Standard gross margins or SGMs are a way of classifying farms according to the type of enterprises on the farm, and their relative contribution to overall profit. The SGM provides a measure of a holding's business size, irrespective of its area and intensity of production.
SGMs are used by Eurostat for collating European Union farm statistics. In the UK, the UK government's June census for agriculture also uses this classification.
SGMs are calculated per unit area of crops and per head of livestock, using standardised SGM coefficients for each type of crop and livestock. Different SGM coefficients are calculated for different geographical areas to allow for differences in profit.
SGMs are representative of the level of profit that could be expected on the average farm under "normal" conditions (i.e. no disease outbreaks or adverse weather).
Because the system of classifying business size was developed for use within the EU statistical network, SGMs are measured in euros and are presented in size ranges which relate to European size units (ESU).
The resulting figures per hectare of crop and per head of livestock are then totalled for the whole farm.
Sizes of holdings are defined, for example in the UK, as: