PRICE CIRCUMSTANCES OF THE AGRO-FOOD COMPLEX DEVELOPMENT

In: Ėkonomika Ukrai͏̈ny: naučny žurnal Nacional'noi͏̈ akademii͏̈ nauk Ukrai͏̈ny i Deržavnoi͏̈ ustanovy "Institut ekonomiky ta prohnozuvannja NAN Ukrai͏̈ny" = Economy of Ukraine, Band 2019, Heft 2, S. 49-61

Abstract

The main source of financial resources of enterprises of the agro-food complex is the favorable proportions of the purchase and sale prices for goods/services. In the Soviet period, the ratio of prices for input and output of agriculture provided collective farms and state farms with almost 40 percent profitability. Subsequently, hyperinflation of the era of coupon-karbovanets violated price parity in agricultural production, which resulted in the majority of agrarian enterprises being in a zone of loss-making. With the introduction of hryvnia, the parity of price movement in agriculture gradually improved, and today the agricultural sector is a highly profitable sector of the national economy. Currently, food consumption by the population of Ukraine is almost 20% lower than the norm recommended by the doctors. The combination of significant volumes of food exports with mass malnutrition is a sign of a drastic price disproportion – a violation of parity between the dynamics of household incomes and price movements in the national food market. The reason for the disparity is the high rate of inflation, which causes a permanent depreciation of the national currency. In 2014–2015, real incomes of the population declined by 30%, which by one third reduced its costs for the purchase of food products. Positive but insufficient rates of post-crisis recovery were observed in 2016–2017. If a third of effective demand is lost, and the pace of its recovery is at the level of 3–4% per annum, then the elimination of the consequences of the crisis will be delayed. One should follow the experience of developed countries that use higher consumption rates (the policy of "quantitative easing") as an anti-crisis measure. In Ukraine, the opposite trend is observed: in times of crisis, consumption rate is declining. In the author's opinion, it is advisable to increase it to 75% of national GDP and increase savings due to the growth of investment attractiveness for foreign investors. The main indicator that characterizes the price situation is the consumer price index. According to official statistics, real incomes of the population of Ukraine during the post-Soviet period have increased significantly, but the indicators of food consumption have considerably deteriorated. Such a contradiction shows understatement of the inflation index and requires clarification of the methodological principles of its calculation.