations to capital productivity using data from IBGE Agribusiness Census were made. In order to calculate capital productivity the aggregated values which are not available in the Census were substituted by the production values because they are a constant fraction of the agribusiness GDP and this proved to be an appropriate measurement. It was concluded that the capital productivity behavior in the 1970-2006 period has decrease considering the land factor or not. 

1.    Introduction

In a previous note published in the No. 77 issue of the Economy and Energy periodical, capital productivity in the agribusiness sector was calculated using the census of the sector that is published every five years on the average by the Instituto Brasileiro de Geografia e Estatística (IBGE). These censuses present data regarding capital stock and the production value for different sub-sectors or activities.

The objective of the present article is to calculate capital productivity in some agribusiness sub-sectors. Since the considered activities have had a large variability along the censuses, it was necessary to group them in three large sets, namely: agriculture (that includes production of both temporary and permanent farming and part of the agribusiness), husbandry (that includes cattle breeding, breeding of other animals and part of agribusiness) and others (that includes horticulture, flower growing, silviculture and other special ends).

The Brazilian agribusiness censuses contain data about the capital stock (K) of the agribusiness enterprises. In order to calculate the capital productivity, besides de capital stock it is necessary to have data about the aggregated value (AV) which is not directly available. Nevertheless, the agribusiness product itself can be used to calculate the global or physical productivity.

In the evaluation of the capital productivity behavior of the agribusiness sector (as a whole or by activity) it was used as a proxy of the AV/K ratio the PV/K ratio where PV is the production value that is directly available in the censuses. This is based on the hypothesis that the aggregated value would be an approximately constant fraction of the production value.

In the capital productivity two hypotheses were considered, namely including or not the land value in the capital stock. This distinction is due to the special characteristic of the land as a production factor and as a value reserve.

This article is organized in the following way: in section 2 the product is used as a proxy of the aggregated value, in section 3 the activities are grouped, in section 4 the capital stock, the production value and the aggregated value are presented, in section 5 the production/capital stock and capital productivity are examined and finally in section 6 the bibliographic references are listed.

2.    Product Value Used as a Proxy of the Aggregated Value

Table 1 presents the production value of the enterprises included in the census and the agribusiness product of Brazil in the years when the censuses were made. When the product value/sector GDP (that represents the aggregated value) ratio is analyzed it is noted that there is a behavior with no variability, almost constant, along the 36 years that were examined.

Table 1: Value of Production and Agribusiness GDP in Brazil

PRODUCTIVITY

1970

1975

1980

1985

2006

Units

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzados)

(Thousand Reais)

Production Value (PV)

24.967.914

139.106.512

1.542.298.296

196.702.092

143.821.310

Agribusiness GDP (AV)

20.156.950

107.349.000

1.232.110.000

148.715.095

111.566.000

AV/PV

0,81

0,77

0,80

0,76

0,78

The behavior of this ratio justifies the adoption of PV/K as proxy of the AV/K capital productivity in order to study its behavior along the years.

It should be taken into account that the values of the AV/PV ratio do not refer to the same universe since the first term (AV) refers to the sector set and therefore excludes the input that are intrinsic to it but are external to the enterprises (exchange in the same sector). Furthermore, the census refers to the enterprises that were visited while the agribusiness product refers to the Brazilian economy as a whole (National Accounts System 2000).

Since this is a primary sector it should be expected that the VA/VP ratio would be high, that is, most of the product value would be generated in the sector itself and not from inputs external to the sector or the enterprise, according to the case. This is what effectively happens and the values that were found (above 0.75) also indicate that the calculation universes are not very different, that is, the universe of enterprises in the census includes a good part of the production sector.

Figure 1 illustrates the behavior of the VP/K, VA/K and VA/VP ratios with the value relative to 1970. It should be noted the behavior practically constant of the first index and as a consequence the coincidence of the two last indexes

Caixa de texto: AV/K
Caixa de texto: PV/K
Caixa de texto: AV/PV
 

Figure 1: VA (agribusiness product in the National Accounts) and VP and K ratios that can be directly obtained from the census.

