2.a.1 Agriculture Orientation Index for Government Expenditures
Target 2.a: Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries
Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Custodian Organization: Food and Agriculture Organization of the United Nations (FAO)
Tier Classification: Tier II
To facilitate the implementation of the global indicator framework, all indicators are classified by the IAEG-SDGs (Inter-Agency and Expert Group on Sustainable Development Goals Indicators) into three tiers on the basis of their level of methodological development and the availability of data at the global level, as follows:
Tier I: Indicator is conceptually clear, has an internationally established methodology and standards are available, and data are regularly produced by countries for at least 50 per cent of countries and of the population in every region where the indicator is relevant.
Tier II: Indicator is conceptually clear, has an internationally established methodology and standards are available, but data are not regularly produced by countries.
Tier III: No internationally established methodology or standards are yet available for the indicator, but methodology/standards are being (or will be) developed or tested.
Definition: The Agriculture Orientation Index (AOI) for Government Expenditures is defined as the Agriculture Share of Government Expenditures, divided by the Agriculture Share of GDP, where Agriculture refers to the agriculture, forestry, fishing and hunting sector. The measure in a currency-free index, calculated as the ratio of these two shares. National governments are requested to compile Government Expenditures according to the international Classification of Functions of Government (COFOC), and Agriculture Share of GDP according to the System of National Accounts (SNA).
Agriculture refers to the agriculture, forestry, fishing and hunting sector, or Division A of ISIC Rev 4 (equal to Division A+B of ISIC Rev 3.2).
Government Expenditures are based on the Classification of the Functions of Government (COFOG) developed by the OECD and published by the United Nations Statistics Division (UNSD).
Government Expenditures are all outlays or expenses associated with supporting a particular sector, including compensation of employees, and subsidies and grants paid as transfers to individuals or corporations in that sector. For a full description, see the Government Finance Statistics Manual (GFSM) 2001, developed by the International Monetary Fund (IMF).
The Agriculture Share of GDP is measured by the ratio of Agriculture Value Added over GDP, based on official data reported by countries to the United Nations Statistics Division.
Rationale: An Agriculture Orientation Index (AOI) greater than 1 reflects a higher orientation towards the agriculture sector, which receives a higher share of government spending relative to its contribution to economic value-added. An AOI less than 1 reflects a lower orientation to agriculture, while an AOI equal to 1 reflects neutrality in a government’s orientation to the agriculture sector.
Government spending in Agriculture includes spending on sector policies and programs; soil improvement and soil degradation control; irrigation and reservoirs for agricultural use; animal health management, livestock research and training in animal husbandry; marine/freshwater biological research; afforestation and other forestry projects; etc.
Spending in these agricultural activities helps to increase sector efficiency, productivity and income growth by increasing physical or human capital and /or reducing inter-temporal budget constraints.
However, the private sector typically under-invests in these activities due to the presence of market failure (e.g. the public good nature of research and development; the positive externalities from improved soil and water conditions; lack of access to competitive credit due to asymmetric information between producers and financial institutions, etc.). Similarly, the high risk faced by agricultural producers, particular smallholders unable to hedge against risk, often requires government intervention in terms of income redistribution to support smallholders in distress following crop failures and livestock loss from pests, droughts, floods, infrastructure failure, or severe price changes.
Government spending in agriculture is essential to address these market failures and the periodic need for income redistribution. This leads to several potential indicators for the SDGs, which include: a) the level of Government Expenditures in Agriculture (GEA); b) the Agriculture share of Government Expenditures, and c) the AOI for Government Expenditures.
An indicator that measures GEA levels fails to take into account the size of an economy. If two countries, A and B, have the same level of GEA, and the same agriculture contribution to GDP, but country A’s economy is 10 times that of country B, setting the same target levels for GEA fails to take economic size into account.
An indicator that measures the Agriculture share of Government Expenditures fails to take into account the relative contributions of the agricultural sector to a country’s GDP. Consider two countries with the same economic size, C and D, where agriculture contributes 2 per cent to C’s GDP, and 10 per cent to country D’s GDP. If total Government Expenditures were equal in both countries, C would experience greater relative investment in Agriculture than D. If total Government Expenditures differed, the result could be magnified or diluted.
The AOI index takes into account a country’s economic size, Agriculture’s contribution to GDP, and the total amount of Government Expenditures. As such, it allows for the setting of a universal and achievable target. Nonetheless, it is useful to interpret the AOI in combination with its numerator and denominator separately: The Agriculture share of Government Expenditures and the Agriculture Share of GDP.
Limitations: Since the numerator of this data is based on administrative sources, there is no confidence interval or standard error associated with government expenditure data. For the denominator, national accounts data typically do not provide any standard error or confidence interval information.
The key limitation with this indicator is that it takes into account only central government expenditures. To the extent that some countries may have heavier intervention in Agriculture by sub-national governments, this will not be taken into account.
Data Source: Data for this indicator was primarily collected from the United Nations Statistics Division’s Open SDG Data Hub. National level data from the UN Statistics Division is compiled by the respective custodian for the SDG indicator, unless otherwise noted. To learn more about the data used in this portal, visit the about page.
Data is accurate as of October 31, 2018.
2.a.1 Agriculture Orientation Index for Government Expenditures in the Sustainable Development Goals
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2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
It is time to rethink how we grow, share and consume our food.
If done right, agriculture, forestry and fisheries can provide nutritious food for all and generate decent incomes, while supporting people-centred rural development and protecting the environment.
Right now, our soils, freshwater, oceans, forests and biodiversity are being rapidly degraded. Climate change is putting even more pressure on the resources we depend on, increasing risks associated with disasters such as droughts and floods. Many rural women and men can no longer make ends meet on their land, forcing them to migrate to cities in search of opportunities.
A profound change of the global food and agriculture system is needed if we are to nourish today’s 815 million hungry and the additional 2 billion people expected by 2050.
The food and agriculture sector offers key solutions for development, and is central for hunger and poverty eradication.