Problems in quantity standardization

[mkao006]

Theoretically, trade should be standardized according to the production pattern of the export country to achieve global balance. However, this proves to be extremely difficult and constrained by the limitation of the data and thus the current system standardize according to the domestic.

Nevertheless, this generates several problems.

1. Generally speaking, exporting countries are more efficient which means that if we standardize by the local production process, we will over-estimate the amount of the primary commodity.
2. Trading occur at the commodity level rather than the whole processing level. Take example, if country A only imports wheat bran while the counter-parts such as wheat flour are imported by country B both from country C then double counting occurs at the global level. That is, both country A and B will have the same x amount of wheat equivalent from the trade, but country A should have 15% while country B should have 80% of the wheat equivalent according to the production process of country C

This issue is also mentioned in section 3.5 Flexible aggregation of FAO’s Supply Utilization Accounts by Maarten van't Riet.

We believe these issues can be eliminated or at least alleviated by standardizing in calorie oppose to quantity.

[mkao006]

A similar problem to point 2 also occur in feed. If a country imports only bran for feed, then at the processed level the quantity of bran will be recorded. However, since bran are never standardized back to wheat due to the double counting conflict with wheat flour we will under count the feed element.