It can be observed in Figure 1 that VA/K and VP/K have the same behavior because VA/VP is approximately constant as noted before and for each activity k and year i, it can be supposed that:

 (VA/K)i,k = (VP/K)i,k * (VA/VP)i                                                                     (1)

where the last value refers to the sector in the year (last line in Table 1) and the values for the activities at each year (VP/K)i,k are those calculated in the following item. That is, it was adopted the hypothesis that the ratio between the aggregated value and the production value for all activities would be equal to the sector as a whole.

3.    Activities grouping

The individual values of the different sectors that are considered in the agribusiness censuses in the currency of the respective year are illustrated in Table 2.

Table 2: Production Value by sector

 

1970

1975

1980

1985

2006

PRODUCTION VALUE

24.967.914

139.106.512

1.542.298.296

196.702.092

143.821.310

(Units)

(Thousand Cruzeiros)

( Thousand Cruzeiros)

( Thousand     Cruzados)

( Thousand  Cruzeiros)

( Thousand  Reais)

Agriculture

14.035.294

82.273.860

822.496.042

119.830.639

99.158.420

Husbandry

6.101.933

38.843.897

490.058.699

51.260.020

30.169.667

Agribusiness

2.105.899

5.567.650

54.024.686

3.595.979

 

Horticulture and Flower growing

307.067

1.622.782

16.126.963

2.127.345

5.032.101

Silviculture and Reforesting

546.688

1.377.241

18.311.637

4.527.137

801.647

Poultry farming

866.222

5.933.489

102.010.518

11.288.536

 

Apiculture/Rabbit farming /Production of silk

18.700

191.928

1.693.733

354.661

 

Pastures

155.523

 

 

 

 

Vegetal Extraction

700.419

3.295.665

 

 

 

Special ends

130.169

 

37.576.018

3.717.775

 

Forest Production – Planted Florests

 

 

 

 

5.921.815

Forest Production – Native Florests

 

 

 

 

1.822.548

Fishery

 

 

 

 

19.988

Aquaculture

 

 

 

 

895.124

 

 

 

 

 

 

 

 

 

 

 

In the calculation of the production value corresponding to the considered activities it was adopted the criterion of subdividing the agribusiness activity between agriculture and husbandry in the same proportion of relative participation of these two sectors in the agribusiness + agriculture + husbandry value. The agribusiness classification (previously used for enterprises that had the two activities) has disappeared from the 2006 census that from then on classified the enterprise by the predominant activity, which justifies this approach.

Table 3: Production Values in the activities as a fraction of the total

Year

1970

1975

1980

1985

2006

Currency

Cruzeiros

(Cr$)

Cruzeiros

(Cr$)

Cruzeiros

(Cr$)

Cruzado

(Cr$)

Real

(R$)

Agriculture

0,562

0,591

0,533

0,609

0,689

Husbandry

0,244

0,279

0,318

0,261

0,210

Agribusiness

0,084

0,040

0,035

0,018

 

Agriculture

0,621

0,619

0,555

0,622

0,689

Husbandry

0,270

0,292

0,331

0,266

0,210

Others

0,109

0,089

0,114

0,112

0,101

Horticulture and Flower growing

0,012

0,012

0,010

0,011

0,035

Silviculture and Reforesting

0,022

0,010

0,012

0,023

0,006

Poultry farming

0,035

0,043

0,066

0,057

 

Apiculture/Rabbit farming /Production of silk

0,001

0,001

0,001

0,002

 

Pastures

0,006

 

 

 

 

Vegetal Extraction

0,028

0,024

 

 

 

Special ends

0,005

 

0,024

0,019

 

Forest Production – Planted Florests

 

 

 

 

0,041

Forest Production – Native Florests

 

 

 

 

0,013

Fishery

 

 

 

 

0,000

Aquaculture

 

 

 

 

0,006

  

Table 3 illustrates de values of Table 2 expressed as fraction of the total production value in the currency of the respective year. The shaded part in the table shows the values of the new subdivision of the product value among agriculture, husbandry and “others” that corresponds to the sum of the remaining activities.

