Chapter IX

1. Chapter IX THE AGRICULTURAL HOUSEHOLD – CONCEPTS AND DEFINITIONS

2.  IX.1 Definition of the household … • IX.2 Households of different sizes and compositions • IX.3The rural and urban household enterprise • IX.4 Definition of the agricultural household-firm (enterprise) • IX.5 Households containing hired labour • IX.6 Relevance for the Less and More Developed Countries and formerly socialised agricultures • IX.7 Typologies of farm-households

3. Key issues • Household is a major form of institutional unit and a policy-relevant unit of living • Key issues • Definition of a household • Classification of households into agricultural and other groups

4. IX.1 Definition of the household appropriate to accounting and statistics SNA/ESA definitions (sector) • A small group of persons who share the same living accommodation, who pool some, or all, of their income and wealth and who consume certain types of goods and services collectively, mainly housing and food. [The criteria of the existence of family or emotional ties may be added].

5. Household definition ctd. • Microeconomic approach • Household budget surveys (varies in EU) • Canberra Group recommendations (various household concepts – dwelling, housekeeping unit, unattached individuals, income units etc.

6. Handbook conclusion • This handbook recognizes that a flexible but transparent approach should be taken to the definition of a household. While income measurement on the basis of the complete dwelling household should be undertaken to facilitate comparisons, both internationally and with national data sources, data should also he available to allow the application of the concept of the single budget household whicn in some circumstances may be preferable

7. IX.2 Households of different sizes and compositions • Comparisons undermined by differences in household composition • Comparisons of same compositions restricting • Equivalence scales may be used to express households in Consumer Units • Scales can vary between countries

8. Household size ctd. • Results should be calculated per household, per household member, per CU • Conclusion • This handbook recognizes that both of these practices (the calculation of income per household member and per consumer unit, and the use of national equivalence scales) should be followed. Details of Equivalence Scales should be made available as meta-data.

9. IX.3 The rural and urban household enterprise • Links with rural definition (Part I) • Only a small fraction of rural households are likely to be agricultural • Residence on a farm is not a suitable criterion for selecting agricultural household (farm-living non-farmers, and urban-living farmers)

10. IX.4 Definition of the agricultural household-firm (enterprise) and those belonging to other socio-professional groups

11. Criteria for classification • Income dependency, or labour input, or both • Household or individual basis • Broad or narrow definitions • De minimis levels • Income in kind (hobby activity / subsistence production) • Cash income • Farm size

12. Practicalities of classification • System based on reference person more practical than on the whole household • Consequences of income variation over time – need for short-term stability • Shrinking size of agricultural household sector over time

13. Conclusion The handbook recognizes that data should be available to develop estimates of income for households ranging from those narrowly defined based on the main income of the household, suitably smoothed to take into account the year-to-year variation, for which averaging over three years is advised, to households that earn any income from self-employed farming activity.

14. Conclusion The handbook recognizes that data should be available to develop estimates of income for households ranging from those narrowly defined based on the main income of the household, suitably smoothed to take into account the year-to-year variation, for which averaging over three years is advised, to households that earn any income from self-employed farming activity.

15. Where it is not possible to identify households with main income from self employed farming activity, the handbook recognizes the use of a reference person system, where this person is normally the main income earner. Studies should be undertaken to assess the significance of adopting alternative bases of classification.

16. Choice of other groups for comparison • National averages contain predominantly household of dependent workers and many single-person household (young, widowed etc.) • Income of farm households a mix of factor rewards • Interest in comparisons with other small business operators

17. Conclusions on comparisons • This handbook recognizes that steps should be taken to avoid misrepresentations when drawing comparisons between the income situation of agricultural households and other socio-professional groups. At the least, this should include income comparisons per household member andper Consumer Unit.

18. IX.5 Households containing hired labour working in agriculture • Agricultural households are traditionally headed by self-employed farmers • Hired workers not target of agric. policy • Hired workers are a small fraction in many countries (not UK, France) • Many family farm corporations can be treated as quasi self-employed households • Great increase in significance as result of enlargement of EU (bring in large units)

19. Conclusions The income situation of the households of hired agricultural workers should be assessed as a separate and supplementary exercise (a recommendation to be taken with that of the next section). An ability to analyse by the type of business on which they are employed should be incorporated (family farm, corporate farm etc.).

20. This handbook recognises that the income situation of the households of hired agricultural workers on all large-scale agricultural units should be assessed as a separate and supplementary exercise, including a breakdown of the type of unit on which they are found and the forms of income they receive (wages, profit share etc.)

21. IX.7 Typologies of farm-households • Examples of typologies • Eurostat IAHS – broad/narroww/marginal • ERS-USDA farm typology (USA) • ISMEA (Italy) • Impact on numbers of agricultural households and income levels of sub-groups

22. ERS-USDA farm typology • Limited resource • Retirement • Residential/lifestyle • Farming occupation/lower sales • Farming occupation/higher sales • Large family farms • Very large family farms • Non-family farms

23. Conclusion • The handbook recognises the value of the typologies of agricultural households that reflect the needs of users and encourages their development. The basis of the typology should be flexible so that different needs can be met. Consideration should be given to the international application of classification based on the USDA-ERS.