JPRS ID: 10486 USSR REPORT AGRICULTURE

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• Content Type: REPORTS

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JPRS L/ 10486;
- 30 April 1982
USSR Re ort
p
AGRICUITURE
CFOUO 7/82)
Fg~~ FOREIGN BROADCAST IN~ORMATION SERVICE
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Cvx vrri~,~r~?L u~t. v~v~t
JPRS L/1Q486
30 April 1982
USSR REPORT
AGRICULTURE
(~oua ~~s2)
CONTENTS
AGRO-ECONOMICS AND ORGANIZATION
New Concept for Setting Procurement Prices in Agriculture
(Aleksandr L'vovich Meyendorf; VOPROSY EKONOMIKT, Mar 82)... 1
Ecanom:ic Planning of CEMA Countries in Agroindustrial Operations
(Ivan Nikolayevich Buzdalov; VOPROSY ~tONOMIKI, Mar 82) 10
~ - a - [III - USSR - 7 FOUO]
.
~ ~
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AGRO-ECONOMICS AND ORGANIZATION
NEW CONCEPT FOR SETTING PROCURIIrIEENT PRICES IN AGRICULTURE
Moscow VOPROSY EKONOMIKI in Russian Nu 3, Ma.r 82 pp 77-84
/Article by Aleksandr L'vovich Meyendorf, candidate of economic sciences, senior
scientific worker at the Institute of Economics of the USSR Academr~� of Sciences:
- "Socially Necessary Expenditures and Procurement Prices in Agriculture"/
/Text/ At present the levels of zonal procurement prices of many types of agricul-
tural product;s deviate considerably from socially necessary expenditures. This
hampers the fulfillment by prices of their accounting function, leads to a distor-
tion of economic indicators and to an inaccurate comgarison of economic results
with expenditures and makes it impossible to obj ectively evaluate the results uf
the economic activity of kolkhozes, sovkhozes and associatians and to draw up cor-
rect plans for the distribution of purchases of agricultural products and for the
specialization of farms and rayons. On the whole, everything that has been men-
tioned has a negative effect on the measures f or an increase in production effi-
ciency. The accountability report of the CPSU Central Committee to the 26th party
congress states the following: "If agriculture as a whole is discussed, it faces
the same main problem that other national economic sectors do--improvemen t in ef-
ficiency and quality." The solution of this problem is largely connected with an
improvement in the formation of prices of agricultural products.,,
~ The production of the biggest volume of output of a structure and quality needed
by society with given expenditures or the production of a given volume of output
- with the lowest possible combined expenses is the generally accepted criterion of
the economic efficiency of production. The efficiency of agricultural production
with observance of the social, political and other conditions corresponding.to so-
ciety's interests is determined by a comparison of the valume of output in value
units with the expenditures on its production.
The procurement prices of agricultural products set by the state have an active
effect on the eff iciency of their productian. Since the distribution of purchases
is also made by the state, cansequently, the cost accounting eff iciency of various
types of products is established by planning and agricultural bodies. At the same
time, in accordance with the adopted concept of price formation the levels c~f pro-
curement prices are directed toward the average conditions of production in the
price zone, that is, they deviate considerably from social?.y necessary expenditures,
which correspond to worse production conditions. As a result, a low prof itability
and sometimes even unprof itableness of output is actually planned for ~arms under
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objectively worse conditions. The derivation of a differential (rent) income from
the sale of the szme products is planned for farms under better production condi-
- tions. This income is only partially withdrawn in favor of society by means of
various financial levers (income tax, disposable balance of prof it and so forth).
With such a method of price forma.tion a different efficiency of production of many
_ types of proclucts is planned for a large number of farms.
Under existing conditions of grice formation a considerable part of the differen-
tial income on fertility is withdrawn through prices. This leads to the fact that
the levels of zonal procurement prices of given products in basic consuming and
large production regions are separate from each other--several individual rerri-
tories, in which economic calculations are incomparable with each other, are seem-
ingly formed. To eliminate this shortcoming, the differences among zonal prices
must not be arb itrary, but must correspond to real expenditures, including expend-
_ itures on the transportation of products f rom one zone to another.
A comparisan of the difference between the prices of wheat in a number of the coun-
try's consuming and producing regions in 1936, when differential income was not
caithdrawn through prices, and now can give a certain idea of the amount of differ-
ential income withdrawn through procurement prices. In 1936 the procurement price
of soft wheat in Gor`kovskiy Kray was only 4 percent higher than in Severo-Kavkaz-
skiy.l In 1981 the basic procurement price of this product in Gor'kovskaya Oblast
(as in a number of oblasts in North-West an3 Central Regions) was approximately 75
percent higher tihan the price in a number of administrative rayons in Krasnodar-
skiy Kray. The difference in the procurement prices of barley�between consuming
and producing zones is now "four to f ive times higher than the cost of its deliv-
ery from mass production regions."2 In all probability, in a number of consuming
regions the zonal nrocurement prices of some basic types of products are now higher
than the socially necessary expenditures on their production and in producing re-
gions, essentially lower than the socially necessary expenditures.
Socially necessary expenditures are reduced expenditures (that is, production cost
plus the standard of profit--eK--where e is the norm of profitability with respect
to capital adopted f or agriculture and K is specific productive capital) under
worse conditions of production of a product in a given region. The lack of corres-
pondence of the levels of procurement prices to the levels of sucia.lly necessary
expenditures leads to certain ;;hortcomings in planned management. The impossibil-
ity of an objective determination of the economic efficiency of the plans for the
distribution of purchases and production development is the most important of them.
For example, let us assume that the reduced expenditures on the production of 1
ton of wheat on farm A are 84 rubles and the socially necessary expenditures, 81
rubles. At the zonal price of. 86 rubles per ton wheat production seems efficient.
In fact, however, it is unprofitable for society, because t!.~e farm's reduced ex-
penditures exceed the socially neces~ary expenditures. If the reduced expendi-
tures of farm B on this product are 79 rubles, the zonal price is 76 rubles and
the socially necessary expenditures are 83 rubles per ton, with the seeming un-
profitableness of wheat it is effectj.ve for society. Hence it follows that the
- first farm should be specialized in the production of some other product.and the
purchase of wheat should be planned primarily for the second farm. However, to
do this with the existing price mechanis:n would mean to deprive the first farm of
a product effec tive for it and to impose the sale of an unprofitable crop on the
secand.
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Calculations in existing procurement prices not Gorresponding to socially necessary
expenditures can lead to an incorrect distribution of not only agricultural produc-
tian, but also of industrial production connected with it. For example, it is im-
possible to efficiently place a plan for the processing of agriculttaral products,
when socially necessary expenditures on their production and transportation are not
known. For the same reason contradictions, which are not characteristic of the so~
cialist economy, between the interests of society (which should be observed prim-
arily) and the cost accounting interests of enterprises and associations of ten
arise. Prices set without reference to the Ievels of socially necessary expendi-
- tures on the production of some product can stimulate farms to deviate production
expenditures from the levels of socially necessary expenditures, or to "punish"
them for the approximation of expenditures to these levels.
Price formation not based on the principle of approximation of prices to the lev-
els of socially necessary expenditures generates a need for petty tutelage ov~r
- the economic activity of enterprises on the part of planning and agricultural man-
agement bodies, because procurement prices of ten do not stimulate or weakly stim-
ulate farms to fulfill the plans for the sale af commodity output ~stablished for
them. The lack of correspondence of the cost accounting interests of a number of
farms to society's interests at times disrupts the mechanism of reward of workers
for the attained production results.
