NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONT 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Biological assets (h) Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement Annual Report 2013 59 We use derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge our  foreign currency risks, interest rate risks and commodity price risks, respectively� Such derivative financial instruments are initially recognised  at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value� Derivatives are carried as  financial assets when the fair value is positive and as financial liabilities when the fair value is negative� Harvested crops at the reporting date are measured at their fair value less costs to sell with reference to the relevant market spot price� At harvest  the fair value is determined on an estimated yield from cotton modules or grain weighed and stored in silos at the commodity’s quoted spot price in  the market place� At reporting date if the crop is not harvested then the carrying value is based on costs incurred on the crop to the reporting date  subject to those costs being probable of recovery� Crops are only brought to account at fair value when yields can be reliably measured and it’s  probable that the future economic benefits will be received by us� (ii) Crops Valuation method Commercial breeding herd (comprising principally females and  breeding bulls) The value of these cattle is determined by independent valuation and with reference to prices  received for representative sales of breeding cattle similar to the Group’s herd� Prices for these  cattle generally reflect a longer term view of the cattle market� Independent valuations were  undertaken by Landmark and Cameron Livestock Pty Ltd Trading cattle (including feedlot cattle) Relevant market indicators used include Roma store cattle prices, abattoir market prices, and  cattle prices received/quoted for the Group’s cattle at the reporting date� Prices for these cattle  generally reflect the shorter term spot prices available in the market place and vary based on  the weight and condition of the animal� AACo live export cattle (Victoria River Group, Anthony Lagoon & Darwin Group) are valued  based on market quotes available at each reporting date� Short fed cattle in feedlots are valued based on market quotes for finished cattle� The value is  based on the estimated exit price per kilogram and the value changes for the weight of each  animal as it progresses through the feedlot program� Wagyu trading cattle are valued on the basis of independent valuation by Cameron Livestock Pty Ltd� Stud breeding herd Independent valuation by Landmark and Cameron Livestock Pty Ltd�  (i) Livestock Broadly, for the most significant types of cattle we determine net market values as follows: In the event that market determined prices or values are not available for a biological asset in its present condition we may use the present value of  the expected net cashflows from the asset discounted at a current market determined rate in determining fair value�  If an active market does not exist then we use one of the following, when available, in determining fair value: The fair value of a biological asset is based on its present location and condition� If an active or other effective market exists for a biological asset  or agricultural produce in its present location and condition, the quoted price in that market is the appropriate basis for determining the fair value of  that asset� Where we have access to different markets then we use the most relevant one� The relevant one is defined as the market “that access  is available to the entity” to be used at the time the fair value is established� Biological assets comprise cattle, other livestock, crops not yet harvested, and harvested crops� Biological assets are measured at fair value  less costs to sell, with any change recognised in the income statement� Costs to sell include all costs that would be necessary to sell the assets,  including freight and direct selling costs� the most recent market transaction price, provided that there has not been a significant change in economic circumstances between the date  of that transaction and the end of the reporting period; or market prices, in markets accessible to the entity, for similar assets with adjustments to reflect differences; or sector benchmarks