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Definition: Processing by producers

National accounts

Entries under this heading should show quantities produced for further processing by agricultural producers (e.g. milk processed to make butter or cheese, apples processed to make apple must or cider) but only in the framework of processing activities which are separable from the main agricultural activity (on the basis of accounting documents, cf. 1.18.1.). Only the raw products (e.g. raw milk, apples) should be recorded and not the processed products manufactured from them (e.g. butter, apple must and cider). In other words, the work incorporated in the processing of agricultural products is not taken into consideration under this heading. Products resulting from processing at the producer's will naturally be indicated in the output of the Agriculture "sub-sector" in the National Accounts (cf. 1.04.1. and 1.04.2.).
Where these processing activities are inseparable non-agricultural activities, the product of these processing activities is recorded in the value of the output of the agricultural industry (cf. 1.17.). Basic agricultural products used as intermediate consumption by these processing activities are not recorded as either output or intermediate consumption. This rule stems from the fact that the two activities (the production of agricultural products and the processing of such products) cannot be distinguished on the basis of accounting documents. Accordingly, the costs of these two types of activity are entered together and their output is assessed as the output of processed products.
Eurostat, "Manual on the economic accounts for agriculture and forestry EAA/EA 97 (Rev. 1.1)", Luxembourg, 2000