Agriculture accounting: the key IFRS issues

Farming is the one industry where IFRS recognises profit as things grow. A calf putting on weight, a wheat crop ripening or a forest maturing all change the value of the business, and IAS 41 puts that change in profit or loss each period. That makes agricultural accounts unusual, and sometimes volatile. This guide maps the key IFRS issues for farms, plantations and agribusiness, explains why each matters and links to the detailed guides.

By Awais Jameel, Chartered Accountant. Reviewed by Muhammad Bilal, Chartered Accountant. 3 minute read.

Short answer

Agriculture accounting under IFRS centres on IAS 41, which measures living animals and plants, biological assets, at fair value less costs to sell at each reporting date, with changes in profit or loss, so profits reflect growth and price changes before anything is sold. Bearer plants, such as fruit trees, tea bushes and oil palms, are an exception: they are property, plant and equipment under IAS 16, while the produce growing on them stays at fair value. Livestock, including dairy cows, stays in IAS 41. At the point of harvest, produce is measured at fair value less costs to sell, which becomes its cost as inventory under IAS 2. Government grants for biological assets at fair value follow IAS 41's own rules. Land is outside IAS 41.

At a glance

Biological assets
Fair value less costs to sell
Changes in value
Profit or loss
Bearer plants
IAS 16, cost or revaluation
Livestock
IAS 41, including dairy cows
Harvested produce
IAS 2 from the point of harvest
Land
IAS 16 or IAS 40, not IAS 41
Agriculture accounting: the key IFRS issuesBiological assets: Fair value less costs to sell; Changes in value: Profit or loss; Bearer plants: IAS 16, cost or revaluation; Livestock: IAS 41, including dairy cows; Harvested produce: IAS 2 from the point of harvest; Land: IAS 16 or IAS 40, not IAS 41.KEY FACTS AT A GLANCEAgriculture accounting: the key IFRS issuesBiological assetsFair value less costs tosellChanges in valueProfit or lossBearer plantsIAS 16, cost orrevaluationLivestockIAS 41, including dairycowsHarvested produceIAS 2 from the point ofharvestLandIAS 16 or IAS 40, not IAS41Tax BakersAgriculture accounting: the key IFRS issuesBiological assets: Fair value less costs to sell; Changes in value: Profit or loss; Bearer plants: IAS 16, cost or revaluation; Livestock: IAS 41, including dairy cows; Harvested produce: IAS 2 from the point of harvest; Land: IAS 16 or IAS 40, not IAS 41.KEY FACTS AT A GLANCEAgriculture accounting: the keyIFRS issuesBiological assetsFair value less costs to sellChanges in valueProfit or lossBearer plantsIAS 16, cost or revaluationLivestockIAS 41, including dairy cowsHarvested produceIAS 2 from the point of harvestLandIAS 16 or IAS 40, not IAS 41Tax Bakers
Key facts at a glance, as set out in this guide.

Why is agriculture accounting different?

Most industries recognise profit when they sell. In agriculture, value is created by biological transformation, growth, procreation, production and degeneration, which happens before any sale, and much farm produce has active markets that make its value observable. IAS 41 therefore measures biological assets at fair value less costs to sell, so a farm's profit includes the change in value of its animals and growing crops. The costs of growing them, such as feed, fertiliser and labour, are expensed as incurred rather than capitalised. Prices of commodities and livestock feed straight into profit, which many farming companies explain separately from their operating results.

Which IFRS issues matter most in agriculture accounting?

Key agriculture accounting issuesKey agriculture accounting issuesStandardMeasurementGrowing cropsIAS 41Fair value lesscosts to sellLivestockIAS 41Fair value lesscosts to sellBearer plantsIAS 16Cost orrevaluationProduce on bearer plantsIAS 41Fair value lesscosts to sellHarvested produceIAS 2Deemed costat harvestGrantsIAS 41, IAS 20When conditionsare metLandIAS 16, IAS 40Separate fromcrops
IAS 41 measures what grows; other standards cover what it grows on.

How are biological assets measured?

At fair value less costs to sell, both when first recognised and at each reporting date, using IFRS 13. Livestock and many crops have market prices; growing crops, forests and young animals often need valuation models. Costs to sell, such as auction commissions and levies, are deducted, but transport to market is reflected in the fair value instead. If fair value cannot be measured reliably when the asset is first recognised, it is measured at cost less depreciation and impairment until it can. See biological assets at fair value.

Why are bearer plants treated differently?

Since 2016, plants used only to bear produce over several periods, such as fruit trees, vines, tea bushes and oil palms, are accounted for like a factory: as property, plant and equipment under IAS 16, at cost or revalued amount, and depreciated over their productive lives. The fruit or leaves growing on them remain biological assets at fair value until harvested. See bearer plants.

How is livestock accounted for?

Animals stay in IAS 41, including bearer animals such as dairy cows and breeding stock. The herd is measured at fair value less costs to sell, newborn animals are recognised at fair value when born, and milk, wool and eggs are measured at fair value less costs to sell when harvested. IAS 41 encourages showing how much of the change in a herd's value comes from price changes and how much from physical change, such as growth and births. See dairy and livestock.

What happens at the point of harvest?

When a crop is harvested, an animal is slaughtered or milk is drawn, the produce is measured at fair value less costs to sell at that moment, and that amount becomes its cost under IAS 2 from then on. Processing after harvest, such as turning grapes into wine or cane into sugar, is ordinary inventory accounting. See crops and the point of harvest and agricultural produce after harvest.

How are grants and land treated?

An unconditional government grant related to a biological asset measured at fair value is recognised in profit or loss when it becomes receivable; a conditional one, when the conditions are met. Grants for assets at cost, including bearer plants, follow IAS 20. See grants for agriculture. Land is property, plant and equipment, or investment property if held for rent, and is never part of a biological asset's fair value; where a market price covers land and crops together, the land's value is deducted. More detail is in the guides on palm oil plantations, poultry farming, agricultural land and hedging crop prices. US GAAP has no fair value model for agriculture: under ASC 905, crops and animals are generally carried at cost.

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Questions people ask

How are biological assets measured under IAS 41?

At fair value less costs to sell at initial recognition and each reporting date, with changes in profit or loss, unless fair value cannot be measured reliably.

Are fruit trees biological assets?

No. Bearer plants such as fruit trees, vines and oil palms are property, plant and equipment under IAS 16; the fruit growing on them is a biological asset.

Are dairy cows bearer plants?

No. Bearer animals stay in IAS 41 at fair value less costs to sell; only bearer plants moved to IAS 16.

How does US GAAP account for agriculture?

Under ASC 905, crops and animals are generally carried at cost, with no fair value model like IAS 41.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IAS 41 Agriculture
  2. IFRS Foundation: IAS 16 Property, Plant and Equipment
  3. IFRS Foundation: IFRS 13 Fair Value Measurement

Rules and fees change. If you are reading this long after October 9, 2026, confirm the figures with the source before you rely on them.

AgricultureBiological assets at fair valueAgricultureBearer plantsAgricultureDairy and livestock

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This guide is general information. It is not tax or legal advice for your situation.