Price Distortions That Arise in Regard of Agricultural and Industrial Products

Abstract

The article analyses the price distortions that arise between industrial enterprises supplying agricultural producers with agricultural products (diesel fuel, fertilizers, agricultural equipment, etc.) and agricultural organizations that use these resources for products manufacture (grain, milk, meat, etc.). The prices for resources are growing faster than the prices for agricultural products manufactured, which leads to withdrawing incomes from the agricultural producers, to using the depreciation fund and to the insignificant profits to maintain the current activities, to accumulating debts to the budget, the extra-budgetary funds and banks. The resulting price distortions reduce the profitability of the agricultural producers and the opportunity to updating the inventory, which leads to aging of the machinery and equipment, to reducing productivity in agriculture, and, consequently, to the lack of conditions for conducting expanded reproduction, for introduction of advanced technologies and innovations.