4. Capital Stock, Production Value and Aggregated Value

The capital stock values receive a similar treatment and the results obtained are indicated in Table 4 whose behavior concerning capital stock valorization between 1970 and 1985 are similar to the production value. These data should be examined with attention because the period considered was one with high inflation levels (including currency changes) that makes extremely difficult the evaluation of the stock value. The aggregated values obtained by multiplying the VA/VP ratio of the sector for each year (last line of Table 1) by the production values of each activity are also indicated

Table 4 – Aggregation of Capital Stock and Production Value.

VARIABLES

1970

1975

1980

1985

2006

 

Currency

Cruzeiros

(Cr$) 

Cruzeiros

(Cr$) 

Cruzeiros

(Cr$) 

Cruzado

(Cr$) 

Real

(R$) 

CAPITAL STOCK (with land)

144.709.935

1.349.700.940

15.071.876.972

2.520.173.007

1.238.572.595

Agriculture

67.939.768

616.911.303

6.494.681.354

1.163.486.654

537.135.488

Husbandry

67.251.233

650.089.134

7.379.230.659

1.218.407.142

610.993.655

Others

9.518.934

82.700.503

1.197.964.959

138.279.211

90.443.450

 

 

 

 

 

 

PRODUCTION VALUE

24.967.914

139.106.512

1.542.298.296

196.702.092

143.821.310

Agriculture

15.503.069

86.055.899

856.349.937

122.349.236

99.158.420

Husbandry

6.740.057

40.629.508

510.229.490

52.337.402

30.169.667

Others

2.724.788

12.421.105

175.718.869

22.015.454

14.493.223

 

AGGREGATED VALUE

20.156.950

107.349.000

1.232.110.000

148.715.095

111.566.000

Agriculture

12.515.847

66.409.649

684.120.137

92.501.194

76.919.813

Husbandry

5.441.344

31.353.939

407.611.717

39.569.288

23.403.410

Others

2.199.760

9.585.412

140.378.146

16.644.614

11.242.777

             

5. Production Value/ Capital Stock and Capital Productivity

5.1. Capital Stock including land value

The production value divided by the capital stock (including land value) for the sector in a general way and for the three activities is illustrated in Table 5. These values are considered in the present article as proxy of capital productivity.

Table 5: Production value of agribusiness using capital stock (with land) by activity

 

1970

1975

1980

1985

2006

PV/K

0,17

0,10

0,10

0,08

0,12

PV agriculture/ K agriculture

0,23

0,14

0,13

0,11

0,18

PV husbandry/K. husbandry

0,10

0,06

0,07

0,04

0,05

PV others/ K. others

0,29

0,15

0,15

0,16

0,16

 

 

The approximate values of capital productivity obtained by using expression (1) are shown in Table 6. They are the result of dividing the aggregated values by the capital stock, both indicated in Table 4. These values are represented in Figure 2.

Table 6 - Approximation of the aggregated value in the agribusiness sector by the capital stock per activity
(capital productivity per activity)

Productivity

1970

1975

1980

1985

2006

Currency

(Cruzeiros)

(Cruzeiros)

(Cruzeiros)

(Cruzados)

(Reais)

 Agriculture GDP/ Capital Stock

0,14

0,08

0,08

0,06

0,09

VA agriculture/K agriculture

0,18

0,11

0,11

0,08

0,14

VA husbandry /K husbandry

0,08

0,05

0,06

0,03

0,04

VA others/K others

0,23

0,12

0,12

0,12

0,12

 

 

Caixa de texto: AV others/K others
Caixa de texto: AV husbandry /K husbandry
 
Figure 2: Behavior of capital productivity (assuming the VA/VP ratio is the same in all activities).

Concerning comparison among the activities, agriculture has always had much higher productivity than that of husbandry. The “others” productivity was exceeded by that agriculture only in the last census.

Capital productivity (including land) has dropped at the beginning of the 1970s as can be observed in Figure 2. From 1975 on the productivity of husbandry and “others” remained approximately constant. The agriculture productivity was reduced until 1985 but it has vigorously reacted between the 1985 and 2006 censuses. The remarkable production gains per planted area, pointed out in the previous note, should be credited to this productivity increase (a definitive conclusion depends on the analysis of products prices, value of capital goods, notably that of land that also have influence on the result).