For the purpose of improving price formation in agriculture, it is necessary to de-
termine the levels of socially necessary expenditures on the production of various
types ~f products in the country and to maximally approximate local procurement
prices to these levels. Academician V. S. Nemchi.nov stressed that the "correspond-
ence of prices to socially necessary expenditures of labor is ane of the most im-
portant and basic provisions of our party..."3 The methods of~price formation
based on this important provision can contribute to a significant increase in the
eff iciency of agricultural production.
The lack of inethodological training of personnel, not the technical complexity of
calculations, is the main obstacle to a correct determination of the levels of so-
cially necessary expenditures on the production of agricultural products and to
the setting of procurement prices close to them. To this day some economists still
have the idea that in agriculture socia.lly necessary expenditures are the average
expenditures on the production of a given product in the zone or region. However,
the average level of reduced expenditures cannot be utilized for the determination
of the efficiency of output, because for the state it is also important to utilize
relatively worse productian cond~tions. In practice, procurement prices are ac-
tually set at levels of expenditures most different with respect to the average in
th e zone. In some cases they approximate them, while in others they deviate from
them considerably. The sale of individual types of products is of ten planned for
farms under poor conditians for their production, although they are planned to
give little prof it or to be unprofitable.
The advocates of the need for the deviation of prices from socially nece~sary ex-
penditures and for price f ormation accorui.ng to average production conditions cite
a number of argumFn ts in their defense. In ~~articular, they point out tnat the
state has economic and administrative levers, by means of which specific assi~~ance
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is given to farms under worse pr~cluction conditions; for example, the planning of
efficient, along with inefficient, types of commodity products for farms; alloca-
tion of outright budgetary appropriations to economically weak sovkhozes, which en-
able them to carry out expanded reproduction; granting of various privileges, in-
cluding the writing off of credit indebtedness to banks, to lagging kolkhozes.
However, these and similar measures do not solve the problem, because the lack of
correspondence of prices to socially necessary expenditures and the uncertainty of
the levels of the latter rernain, which deprives procurement prices of their ac-
counting function making it possible to objectively determine the economic effi-
ciency of agricultural production.
The distribution of purchases of specif ic output throughout oblasts, rayons an~.
farms with different natural and climatic conditions for the purpose of equalizing
the prof itability of farms inevitably leads to an increase in the cost of output,
because it does not make it possible to efficiently specialize the activity of
farms in the production of individual products. The granting of budgetary appro-
priations, writi.ng off of debts and similar measures do not stimulate kolkhozes,
sovkhozes and associations to increase the volume and to improve the quality of
output to the extent to which this is attained when material and financial re-
sources are received in the form of payment f or the quantity and quality of sold
output, that is, through prices.
Another argument advanced in defense of the used methods of setting of precurement
prices is that their f ormation according to the average production conditions in
every price zone and without reference to the levels of socially necessary expendi-
tures makes it possible to withdraw in favor of society part of the differential
income on f ertility where production conditions are better. However, if procure-
ment prices close to socially necessary expenditures (according to worse produc-
tion conditions) are to be introduced, their general level and the level. of retail
- prices should be raised considerably. Furthermore, according to Li~is argument, it
wauld be necessary to create a complex mechanism of withdrawal of rent payments to
the budget from farms and to pay farms large sums for output in order to withdraw
part of them afterwards.
Society is interested in obtaining agricultural output with the lowest expendi-
tures both at places of production and at places of consumption (with due regard
Eor transport costs). At both plac.es the prices of agr~icultural prcducts should
be as close as possible to the corresponding levels of socially necessary expendi-
tures. At the same time, at the place ~f ~~nsumption socially necessary expendi-
tures are equal to the amount of the procurement price close to socially necessary
expenditures at the place of production and of the expenditures on the transporta-
tion of products to the place of consumption. In connection with the fact that
- natural conditions at places of production are different and transport expendi-
tures on the delivery of products from various places of production to places of
consumption are not the same, in the country there cannot be a single level of
socially necessary expenditures and of the price of a specific type of product
corresponding to them at places of production or at places of consumption.
On the basis of the criterion of minimization of combined production and transport
expenditures it is possible to draw up a plan close to optimal for the distribu-
tion of p~urchases of agricultural output of a given volume and structure. The
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setting, s;multaneously with the physical indicators of such a plan, of the lev-
els of socially necessary expenditures and of procurement prices, which are close
to socially necessary expenditures, of the production of specif ic types of products
~ in the country's various regions is a necessary condition for its development.
This is connected with the fact that, to select the most suitable variant of dis-
tributian of purchases according to the criterion of national econornic efficiency,
_ it is necessary to make comparisons of combined results with expenditures.
The signif icant deviations of procurement prices from socially necessary expendi-
tures are due mainly to the use of the price apparatus for the performance of the
function, which is not characteristic of it, of withdrawal in favor of society of
the part of the differential income of farms in regions with relatively better con-
ditions and of the part of the necessary income of farms under worse production
conditions. Therefore, discontinuation of the withdrawal of this income through
prices would be of great importance for the approximation of the levels of procure-
ment prices to socially necessary expenditures on output in the country's various
regions. For this it is advisable to primarily reduce the difference between high
zonal procurement prices in large consuming regions and low prices in main produc-
tion regions to the amount of expenditures on the transportation of products bet-
ween them.
For the purpose of simplifying calculations, the concept of "standard wholesale
price" of output can be used. This standard wholesale price is close to socially
necessary expenditures at the place of consumption and is equal to the procurement
price close to socially necessary expenditures at the place of production plus ex-
penditures on the transportation of a unit of output to the place of consumption.
As a rule, the standard wholesale price is lower than the corresponding full whole-
sale price at a given place of consumption, which also i.ncludes trade ar~d some other
expenses. The standard wholesale prices at places of consumption close to socially
_ necessary expenditures are the lowest possible prices, because they must meet the
requirements of the criterion of minimization of expenditures on the production
and transportation of the planned quantity of output to the place of consumption.
The difference ber.ween these prices in any two places in the country should not
exceed the expenditures on the transportation of output between them.
Let us examine an example of the calculation of the preliminary variant of levels
of procurement prices of standard sof t wheat in a number of the country's regions.
In Krasnodarskiy Kray we will conventionally determine this price at 94 rubles per
ton and the expenditures on the transportation of wheat from Krasnodar to Moscow,
at about 6 rubles per ton.4 Then the standard wholesale price in Moscow and the
procurement price in Moscow Oblast will be approximately 100 rubles per ton (94+6).
~ At the same time, it is taken into account that part of the wheat transported from
Krasnodarskiy Kray arrives in Moscow or is transported through Moscow farther.
