What is the pricing policy in agriculture

Agricultural market and agricultural price policy

takes into account specific factors that affect market supply and price developments in the agricultural sector. The natural dependence of supply (natural production conditions) and demand (population development, individual calorie requirement) leads to relatively large fluctuations in supply and relative uniformity in demand. Under these conditions, there are very large price fluctuations on free agricultural markets (- KING's rule). The agricultural markets are characterized by a polypolistic structure of supply and competition between producers. This is why they do not succeed in individually or jointly exerting influence on agricultural markets and prices. This explains the tendency of agricultural producers to make use of state agricultural market and price policies. As a result of the relatively low income elasticity of the demand for agricultural products (-p ENGEL's law), the possibilities of agriculture to participate in economic growth through the volume economy are limited, while technical progress enables a relatively strong expansion of production. This context gives rise to tendencies towards a weakening of the supplier position on the agricultural markets. With increasing economic development, the importance of the treatment and processing of agricultural products outside of the farms increases. This results in a trend towards a decrease in the producer's share in the consumer price. The classic agricultural market and price policy is limited to influencing the orderly flow of the market process, controlling cross-border traffic and collecting taxes and duties for fiscal reasons. For a long time, governments were powerless to deal with fluctuations in supply and prices. Only the prosperity of the industrialized nations enables them to develop and use a detailed and usually complex set of instruments to stabilize the agricultural markets. Measures to promote market observation, market statistics and producer information serve to limit the production errors that frequently occur under the conditions of the polypole. A rational marketing of agricultural products is in the interests of producers and consumers. It is guaranteed by - competition. Measures for its maintenance and development can be seen, among other things, in the promotion of the agricultural cooperative system and other forms of cooperation. One of the most important tasks of market and price policy is to protect domestic agriculture from foreign competition. The superiority of foreign competition and the strategic need to maintain a certain level of national self-sufficiency provide the basis for this. The usual means of -3 protectionism are protective tariffs, levies and quotas for imports. The increase in domestic prices compared to world market prices that can thus be achieved is at the expense of the consumer. This direct impact can be avoided if the producers are supported directly by -4 subsidies instead of through the prices (deficiency payments). The consumer is then indirectly charged as a taxpayer. With the help of a skimming system that includes all important agricultural products, all fluctuations in domestic supply and demand can be passed on to the external market. If this system is supplemented by interventions that prevent prices from falling below a certain level, then it is possible to limit price movements until the market is largely stabilized. The smooth functioning of such a skimming and intervention system assumes, however, that the degree of self-sufficiency is not fully achieved even with larger supply quantities and weaker demand, that the external market is large enough to absorb domestic deficit or surplus positions, that external supply is elastic and one Subject to pricing under competition. With regard to increasing national self-sufficiency, the higher the elasticity of domestic supply and demand in relation to price, the more effective the levy system is. The effect on agricultural income growth is greater the lower the price elasticity of domestic supply and demand. The price elasticity of domestic supply, which is relatively high in the long term, in particular, has the consequence that the intervention volumes increase with continuous application of the levy system. From this arises the need to supplement the system with measures of domestic production quotas and / or producers' participation in the costs of surplus disposal. This shows the limits of the positive income effect of market and price policy. Today it is recognized that income policy for agriculture can no longer be pursued solely through market and price policy. At the international level, agricultural market and price policy contributes to the stabilization of individual markets through the agreement of goods agreements, which aim to secure minimum prices for exporting countries and minimum supply for importing countries. The inevitably diverging interests and the uncertainty, especially of the development of production as well as the coming about of worldwide agreements. The agricultural market and price policy for the Federal Republic is operated within the framework of the European agricultural policy. Literature: Wöhlken, E. (1991). Plate, R., Böckenhoff, E. (1984)

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