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Agricultural Activity

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Chapter Seven

Syllabus topic 6, "Key Definitions- Agriculture activity, Bearer Plant and Biological Asset."

Pages 14 to 15 of 110

The definition

Paragraph 5 defines it, in bold, and every word is load bearing:

Agricultural activity is the management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets.

Break it into four parts.

Management by an entity. Somebody is managing. This is the word that excludes ocean fishing and deforestation.

Of the biological transformation and harvest. Both. Growing and taking.

Of biological assets. Living animals or plants.

For sale or for conversion into agricultural produce or into additional biological assets. A purpose. Three permitted ones.

Paragraph 6: how wide it is, and the three features

Paragraph 6 first gives the range:

Agricultural activity covers a diverse range of activities; for example, raising livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture and aquaculture (including fish farming).

Note that forestry and fish farming are in. A student who thinks agriculture means crops will get that wrong.

Then it names three features common to all of them, and these three are the most examinable thing in the definitions section.

(a) Capability to change. Living animals and plants are capable of biological transformation.

(b) Management of change. Management facilitates biological transformation by enhancing, or at least stabilising, conditions necessary for the process to take place, for example nutrient levels, moisture, temperature, fertility and light. The standard then draws the line itself:

Such management distinguishes agricultural activity from other activities. For example, harvesting from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity.

(c) Measurement of change. The change in quality or quantity brought about by biological transformation or harvest is measured and monitored as a routine management function. Paragraph 6 gives its own examples of each: quality means genetic merit, density, ripeness, fat cover, protein content and fibre strength; quantity means progeny, weight, cubic metres, fibre length or diameter, and number of buds.

All three must be present. That is what an answer has to say, and it is what the ocean fishing example proves: a shoal of fish is capable of change and its change can be measured, but nobody is managing it, so feature (b) fails and the activity is out.

Paragraph 7: what biological transformation produces

Paragraph 7 sorts the outcomes into two:

(a) asset changes through (i) growth (an increase in quantity or improvement in quality of an animal or plant), (ii) degeneration (a decrease in the quantity or deterioration in quality of an animal or plant), or (iii) procreation (creation of additional living animals or plants); or

(b) production of agricultural produce such as latex, tea leaf, wool, and milk.

Degeneration counts. Biological transformation is not only growth. An ageing animal, a diseased orchard and a crop lost to pests are all biological transformation, and they produce losses, which paragraph 26 puts through profit or loss exactly as it puts gains.

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Agricultural Activity

Managed and unmanaged: the test in practice

ActivityAgricultural activity?Which feature decides
A poultry farmYesAll three present
A tree plantation grown for timberYesAll three present
A fish farmYesAll three present
Ocean fishingNoNo management of change
Cutting a natural forestNoNo management of change
Collecting honey from wild hivesNoNo management of change
Beekeeping in managed hivesYesAll three present
A vineyardYesAll three present
Making wine from those grapesNoProcessing after harvest, paragraph 3
A nursery raising saplings for saleYesConversion into additional biological assets

The word MU uses

Her topic line says "Agriculture activity". The standard says agricultural activity. They are the same thing and the standard's spelling is the one to write.

A common wrong answer

"Agricultural activity means any activity connected with land."

It does not. Land is expressly outside the standard by paragraph 2(a), and activities on land that nobody manages biologically are outside by paragraph 6(b). The subject of Ind AS 41 is the living asset and its managed change, not the ground it stands on.

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The rest of this subject

These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.

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