Wheat is also delivered to Moscow from other regions, including the Ukraine, the
Volga area, the Urals and West Siberia. When it is delivered from Zaporozh'ye,
standard expenditures on the transportation of 1 ton of wheat by railroad to Mos-
_ cow can be 4.5 rubles, from Saratov, 3.8 rubles, from Orenburg, 5.3 rubles, from
Tselinograd, 9.4 rubles and from Novosibirsk, 9.8 rubles. Taking the standard
wholesale pri~e in Moscow as the basis, it is possible to approximately determine
the preliminary levels of procurement prices per ton of wheat in the oblasts sup-
- plying it. In Zaporozhskaya Oblast it will be equal to approximately 95.5 rubles
(100-4.5), in Saratovskaya Oblast, 96.2 (100-3.8), in Orenburgskaya Oblast, 94.7
(100-5.3), in Tselinogradskaya Oblast, 90.6 (100-9.4) and in Novosibirskaya Oblast,
- 90.2 rubles (100-9.8).
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Large prodacing regi.ons supply w}~~eat to many places. While the expenditures on the
transportation of 1 ton of grain from Novosibirsk to Khabarovsk are 14.5 rubles and
its standard wholesale price in Novosibirsk is 90.2 rubles, the standard wholesale
price in Khabarovsk and the procurement price of 1 ton cf wheat in Khabarovskiy
Kray can be about 104.7 rubles (90.2+14.5). The prices examined by us are conven-
tional and serve only to illustrate the principle of determination of the differ-
ence among zonal prices in the country's various regions according to the transport
_ expenditures on the delivery of a unit of output among them.
Next it is necessary to determine the approximate quantity of commodity output of
each type planned for various republics and oblasts. At the same time, it is nec-
essary to take into account the preset levels of zonal procurement prices, which
should ensure planned loss-free production of no Iess than 90 to 95 percent of the
- total volume of a given product. In oblasts at f irst the levels of reduced expend-
itures on the basic types of commodity products planned for the five year plan are
determined and farms are ranked according to them. Levels of reduced expenditures
on the production of various types of products corresponding to the production
structure planned.for every farm are adopted. The levels of procuremet prices
close to socially necessary expenditures set for an oblast are used to "cut off"
the farms whose planned reduced expenditures on individual products exceed the lev-
el of the procurement price. The sale of given products to the state is not planned
for these farms. Then it is determined whether the levels of procurem~nt prices
adopted for various oblasts are mutually compatible and whether they contribute to
a full utilization of farm resources.
To explain what has been said, we will assume that in Krasnodarskiy Kray the re-
duced ex~enditures on the production of 1 ton of commodity wheat planned for the
five-year plan total from 50 to 100 rubles on farms. We will assume that, while
the kray procurement price is 94 rubles, on 5 percent of the farms these expendi-
tures exceed 94 rubles. If 95 percent of the farms can ensure the fulfillment of
the kray plan for the purchases of this crop, the sale of wheat should not be
planned for 5 percent of the farms where at this procurement price it would be un-
profitable according to the plan. However, if the wheat plan at this price and
with a planned prof itability of its production is not fulfilled, it is necessary
to either lower the plan for the purchases of this crop for this region, or to
raise its procurement prices.
ror the purpose of checking the correct setting of the levels of procurement prices
of various types of products, it is necessary to clarify whether the levels of
standard wholesale prices of a given type of product transported from various re-
gions are close to each other at every big place of consumption. If this is not
so, either purchases are distributed and directions of flows of transportation of
products are chosen inefficiently, or the levels of procurement prices are deter-
mined incorrectly. For example, as taken above, 1 ton of soft wheat transported
from Krasnodar to Moscow costs 100 rubles. Let us assume that in Kaluzhskaya Ob-
last, f.rom where wheat is also delivered to Moscow, the procurement price of 1 ton
of this product is preset at the level of 103 rubles. With an expenditure of 1
ruble on the transportation of 1 ton of wheat from Kaluga it3 standard wholesale
price in Moscow will be 104 rubles. The lower level of the standard wholesale
price of wheat arriving from Krasnodar indicates that the total expenses on the
- production and delivery of this product to Moscow can be lowered through a reduc-
tion of its transportation from Kaluzhskaya Oblast at the expense of a correspond-
_ ing increase in deliveries from Krasnodarskiy Kray. After the plans for the
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distribution of purchases of wheat, thE flows of its transportatiun and procurement
prices are corxected, price levels are set in various wheat supplying regions.
Along with transport expenses on the delivery of wheat the~ should be in Mosc ow ap-
proximately the same (f or examp~e, at the level of 100.5 rubles per ton).
Upon the attainment of equality of standard Taholesale prices of basic types of com-
modity products at every big place of consumption the l~vels of procurement prices
and the plans for the distribution of purchases throughout the country can be con-
sidered suff iciently close to optimal, that is, correspanding to the above-cited
criterion of efficiency of the sector as a whole (with provision of a normal or
close-to-normal profitab ility of most farms).
Directive bodies plan the volumes, structure and specifications of output on the
basis of society's needs and capabilities. Thus, the levels of procurement prices,
close to socially necessary expenditures, of various products are determined by the
plans f or economic development, the population's supply and existing natural con-
ditions. The task is as follows: To set in a methodological and methodically cor-
rect manner the levels of procurement prices close to socially necessary expencii-
tures, which objectively meet the requirements of the plan for the distribution of
purchases of products throughout the country. At the same time, the bigger the
transPort expenditures f rom the place of consumption to the place of production of
a product, all things being e.qual, the lower socially necessary expenditures and
the procurement price of this product corresponding to them at the place of produc-
tion should be and vice versa.
The ~ltitude of interconnected I.evels of p~cocurement prices of various types of
= products in the country's various parts can be determined only by means of a num- ~
ber of repeated calculations. In connection with the fact that, in general, trans-
port expenditures on the delivery of products among the country's localities are
invariable, the difference among the levels of procurement prices in various re-
gions also can be constant. For example, in the above-cited example if the pro-
curement prices of 1 ton of wheat in the amount of 94 rubles in Krasnodarskiy Kray,
96.2 rubles in Saratovskaya Oblast and so forth do not make it possible to obtain
the planned total quantity of commodity wheat without damage to the interests of
most farms, a rise in these prices by an amount uniform or close to uniform for all
_ oblasts may be needed. For example, if the price of 1 ton of wheat in Moscow is to
be raised by 1 ruble, in Krasnodarskiy Kray the procurement price of this product
should also be raised by 1 ruble and it will be 95 rubles (94+1). In Saratovskaya
Oblast the price will rise to 97.2 rubles (96.2+I), in Khabarovskiy Kray, to I,05.7
- rubles (104.7+1) and so forth. The planned volumes of purchases should b~ changed
accordingly.
When the level of procurement prices is set higher than necessary for the produc-
tion of the planned volume of a product, farms try to overfulfill the plans for the
sale of this product and to underfulfill them for other types of products. Then
the level of procurement prices for this product shou~d be lowered everywhere by
the same amount and Iocal procurement plans should be brought in correspandence
with state needs. ~
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To cArrectly deteruLine the planned levels (for exau~ple, for the five-year plan) of
oblast (republic) pxocurement prices is not an easy, but quite feasible, task. In
the future, when an ever greater proportion of calculations will be performed by
= computers, it will be possible to more accurately set the levels of socially nec-
essary expenditures and the levels of procurement prices corresponding to them and
to distribute purchases. Taking into consideration the fact that now it is not yet
possible to sufficiently accurately determine the levels of socially necessary ex-
penditures and the flows of transportation of products in various places of their
consumption, which. char_ge from year to year, and that it is difficult to calculate
the expenditures on the transportation of products among the country's regions,
procurement prices close to socially necessary expenditures can be set only approx-
imately. However, e~en such prices make it possible to more substantiall;~ perform
planned calculations for the distribution of purchases and to more reliably eval-.
uate the activity of farms than with the existing method of price formation.