It is also interesting to compare the capital distribution among the different types of activities and the capital stock distribution along the years. This is done in Figure 3 (VA) and Figure 4 (K).

Figure 3: Evolution of the Product Value per AV share in the activities

These results were partially commented previously but in Figure 3 it is noted the increase of the agriculture production share. In the previous note it was shown that the physical productivity (agriculture production at constant prices per ha) has practically doubled between 1980 and 2000. This makes sense because it was at that time that Embrapas’ researches started to present results after years of investment.

Activity Share in the Capital Stock of the Sector

Caixa de texto: Others K
Caixa de texto: Husbandry K
Caixa de texto: Agriculture K

Figure 4: Evolution of the activity share in the capital stock

 

In Figure 4 it is presented the evolution of the activity share in the capital stock. The participation of the three groups is approximately constant (along time). Agriculture and husbandry have similar share values. However, in production value agriculture is predominant and it is noticed a gain in agriculture as compared to husbandry probably due to the physical productivity increase per planted area.

5.2.       Capital stock excluding the land value

The data treatment excluding land is due to the special characteristic of this good (actually a natural resource) that can be categorized in the capital concept resulting from real investments as long as the resources used to make it productive are accounted for and that they represent only a fraction of the “land value”.

Table 7 – Capital stock value without the land value

VARIABLES

1970

1975

1980

1985

2006

Currency

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzados)

(Thousand  Reais)

CAPITAL STOCK

66.904.141

408.951.861

5.554.228.143

901.762.754

364.366.053

Agriculture

31.060.340

189.604.266

2.310.755.035

427.610.510

158.230.715

Husbandry

30.686.249

179.738.984

2.489.241.348

410.210.357

173.015.167

Others

5.157.552

39.608.611

754.231.760

63.941.887

33.120.169

 

 

When the land factor is excluded, shown in Table 7 and illustrated as percent in Figure 5, there is a balanced distribution between agriculture and husbandry along the years. The expected behavior is that when land is excluded husbandry should have a comparatively lower share in Figure 4 (husbandry is more intensive in land use). However, the reduction is not significant.

Caixa de texto: Agriculture K

Figure 5 – Activity share in the Capital Stock of the Sector excluding land value.

When the capital stock with and without land is analyzed (Table 8) it is clearly seen that the agriculture and husbandry values in the sector have always been balanced, that is, they were not much different in spite of the fact that they are different activities and each sub-sector has a productivity chain with its peculiarities.

Table 8 – Land value, capital stock with and without land.

Capital Stock

1970

1975

1980

1985

2006

Units

(Thousand  Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzados)

(Thousand Reais)

Capital stock with land

144.709.933

1.349.700.942

15.071.876.975

2.520.548.289

1.238.572.595

Capital stock without land

66.904.141

408.951.861

5.554.228.143

901.762.754

364.366.053

Variables

1970

1975

1980

1985

2006

Total land value

77.805.795

940.749.078

9.517.648.832

1.618.691.069

874.206.542

Units

Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzados)

(Thousand Reais)

Agriculture

36.879.428

427.307.037

4.183.926.319

735.876.144

378.904.773

Husbandry

36.564.984

470.350.150

4.889.989.311

808.196.785

437.978.488

Others

4.361.382

43.091.892

443.733.199

74.337.324

57.323.281

 

Table 9 shows the land share in the capital stock (value of goods) for agribusiness and the considered activities. Effectively the land value has a slightly higher share in the capital stock relative to agriculture.

Table 9 – Share of land value in the value of goods

Capital Stock

1970

1975

1980

1985

2006

Total (land value/ K)

54%

70%

63%

64%

71%

Agriculture

54%

69%

64%

63%

71%

Husbandry

54%

72%

66%

66%

72%

Others

46%

52%

37%

54%

63%

Table 10 – Production value / capital stock by activity
(excluding land)

 

1970

1975

1980

1985

2006

Currency

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzados)

(Thousand Reais)

PV/ Capital Stock

0,37

0,34

0,28

0,22

0,39

PV Agriculture/ K Agriculture

0,50

0,45

0,37

0,29

0,63

PV Husbandry/ K Husbandry

0,22

0,23

0,20

0,13

0,17

PV Others/ K Others

0,53

0,31

0,23

0,34

0,44

Table 11 – Approximation of the aggregated value in the agribusiness sector by capital stock per activity
(capital productivity per activity).

