AGRIFOOD COMPLEX UNDER INFLATION

Abstract

For a long time, Ukraine’s agriculture operates under conditions of the intense inflation process, i.e., under the systematic significant increase in producers’ prices. In the Soviet period, the powerful budgetary dotations restrained the increase in consumption prices of foods, but the purchase prices of agricultural products increased permanently. For 1950–1990, producers’ prices increased by 15 times, i.e., the mean annual inflation was about 7%.
In the years of Ukraine’s sovereignty, the inflation processes in the agrisphere are accelerating, which became a reason for the unprofitableness in the branch for the last decade of the past century.
There exist scientific theories, according to which the yearly inflation about 6–9% jointly with the yearly devaluation on a level of 3–5% are gainful to Ukraine’s modern economy. In our opinion, the inflation process is not gainful to the agriculture. The branch is slightly monopolized and loses the price races to other sectors of the economy: for the years, when the hryvna existed, the purchase prices increased by one quarter more than the sale prices.
For the agriculture, three aspects of price parity have the fundamental meaning in the intense inflation dynamics:
– ratio of the increase rates of prices of agricultural products and prices of the whole national economy. This proportion characterizes the intersectoral distribution of financial resources and the specific weight of a branch in it;
– ratio of the rates of motion of the prices of purchase and sale for agriproducers, which determines the sectoral profitability;
– ratio of the prices established by producers and the prices for the consumers of food products, which determines the demand for foods; it determines, in turn, the volumes of the food market and, in particular, the volumes of production of the agrarian products.
At the present time, the last aspect of the price parity acquires a special actuality. The inflation burst in 2014–2015 decreased the mean wages by one quarter and the mean real pension by one third. The tendency to a decrease in the food consumption became to act. To overcome the crisis phenomena, it is necessary that the growth in incomes of the population leave behind the inflation rate. Namely by this criterion, it is necessary to evaluate the achievements of the economic policy.