In order not to differentiate procurement prices unnecessarily, at first they should
be set for oblasts (republics without an oblast division). Subsequently, it will
be possible to bring them up to administrative rayons. Oblast and rayon procure-
ment prices will differ from existing zonal and differentiated prices in the fact
that they are interconnected in terms oi transport expenditures. At the same time,
the same price can be set for several oblasts (rayons). For example, using the
f oregoing example, it can be assumed that the procurement price of I ton of sof t
wheat in tre Bashkir ASSR can be close to the price in Krasnodarskiy Kray, because ~
wheat is transported to Moscow from both regions and the distance between Uf a and
Moscow is close to the distance between Moscow and Krasnodar.
At present prices deviate from socially necessary expenditures mainly in order to
more easily withdraw part of the farm income by means of them. However, it is
withdrawn f rom farms in such a way regardless of the amount of the planned net in-
come and of �.ahether, in general, net income from a given product is planned for
them. Thi~ leads to a diff erentiation of Ch~ planned prof itab ility of farms. The
- setting of procurement prices corresponding to the levels of socially necessary
expenditures will abolish the planned unprofitableness and low profitability of
farms. However, this will require the establishment of a system of direct with-
drawal of the differential income of farms, which can be done through the intro-
duction of so-called stable payments to the budget used in the food industry.
These payments are set for enterprises in percent of their actual prof it. T[ie
amount of percentage depends on the amount of planned profit and the profit that
is to be lef t at the enterprise's disposal.
Stable payments in agriculture can be set for highly prof itable kolkhozes and sov-
khozes and, as earnings are received in the current accounts of farms in the bank,
the appropriate sums in a certain percent of these earnings can be withdrawn until
tlie payment is liquidated fully. At the same time, on sovkhozes stable payments
will replace tl-~e disposable balance of profit, which is now withdrawn from them.
The amount of the planned net income remaining at the farm's disposal after the
withdrawal of a stable payment should be suff icient to ensure its planned expanded
reproduction. With due regard fer the payments received in the budget the total
volume of capital granted agriculture f or a given quantity of output purchased by
the state can remain at the approved level.
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The transition to ~he new principle of withdrawal of differential income in agri-
culture. is pnssible on the basis of the existing system of settlement of accounts
between farms and grocurement enterprises, i.n accordance with which the enterprises
that purchase the basic types of products of farms at different zonal prices credit
them at accounting prices uniform for the entire country. For example, soft wheat,
regardless of the levels of procurement prices at which it is purchased in various
price zones,is credited by procurement organizations at a price uniform for the en-
tire country--111 rubles per ton.
The change in the levels of zonal prices should not affect the levels of accounting
prices and, consequently, whr~lesale and retail prices of food. This is due to the
fact that the additional payments from the budget to procurement organizations in
the zones where procurement prices exceed the accounting price will be liquidated
not only by the bu3get revenues in the zones where procurement prices will rema.in
b~low the accounting price, but also by the budget revenues from stable payments of .
highly profitaUle farms.
FOOTNOTFS
l. Calculated according to the data cited in A. N. Malafeyev's book "Istoriya
Tsenoobrazovaniya v SSSR (1917-1963)" /History of Price Formation in the USSR
(1917-1963)/, (Izdatel'stvo Mysl', 1964, p 393).
2. A. S. Baranov, "Gosudarstvennyye Zagotovki v Uslovi~akh Spetsializatsii i Kon-
tsentratsii Sel'skokhozyaystvennogo Proizvodstva" /State Procurements Under
Conditions of Specialization and Concentration of Agricultural Production/, Iz-
datel'stvo Kolos, 1978, p 83.
3. V. S. Nemchinov, "Obshchestvennaya Stoimost' i Planovaya Tsena" /Social Value
and Planned Price/, Izdatel'stvo Nauka, 1970, p 213.
4. Here and hereinafter the expenditures on the transportation of products appr.ox-
imately correspond to the actual expenditures.
COPYRIGHT: Izdatel'stvo "Pravda", "Voprosy Ekonomiki", 1982
11,439
CSO: 1824/240
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ACRO-ECONOMICS AND ORGANIZATION
E~ONOMIC PLANNING OF CEMA COUNTRIES IN AGROINDUSTRIAL OPERATIONS
Moscow VOPROSY EKONOMIKI in Russian No 3, Mar 82 pp 96-104
[Article by Ivan Nikolayevich Buzdalov, doctor of economic sciences, ~enior
cientific a~ssociate of IEMSS, USSR Academy of Sciences; and Mik~zail Yefimovich
Bukh, ~andidate of economic Sciences, department head, NII [Scientif ic-Research
Institutej of TsSU SSSR [USSR Central Statistics Administration]: "The
Economic Mechanism of the Agroindustrial Sphere"]
[TextJ In the agrarian policy of the Communist and workers parties of the social-
ist countries, ever-increasing attention is being devoted to increasing the effec-
tiveness of the economic mechanism of agriculture and the entire agroindustrial
complex.
There operates in the single system of the national economy of a particular
socialist country a sirgle economic mechanism, and application is made of single
f~rms and methods of the planned social organization of production and
exchange of labor activity, which encompass all levels and links in that system.
At the same time, to the degree that it is rightful to isolate agrarian relations
from the overall system of socialist production relations, it is completely
natural to carry out a special consideration of the economic mechanism of the
development of agriculture, and, under conditions of the deepening of its
integrational links with the related branches and spheres in the national
economy, the economic mechanism of the agroindustrial complex. When analyzing
the specifics of the economic mechanism in the agroindustrial sphere and especialy
i.~ its basic link, agriculture, a factor of fundamental importance is the
taking into account of the vast variety of concrete conditions of production,
which substantially influences the nature of the formation, making, and
implementing of the planned economic decisions, the providing of economic
incentives to production through a system of prices, the distribution of income,
etc. In turn, these specifics exert an influence upon the fundamental aspects
_oE the operation of the entire economic mechanism in the national economy.
A very important link in the economic mechanism is planning, and the forms and
methods of carrying it out. Studies by economists in the socialist countries and
the positive experience derived from the changes in the economic mechanism of
the agroindustrial sphere indicate that their initial point is the use of those
methods of planned administration, foxms of making and implementing Planned
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decisions, and evaluations of the results of labor which, in all links of
economic-planning activity, are based on incentives and interests. The essence
of this orientation consists in the more consistent observance of the principle
of democratic centralism, in the elimination of excessive administrative regula-
tian of the work performed by the primary production links, which are supported
through a system of economic contracts and through the mutual material responsi-
bility of all the partners participating in the reproduction process of the
_ APK [agroindustrial complex] system. The necessity for improving the economic
mechanism specifically in this direction was indicated, in particular, at the
November 1981 Plenum of the CPSU Central Committee. In his speech at the Plenum,
- L. I. Brezhnev remarked, "An important place when developing the food supplies
program should also be given to such large-scale problems as the improvement
of the economic mechanism and the system of administration the administration
of agriculture and the ag~:,ir.~v:;trial complex as a whole. And, of course,
administration at the local level."
Recently in the socialist countries steps have been carried out, or are being
planned, for the improvement of planning, and for involving the collectives of
enterprises and APO [agroindustrial associations ] in economic-planning activities.
