Implementation of IFRS in statistics Ultimate Harmonization tool?

Koen BooneWye City Group Meeting, Rome, 11th of June 2009

Content

International Financial Reporting Standards

Implementation IFRS in Dutch FADN Biological assets

Intangible assets (milk quota)

Conclusion

International Financial Reporting Standard International accounting standards for

financial reporting by companies Adopted by EU to realize EU-27

standardization Obliged for all stock listed companies Strongly advised to other companies (national

regulation) Applied in more than 100 countries FASB started process to harmonize with IFRS Standard (IAS 41) on agriculture

IFRS content – biological assets

Fair value for biological assets (living) Market price Market price related assets/markets Benchmarks Net Present Value Costs

Change in fair value part of income Agricultural inventories: fair value or costs

(fair value at point of harvest)

IFRS content - Intangibles

Valuation if Identifiable Verifiable Lead to economic profit

When active market: Valuation at fair value and no depreciation

Example: Milk quota

Dutch FADN

1500 farms Data assembled by own employees Financial, environmental, off farm, people Part of data in EU-27 database Complete renewal of system around 2000 Decision to adopt IFRS guidelines

Harmonization with other sectors International harmonization

Biological assets in FADN

Valuation in Dutch (and EU) FADN was already largely based on current value

Some products still cost of production Not traded in its current state (tomato plant) Very small products Very volatile products (lettuce)

Fair value/market prices assembled by LEI. For very differentiated products (flower

bulbs): ask farmer

Change in fair value part of income

Part of IFRS trend to adopt market values Much debated

Product not yet sold (prudence principle) Users are not used to it or do not understand it Unreliable and volatile No relation with performance of farm(er) Developing countries Production factors (dairy cow, apple tree) are

not sold in their current state

Biological assets in FADN

Dutch FADN: Completely implemented Not much discussion in period 2001-2006 Large price differences in 2007 and 2008 Change in value dairy cows 2007 + 22.000

and in 2008 – 13.000 Debate restarted again for

bearers/production factors

Intangibles – Milk quota

All milk quota included on balance sheet and no depreciation

Deferred tax provision (30%) End of 2008: Abolishment of quota system in

2015 Average value per farm 600.000 Depreciate complete value?

Increase of value of quota was not included in income

Price of land will increase

Conclusion

IFRS worldwide standard but adoption not very fast

IFRS suitable for statistics Adoption of IFRS in FADN possible but not

without problems Limited adoption of business economic

accounting in agriculture Change in value of bearers Developing countries

Thank you for your attention

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