Productivity

1970

1975

1980

1985

2006

Currency

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzeiros)

(Thousand Cruzados)

(Thousand Reais)

Agriculture GDP/ Capital Stock

0,30

0,26

0,22

0,16

0,31

AV agriculture/K agriculture

0,40

0,35

0,30

0,22

0,49

AV husbandry/K husbandry

0,18

0,17

0,16

0,10

0,14

AV others/K others

0,43

0,24

0,19

0,26

0,34

 

 

Without the land value in the capital stock (K) the capital productivity values (VA/K) shown in Table 11 are obviously higher than those obtained considering the land use (Table 8). The values for the sector are as expected average values relative to the activities. Figure 6 illustrates the Table 12 data.

Caixa de texto: AV others/ K others
Caixa de texto: AV agriculture/K agriculture
Caixa de texto: AV husbandry/K husbandry
Caixa de texto: Agriculture GDP/Capital stock
    

Figure 6 - Capital Productivity by activity (capital stock without land).

 

In the agribusiness sector capital productivity decreases until 1985 and it grows in the 2006 census. This recovery is due mainly to agriculture. Recovery in the “others” is also high but its weight concerning the average is low. Husbandry has not recovered in 2006 the productivity of the initial year.

Capital productivity decrease makes sense in the economy as a whole because it was in this period in which it occurred the so-called Brazilian miracle characterized by a strong input of external capital, low inflation and development projects such as the Transamazônica highway and the Niteroi-Rio bridge, construction of important highways and the agreement with Paraguay for the construction of the Itaipu Hydroelectric Plant. All these factors may have contributed for capital productivity decrease from the beginning of the 1970s on. The agriculture productivity followed a similar pace. In contrast to the economy as a whole, it has had a considerable recovery between 1985 and 2006.

Figure 7 - Capital Productivity with and without land

 

Finally in Figure 7, the capital productivity with and without land are compared. In both cases there was a decrease until 1985 and recovery in 2006. The level difference between both is due to the subtracted fraction (land). It should be noted that the capital productivity was evaluated for Brazil (e&e No 74) and the value for the economy as a whole was 0.4. Even with the exclusion of the land value, the agribusiness productivity would be lower than the average value of the economy in 2006. However, it should be considered that the product of the agribusiness activity aggregates values in different subsequent steps of the agribusiness and services cycle and therefore it contributes to the leverage of other economic sectors that are not much capital-intensive. 

 

1.    Conclusion

The Brazilian agribusiness censuses present important information, namely the capital stock subdivided in different items. The component that varies most is the value assigned to land. When land is excluded it is noticed that the “Agriculture” and “Husbandry” groups have an (almost) equal distribution and there is a remarkable identical capital stock relative to production value. It is concluded that the capital productivity (with and without land) by activity groups presented a decrease at the beginning of the 1970s. The existing information gap of 20 years when information concerning capital stock was not published does not permit to know the capital productivity path between 1986 and 2006. It can (certainly) be assumed that the capital productivity in both cases (with and without land) has systematically decreased between 1970 and 1986 and that of 2006 is significantly higher than that of 1986.

 

2.    References

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA. 2006. 

Censo Agropecuário Brasil. Rio de Janeiro: IBGE.

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA. 1995/1996. 

Censo Agropecuário Brasil. Rio de Janeiro: IBGE.

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA. 1985.

Censo Agropecuário Brasil. Rio de Janeiro: IBGE.

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA. 1980. 

Censo Agropecuário Brasil. Rio de Janeiro: IBGE.

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA. 1975.

Censo Agropecuário Brasil. Rio de Janeiro: IBGE.

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA. 1970

Censo Agropecuário – Brasil. Rio de Janeiro: IBGE.

INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA/ SISTEMA DE CONTAS NACIONAIS do BRASIL/2000

 

 

 

 

Graphic Edition/Edição Gráfica:
MAK
Editoração Eletrônic
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Revised/Revisado:
Monday, 16 January 2012
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