When forming ancl implementing planning decisions and concrete assignments,
more and more active use is being made of economic levers, interests, and incen-
tives, and there has been an increase in the economic independence of the produc-
tion collectives, as a result of which there is a more consistent carrying out
of the principle of democratic centralism. An important form is the economic
_ contract, which acts as a direct economic lever for the wall-substantiated
formation of the assignment, as an instrument of planning.
When evaluating a particular approach to the use of the economic mechanism, and
primarily its chief link methods of planning from scientific positions,
it is necessary to take into consideration the results of the application in
the practical situation of the corresponding methodological concepts. In this
regard, something that deserves attention is the study and dissemination of the
experience in organizing iY:e economic-planning interrelations in the agro-
~ industrial sphere in V?~.TD. [Hungarian People's Republic]. It is specifically that
experience that contributed to the skillful coordination of the work performed
by the Hungarian agricultural cooperatives and enterprises, as was noted in the
Report of the Central Committee to the 26th CPSU Congress.
During the past 15 years the increase in the harvest yield of grain crops in
Hungary came to approximately 20 quintals per hectare (with tYiat increase being
achieved from a level that was comparatively high at the beginning of the eco-
nomic reform: in 1966-1970 it constituted an average of 25.4 quintals per hectare).
In other European CEMA countries, the harvest yield of grain crops increased
with the limits of 7-10 quintals per hectare. On the new economic-organizational
basis that was linked with the orientation of the economic mechanism on the final
- results, high overall growth rates for agricultural production were assured.
During the past two five-year plans they came to an average of 4 percent per
year. During the 1960's Hungary was a country that was a net-importer of grain,
but in recent years, with a production of more than 1.2 tons of grain per person,
Hungary became a net-exporter of that basic product. The level of ineat production
per capita of population was more than 140 kilograms in 1978-1980 (increase of
more than 50 kilograms as compared with 1965).
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The fact that the results of the rapid and as has been shown by the dynamics
of the production costs of output and profitability more effective development
of agricultu~~ aad the entire agroindustrial complex were achieved thanks to
the comprehensive improvement of the economic mechanism, is attested to by
the data concerning the amounts of attracted resources. During the period indi-
cated above, for example, capital investments in the agriculture of Hungary
dropped from 18 to 15 percent of the overall~valume of investments in the national
economy. All this attests to the indisputable effectiveness of the economic
approach to the making and implementation of planning decisions, when provision
is made for the active manifestation of such a motivating force in the economic
mechanism as interests, personal self-interestedness, the special importance of
which in the course of communist construction was pointed out by V. I. Lenin*.
The broader the horizon for the manifestation of interests primarily the
- material ones is created by the planning methods that are being employed,
the more dynamic the development and interaction of the entire system of
socialist production relations and the more effective the functioning of the
= productive forces and the method of production as a whole.
The basic peculiarity of the economic mechanism of the agroindustrial complex in
Hungary consists in the fact that the state carries out the planning of the
national economy not by means of the direct informing of the specific executors
of what their planning indicators are, but, rather, by means of using such
- economic levers and incentives as the economic contract, the controlling of
state deductions from enterprise income, the regulation of the part of the
income remaining with them, various fixed payments and taxes (payment for fixed
and working assets, income tax, etc.), price policy, credit system, etc.
Gnterprises and organizations in the agriculture and food industry of Hungary in-
dependently develop their own annual and Live-year plans. Those plans are
ciot approved by superior organizations, which carry out monitoring functions with
regard to their execution. The procurement organizations and the trusts in the
food industry, on the basis of the plans received from superior agencies,
conclude contracts that are based on equality between the contracting parties,
with the SKhPK [agricultural producers cooperatives] and state farms for the sale
of specific types of output. The cost-accounting form of implementation of the
platined assignments guarantees the observance of the material interests of the
cooperatives and state tarms and contributes to the formation of such an
agricultural division of the statewide plan in which the needs are more completely
c~ordinated with the re al capabilities of production and with its concrete
conditions.
An important area in improving planning is the inclusion in this process of the
purchase and supply-and-sales organizations on a cost-accounting basis. As has
= been shown by the experience in Hungary, under conditions of the broad, active
us~~ ot economic methods, the cost-accounting principles of plan formation and
implementation, direct contacts, and economic-contract forms of exchange of
activity, the need for purchasing organizations and other intermediaries completely
*This does not contradict the determining role of social interests. In this
instance we have in mind the assumption that, the more completely personal self-
interestedness manifests itself i_n the sysLem of interests, the more successfully
the collective and social interests are implemented and the highest goal of
producti~n under socialism is achieved.
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disappears. But in the event tha.t they aL~ retaine3, only complete cost accounting
(and cost accounting is a metr:oc: for the planned running of the economy) can
convert the procurement and supply organizations into active participants in
the system of planned administration, which have a direct self-interest in
the improvement of the economic-planning work, the efficient placement of the
plans, the improvement of the structure of production and technology, etc.
The course of the Communist and workers parties in the socialist countries, aimed
at improving planning, has led in recent years to noticeable qualitative shifts
in the direction of bringing the CEMA countries closer together with regard to
the economic mechanisms of the development of the agroindustrial sphere. This is
of great importance not only for increasing the effectiveness of these mechanism
within each country, but also for forming an effective economic mechanism for
international cooperation in the agroindustrial sphere within the framework
of the socialist economic integration. Obviously, at such time it is necessary
to ~rient oneself not at some medium alternative, but upon the more effective
deci$ions that have been developed and that are being employed comprehensively
in the individual countries.
Substantial chan~es after the March 1979 P?enum of the Central Committee of the
Bulgarian Communist Part'y occurred in the mechanism of the planned administratior.
of the agroindustrial complex of Bulgaria. P~evio~sly the system.of planning in the
NAPK [national-ecpnomic agroindustrial complex] of Bulgaria was characterized by
the fact that the central agencies developed the detailed indicators iri the
plans for the districts, and the districts developed them for the agro-
industrial complex. For purposes of developing ttie economic initiative of the
collectives in the new economic mechanism there is an intensification o'r the
role played by cost-accounting levers and incentives. The APK and the other
enterprises in the agroindustrial sphere are informed of only four consolidated
indicators, including the mandatory sale of a number of basic types of output
(no more than eight types of products, depending upon the farm specialization).
All the remaining sections and indicators in the plan, including such ones as
the sowing structure, harvest yield, quantity and productivity of lives~tock,
production costs, profit, capital investments, and the number of employees,
are developed by the agroindustrial complexes themselves. The new economic
- mechanism stipulates a sharp increase in the role played by prices and other
economic levers in planned administration. The mentioned limited number of
assignments for the APK are implemented on an economic-contract basis of inter-
relations with the appropriate purchasing and other organizations. As was noted
in the Report of the Central Committee of the Bulgarian Communist Party to the
12th Party Congress, within the near future it will be necessary "to make
complete application of the basic principle and requirement of the new economic
mechanism the changeover of all types of economic and social activity to
cost accounting, the very core of which is the paying for oneself"~.
