Share of raw material costs in total production costs

22-08-2014 | Publication

The share of raw material costs in the total costs for producers can be calculated using different methods. This note compares two of these methods; the energy and material costs and the basic raw material costs. The basic raw material costs are lower than the energy and material costs, because they do not include the value added from production chains. This makes the basic raw material costs a better indicator for resource use within an economy and for the potential  behavioural effects of pricing resources.

Dutch export is relatively resource-intensive

The share of basic raw material costs in the total final demand within the Dutch economy is over 14%. If only domestic final demand is considered, the share of raw material costs is much lower, at 6.5%. The Dutch economy is more resource-intensive than the economies of Germany, Denmark and the United Kingdom, due to a relatively large share of basic industry mainly producing for the export market. However, from the databases used, it was difficult to determine whether the Dutch economic sectors were less efficient than those in other countries. The industries of food and food processing, base chemicals and base metals are the most resource-intensive and, therefore, the most vulnerable to price changes of raw materials.