Industry Structure of Agri-Food Production and Consumer Food Price Index

Abstract

It is believed that one of the main conditions for the absence of a shortage and stability of food prices on the domestic market is a sufficient level of food self-sufficiency, calculated as the ratio of the volume of production of this type of food to the volume of its use in the territory of the given country. However, this approach has a weak point: production volumes in the numerator are agricultural raw materials, and not consumer-ready industrial products. Considering the export channel of the extraction of food raw materials, the production volumes of agricultural goods sufficient for food self-supply do not guarantee their availability at national enterprises of the food industry to produce semifinished foods and ready-made food in a quantity sufficient for the food market to function without a deficit. Therefore, the purpose of this study is to test the hypothesis that the violation of industry proportions of agri-food production is one of the reasons for the growth of the consumer price index in the food market of Ukraine. The authors of this study proposed the “coefficient of the ratio of gross value added created in the food industry to gross value added created in agriculture” as an indicator that describes the sectoral structure of agri-food production. It was found that, provided the other factors of influence remain unchanged, an increase in the coefficient “the ratio of gross value added created in the food industry to gross value added created in agriculture” by 1% leads to a decrease in the consumer price index of food products and soft drinks by 0.317%. It was concluded that to ensure the stability of national food prices, such a coefficient should not be less than 1. The prospects of further research include the development of an organisational and economic mechanism for the development of a closed value chain in the system of national agri-food production.