The measures for improving the planned administration are also being carried out
in Czechoslovakia, GDR [German Democratic Republic East Germany], Romania,
~~T. Zhivkov, Otchet TsentraZ'nogo Komiteta BoZgarskoy korronunisticheskoz~ partii
XII s"r~ezdu i predstoz~ashchiz~e zadachi pQ2''tZ2 [Report of the Central Committee of
the Bulgarian Communist Party to the 1'Lth Congress and the Tasks Confronting ttie
Party], Sofiya Press, 1981, pp 34-35.
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and other CEMA countrie~, and this attests to the undoubted progress in bringing
closer together the econemic mechanisms of the agroindustrial complex in those
countries. However, a large amount of woric remainss to be done, primarily
work involving the comprehensive use of the econon.ic mechanism, and the
intensifying in that mechanism of the role played by cost-accounting levers
and incentives.
In conformity with the decree of the ~PSU ~entral Committee and the USSR Council
of Ministers that was adopted in November 1980, entitled "Improving the Planning
and the Providing of Economic Incentives for the Production and Procurements
of Agricultural Products," steps are being carried out to eliminate the exceesive
guardianship over the farms. There has been a reduction in the number of indi-
cators that are communicated to the kolkhozes and sovkhozes in a centralized
procedure. For kolkhozes, for example, they are limited to the valume of
- purchases of agricultural products and the quantity of basic material-technical
means to be delivered. For sovkhozes, in addition, plans are specified for
the wage fund, profit, andfinancial limits of capital construction. Instead
of a large number of plans, a single plan is established for purchases of output
at all levels of planning of production, and norms lists for material-technical
support and capital construction are employed.
Since 1981 there has been a new procedure, according to which the collectives
in the subdivisions are granted the right to determine for themselves the size
of the bonuses and the overall earnings, with a consideration of the actual
~ contribution that was made to the final result by the activity of the collective,
and a consideration of the level and effectiveness of production. There has
been an intensification of the sanctions applied as a result of poor work.
The farm managers and specialists will receive bonuses nnt for overfulfillment
of plan, but for an increase in the volumes of sale o: output and profit
received. In the implementation of these principles, a factor that is of
decisive importance is, of c~urse, the change in the forms of executing the
planned assignments on the basis of increasing the role of the economic contracts
in the process of planning.
An important area for the further improvement of the economic mechanism in the
agroindustrial sphere of the CEMA countries`is the guaranteeing of the more
effective combination of the centralized plan with the development of the
~conomic initiative of the collectives at the enterprises in forming and fulfilling
it. Among the concrete measures being successfully carried out in Hungary, one
- that is of determining importance is the limitation of the directive assignments
to enterprises and associations in physical indicators, the communicating of
those assignments to the appropriate departments and regional agencies of admin-
istration, and the use in implementing them of cost-accounting methods that
~rant equal economic conditions of management for the planning-and-pr~curement
and supply-and-sales agencies, and the enterprises ~f the APO [agroindustrial
associationsl. ,
A special role in the comprehensive improvement of the economic mechanism in the
aQroindustrial sphere is played by the inter.sification of the functions of the
economic levers, which were constructed pri~narily on the vrincivle of the
equivalencv of exchanQe. ::herein lies one of the decisive conditions for the
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consistent application of cost-accounting methods ira planned administration, and
the directed use of the motivating basic of the.entire mechanism interests. .
At the present time, basically as a result of the lack of perfection with
regard to prices, there has been a break in the direct link between material
incentive and profitability, as a concrete expression of the repayment principle
and a generalizing indicator of the effectiveness of production. One should
note that the improvement of pricing is not a local question of reinforcing the
cost-accounting relations in the APK system, but, ratt~er, one of the key
- national-economic problems of socioeconomic developmet:t and the application of
effective cost accounting in the entire national economy. What is required
here is the consistent carrying out of a series of economic-planning, statewide,
centrally carried out measures involving the application of a price system
that corresponds to the objective natural laws underlying the formation of
prices. These measures touch upon such an important problem of improving the
_ economic mechanism as the systematizing of retail prices of foodstuffs and
articles made from agricultural raw materials.
For the European CEMA countries during !:he past 20-year period a typical feature
was the cr~nsiderable increase in purchase prices. That contributed to the
reinforcement of the economic foundations of cost accounting in agriculture.
At the present time a task that is becoming a very important one is the creation
of a more flexible system of purchase prices, which is based on the expenditures
of live and embodied labor, and also which takes into consideration the capital
requirements of output, including in the assets the land in its monetary
evaluation. The co~r;pl~xities in improving the:purchase prices lie in the
fact that in a number of CEMA countries the production costs are not computed
by all farms. The normative production costs are determined fur random groups .
of enterprises. Their more precise computation requires an increase in the
number of farms that establish the production costs of the output being produced,
and the work on the basis of cost accounting includes the necessity of computing
~ the production costs of the output on each farm.
The role of prices as an incentive presupposes definite deviations from the
basic price, particularly through establishment of bonus markups to be applied
to it. The principles of paying such bonuses are different in various countries.
- In Hungary, East Germany, and Czechoslovakia they are computed for the planned
increase in production as compared with the previous period. For production
of output in excess of the planned volume, no increased prices or markups are
established there. In Bulgaria and Romania, and prior to 1981 in the USSR,
in addition to the basic prices for a number of agricultural products, bonus
' markups were applied for the production of output in excess of plan. The
encouragement of thc planned increase in production by means of prices appears
to be more effective, inasmuch as the markups for sale of output in excess of
plan do not encourage the farms to accept intensive plans and are, in essence,
a return to a double price system.
The changeover of agriculture to an industrial base is closely linked with the
intensification of the integrational processes in the branch and with the forma-
tion of interfarm enterprises and agroindustrial associations. In this connec-
tion, during recent years there have arisen in the capitalist countries new
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aspects of improving the pricing of agricultural output, which aspects are
influenced by the fact that, through prices, it is necessary to guarantee
the equal interest that the partners have in cooperative actions, primarily
income that is proportional to the contribution made by each p articipant per
unit of expenditures invested in the obtaining of the final results of the
economic activity. A factor that takes on great importance is the establishment
of contractual settlement prices. The degree of correctness with which the
sett~ement prices are estahlished decisively determines the ma.terial self-
interestedness of the partners in the cooperative venture.
An important question when establishing the settlement contract prices is
their interrelationship with state purchase prices. Apparently, the construction
of the ~ettlement prices exclusively on individual costs without a consideration of
ttie existinb purchase prices can~lead to a break between the economy of the
_ associations and the real reproduction process within the framework of the
national economy, and this, in the final analysis, wi11 lead to undesirable con-
sequences. Therefore, when establishing the settlement prices, it is desirable to
orient oneself on the overall price policy, on the economically substantiated
level of state purchase prices. With the price relationships that have developed,
it is possible to include in the settlement nrice the purchase price, plus or
minus a markdown or rebate, proceeding from the individual costs and the nature
of the specialization of the partners in the association.
The chief area for improving pricing is the application of a well-substantiated
system of purchase and other sale prices, including the correct establishment of
prices of producer goods that are de~ivered to agriculture, and for the services
rendered to it. Unfortunately, the correlation between industrial and agricul-
tural prices for the output produced by the APK [agroindustrial complex] in the
CEMA countries, as a rule, is formed to the advantage of the industrial branches
and that lessens the incentive principles of the economic mech anism.
In the establishment of prices it is especially important to take into considera-
tion of the chief specific features of agricultural production the limited
nature of the land, with its dissimilar natural fertility, th at is, social con-
ditions which objectively lead to the formation of differential rent. Therefore
planned pricing cannot orient itself on the cost of production of output on
average land (in any instance, for the USSR). With this kind of orientation an
i~ievitable result is the preservation of subsidies and oth.er channels, outside
the cost-accounting system, for redistributing the net income, and that weaken
the economic role of price as an incentive for intensifying production, for
specializing it, for encouraging an increase in effectiveness, etc. At the same
time this gives rise to the differentiation of the economic and social develop-
ment of the farms that have at their disposal land of worse or better quality.
The orientation, in pricing, on the products of agriculture wh ich are produced
on the worse land presupposes the transfer of rent to the social funds by means
of its direct extraction, by means of the differentiation of the rates for rental
payments depending upon the evaluation of the land. The income derived by the
farms and by tne state will remain approximately the same, but the very mechanism
of regulating the rental relations with the use of a single price will have a
more active ~~ffect upon the increase in effectiveness.
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An import2nt role ~n the providing of economic incentives for agroindustrial
production in the CEMA countries is played by the credit system, which is be-
coming a more and more effective regulator of production. There has been
a fundamental change in the structure of credit: there has been a sharp increase
in the percentage of long-term investment credits and a reduction in the share
of short-term ones. The interest rates for credit are becoming more substantiated,
inasmuch as the reduced rates, which are divorced from the overall normative
coefficients of effectiveness, nullify the encouraging role of credit.
An essential role in the economic mechanism of the agroindustrial complex of
the CEMA countries is assigned to taxes, in the form of which deductions to be
paid into the state budget are made. Experience shows us that the incentive
importance of the system of taxation is greater in proportion to the extent to
which the size of the t3xes is closely linked with the profitability and with
the level of profitability. This principle is being carried out most consistently
in Hungary.
In Bulgaria in the mid-1970's a single task for the APK was established depending
- upon the profitability of production. In East Germany the base for computing
the tax since 1981 has been the farms' profit, rather than the gross income,
as had been the case previously.
Another typical feature in the development of the system of taxation is the
increase in the importance of the land tax. In Hungary and East Germany, for
a long time, a part of the farms' net income has deen extracted and paid into
- centralized state funds on the basis of the land tax. In 1980 in Czechoslovakia
the land tax collected from enterprises running farm on fertile soils was
increased by 25-30 percent, including 70-90 percent for those on fertile
ehernozems. Factually speaking, this is a concrete form of rental payments.
A factor of particular importance in increasing the effectiveness of the
- economic mechanism is the intensification of the mutual self-interestedness and
responsibility borne by ail links~.in the economic and administrative structure
of the APK in the final results. In directives dealing with~the Sixth F ive-Year
_ Plan for Hungary it was emphasized that, when carrying out the control functions,
the agencies of planning administration must bear the direct responsibility
"for their own economic resolutions and the effectiveness of their economic ac-
tivity." Contract relations are the legal and economic form of carrying out
this principle.
Scientific generalizations and the practical experience in the CEMA countries
- indicate that the observance of the functional principles that are inherent
in contract relations, with which the partners in the agroindustrial sphere
act as completely eq~eal economic links operating on a self-repaying basis,
creates real prerequisites for the efficient combination of centralized planning
with the development of economic initiative, for achieving a closer tie between
the incentives and effectiveness.
During recent years, in the decisions of the Communist and workers parties in
the socialist countries, there has been an emphasizing of the need to intensify
the role played by contract relations, to reinforce contract discipline, and to
achieve a direct relationship between the providing of material incentives and
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the fulfillment of the pledges with regard to economic contracts. The economic
contract is becoming an increasingly active economic instrument for forming,
. making, and amplementing planning decisions.
The role of direct economic-contr~ct ties in the prevention of losses is great.
Under the conditions of the relations that have developed between the farms
and the procurement and supply-and-sales system, the producers orient themselves
only on that amount of output which can realistically be accepted and stored
in that system~in storage facilities, at warehouses, etc. With the traditional
system of procurements, as a result of the lag with regard to the infraetructure
of the agroindustrial complex, there is a loss, for example, of as much as 40
percent or more of potatoes, and as much as 2'S percent of vegetables and fruit.
In the All-Hungarian Vegetable and Fruit Association that was created and is
- operating on a contract basis, and that uses modern equipment, almost complete
elimination of losses has been achieved.
Practical life attests to the fact that it is precisely with a developed system
of economic contracts that one achieves the best balancing of production,
overcomes departmental barriers, and provides for the application of a truly
comprehensive system of planned administration of production buth on the
macroeconomic and on the microeconomic level. 1ne experience of Hungary shows
that the resolution of these problems to a suhstantial degree appears possible
on the basis of converting the economic contract into the chief form of economic
interrelations between enterpri~�es and the organizations of the NAPK, thanks to
which, factually speaking, the directed formation and successful implementation
of the state plan are carried out.
At the present time in the European CEMA countries 80-100 percent of the commer-
cial agricultural output produced in the social sector, in the course of its
subsequent processing and sale, is recorded in economic contracts. However,
in and of itself, the share of output that is involved in the economic contracts
does not yet determine the degree of effectiveness of the use of this system.
- Against the background of overall progress in the development of economic-
contract relations, the degree of use of the functions and principles that are
organically inherent in that ecor.~mic category is substantially different for the
individual countries. The contracts can fulfill the economic functions of
di.rect influence upon increasing the final results of the development of the
NAPK, when they act as a relatively independent lever for implementing the
economic-planning decisions, rather than formally duplicatin~ the planned
assignment. Correspondingly, the entire system of incentives and sanctions
- should be constructed depending upon the fulfillment of the economic contracts.
The effectiveness ~f the economic mechanism depends to a substantial degree upon
the forms and methods of material incentive provided to the workers in the
production subdivisions, upon the clearly coordinated economic relations
within the enterprises of the agroindustrial associations, complexes, combines,
etc. The question that is fundamental here is the question about how the
system of incentives is consistently directed at effectiveness and quality,
and what predetermines the strictly established evaluation criteria and indi-
cators of economic activity. When improving the economic mechanism of the agro-
industrial complex, it appears to be important to achieve a direct functional
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relationship between the enterprises' income and the level of payment of the
13bor performed by the workers, on the one hand, and the generalizing indicator
of their effectiveness profitability on the other.
With the aid of a price policy, deductions from profit, and other forms of
financial-economic regulation, one guarantees the combination of the interests of
soci`ty as a whole and the individual collectives. Simultaneously one creates
the prerequisites for intensifying t.he material self-interestedness of individual
workers within the economic subdivisions. However, in order to implement these
prerequisites, it is necessary to inform every worker collective, every concrete
groducer, of what the incentives are. This is possible by the development,
practical introduction, and constant improvement of a system of incentives that
is based on the socialist principle of remuneration for labor on the basis of
its quantity and quality.
- Payment for labor is the chief form of realizing the personal economic interests
of the producers in the system of production relations under socialism. During ~
the past decade the role of the basic wages as a form of material incentive in
- the agriculture of the CEMA countries has ~rown. This is linked with the change-
over to monetary payment, with the introduction of a guaranteed minimum wage,
and with the gradual reduction in the share of the vitally needed means which
are needed for the reproduction of the manpower and which are coming from the
personal subsidiary farm. But simply through wages one does not always assure
a direct relationship between the results of labor and the effectiveness of
production, on the one hand, and the income of the immediate producers, on the
other.
As a result of the development of comprehensive mechanism, the results of labor
- are increasingly determined not by individual workers, but by a collective a
- brigade, section, etc. Under these conditions in all the countries that are
being considered, there has been an increase in the role of the system of
payment by the job plus bonus. This system, when determining the contribution
made by each individual to the overall result takes the most complete considera-
tion of the individual material interests of the producers and assures their
combination with the overall, collective interests*.
At the present time there has been an increase in the role of bonuses paid to
workers on the basis of the final results of their labor. For example, in
Czechoslovakia, in the overall volume of bonuses there has been an increase
in that share of them for which the payment is linked with the qualitative
*In the European CEMA countries, the job-plus-bonus system is used with the
giving of time advances. Sixty to 80 percent of the total earnings is paid
during the course of the year, and 20-40 percent on the basis of the year's
results. Experience indicates that the excessive increasing in the share of
payment based on the year's results is undesirable, since the even payment of
the labor during the year increases the sense of confidence in the workers.
Twenty to 40 percent of the total earnings to be paid out at the end of the
year seems to be a sufficient amount for guaranteeing the material self-
interestedness in the final results of the la~or.
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results of production and labor. Whereas previously that share constituted
approximately 7 percent, at the present time it occupies 25-30 percent of
the total wage fund.
Despite the unification of the forms and methods of providing incentives to
the workers, including the farm managers and specialists, on the whole the pay-
ment of labor is not always directly linked with the results of production, with
its qualitative indicators. The forms of addition~l material incentive are
extremely varied, and frequently duplicate one another, but, most i.mportant,
they are insuff iciently interrelated with the criterion and indicator of
effectivEness. That is why it would appear to be important to intensify the
work of guaranteeing the direct dependence of any additional incentive payment
upon the achieved indicators of effectiveness, upon the amount of profit
obtained, and the level of profitability. According to many participants in
- the international conference that was held in 1981 and that was devoted to
the problem being discussed, herein lies one of the basic areas for improving
the economic mechanism in the agroindustrial sphere of the CEMA countries.
- The rate of results in the comprehensive improvement of the econom~c mechanism,
the effective Use of all the previously analyzed elements of that mechanism, and
the concrete economic instruments and levers, are largely determined by the
organizational structure in the NAPK, by the orientation on the final results of
the agroindustrial production not only of the economic levers and incentives,
but also the organizational-adrtr~nistrative system.
Practical life has shown us that without a change in the organizational-
administrative structure of the agroindustrial complex, it is impossible to
overcome the departmental dissociation or to eliminate the disproportions
within the complex. A step forward in the elimination of these shortcomings
was the creation in Hungary, East Germany, Romania, and Czechoslovakia of single
ministries of agriculture and the processing industry. That made it possible,
in particular, to maneuver the resources more effectively on the scale of the
entire complex, and to be more time-responsive in taking into consideration
the changing economic situation. However, the experience of the activity of the
new ministries attests to the fact that it has not yet been possible to overcome
completely the interdepartmental discrepancies in the relations among the
branches and spheres of the NAPK. The question of including the branches in
sphere I in the administrative system of the agroindustrial complex has not been
resolved (or has not received a definite scientific substantiation).
At the present time in the CEMA countries there predominates the opinion con-.
cerning the need to create a coordination center for NAPK on the Council of
Ministers level, which center would be granted broad powers for resolving the
basic questions of developing the complex, as well as the administrations and
departments of the agroindustrial complex in the planning agencies. That kind
of center, with the existence of the corresponding economic functions, could,
by using contract relations and cost-accounting levers and incentives,
guarantee the comprehensive development of the NAPK and carry out effective
' interdepartmental monitoring of its development. ~
In a number of CEMA countries there have already been created organizations that
are fulfilling function5 that are analogous to the tasks of this
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coordination center. For example, a governmental commission for administering the
supply of the basic types of foodstuffs is functioning in Czechoslovakia. The
commission is headed by the deputy chairman of the Federal Government. Its
makeup includes representatives of the ministries of agriculture and the
food industry, Gosplan, the Federal Price Administration, and other departments.
In East Germany for a number of years all the questions linked with the develop-
ment of the NAPK, within the framework of the State Planning Co~ission, have
been under the jurisdiction of one of the deputy chairmen. That makes it
possible in a more time-responsive manner to maneuver the resources, and especial-
ly to change the structure of capital investments. At the present time there
has been an intensification of the comprehensive nature of planning and adminis-
tration of the NAPK in the USSR. In 1981 an Administration of Planning of the
Agroindustrial Complex was formed in USSR Gosplan. It has four sections:
a combined section and three branch sections (agriculture, food industry,
microbiological and combined-fodder industry).
Ef~'icient organizational-administrative forms of the agroindustrial complex are
also developing on the microeconomic level. In Hungary a form that has become
widespread is the use of industrial production systems (IPS) for growing
_ animal-husbandry crops and for the production of animal-husbandry output. Their
members are the overwhelming majority of the state farms and agricultural
production cooperatives in the country. The central link in the organizational-
administrative structure of the IPS is the so-called head farm, which might be
an advanced state farm or cooperative. The head farm is characterized by the
availability of a large amount of experience in the production of a definite
kind of output, by a h igh level of comprehensive mechanization, and by the
availability of highly skilled personnel. The association functions as a
completely independent economic organization. Every member of the industrial
production system concludes a contract that regulates uts relationship with
the head far.m and with the other partners. The general assembly, where the
delegates of all the participating enterprises are represented, and the board of
governors, which is elected by the general assembly, are the collective adminis-
~ trative agencies of the IPS.
In East Germany organizations that have proven their value as an efficient form
' of agroindustrial integration are the associations which have been given the
name of cooperative unions. The cooperative unions include specialized agri-
cultural enterprises and organizations, as well as enterprises in the processing
industry and trade. The enterprises and organizations that are included in
a cooperative union retain their legal and economic independence. The highest
agency of the cooperative union is the assembly of authorized agents, the
makeup of which includes an identical number of representatives from all the
enterprises and institutions thatare included in the associations. The assembly of
authorized agents elects the council chairman and a time-responsive administra-
tive agency the council of the cooperative union. Various working groups
and commissions are the consultative agency for administering the association.
Their tasks include the preparation of decisions in a particular area of develop-
ment of the association.
In the Soviet Union the regional agroindustrial associations ~RAPO) are a
promising organizational-administrative form of agroindustrial integration. These
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associations include within themselves, within the confines of the rayon,
all the kolkhozes, sovkhozes, interfarm associations, and processing enterprises
and sections of Goskomsel'khoztekhnika. The administrative agency of the
association is the council, which carries out the administration of the partners
_ on principles of cost accounting. The RAPO are subordinate tQ t he rayon executive
committee and to the functional republic-level or union-level agencj!. The
' RAPO have become most widespread in Estonian SSR. gtarting in 1982, all the
rayons in the republic are changing over this kind of organizational structure
for administering the agriculture and the branches that are connected with it.
There has been an increase in the number of rayon agroindustrial associations
in Lithuania, Latvia, and Georgia. The formation of regional organizational-
administrative structures on the microlevel completes the transition to
production-economic integration within the national-economic agroinclustrial
complex.
COPYRIGHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1982.
5075
CSO: 1824/242 E~
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