State Regulation of Agricultural Market: Supporting Consumer

Abstract

The article is devoted to identification of reasons for the changes in agricultural policy, the structure, peculiarities of modern mechanisms for supporting producers, consumers, and agriculture according to the Organization for Economic Co-operation and Development (OECD) methodology. The agricultural sector is considered as a combination of three elements: the complex of agricultural enterprises, the general supply sector, and consumers of agricultural products. Dynamics of the resulting indicator of the level of government support for the agricultural sector (TSE) of Ukraine in 1995-2017 are characterized by diversity, which indicates a lack of consistent policy in agricultural production. Agricultural sector support is provided through the support of producers. There is an insatiability of physiological consumption of certain food groups, especially of animal origin in our country. For the majority of the population, the cost of nutrition in the household budget is very high, that's why we need to study the effectiveness of consumer support indicators (CSE).The government does not simultaneously support the producers and consumers. The results of the analysis of such indicators as CSE and PSE confirm this tendency. The causes of failures in the agri-food market are identified: inelasticity of supply, which is explained by the immobility of the resources "land" and "labor force"; inelasticity of demand, which is explained by E. Engel's and J. Keynes' Laws and the degree of saturation of food demand. Another reason for the failures of the agri-food market is a high differentiation of incomes and, as a result, the differentiation in volumes of food consumption. For Ukrainian high income households, the saturation limit for food products has almost been reached. The study reveals the relationship between household incomes and the dynamics of demand in the agri-food market. It is shown the ways and methods of increasing demand. It is advisable to give subsidies to low-income population, not just in additional cash payments or lower income tax rates, but in the form of food cards, free lunches for children, nursing mothers and other low-income population. Such spending of public funds can increase food demand. Government support of low-income population should be a priority for government policy not only in crisis conditions, but also in conditions of economic growth.

Directions and Methods of the System of State Regulation of the Agricultural Sector of the Economy

“…На думку інших науковців держава зобов'язана здійснювати регулювання таких напрямів як формування аграрного ринку, його кредитування, страхування та обтяження [2]. Серед базових основоположних принципів державної підтримки аграрного сектору аграрна наука виділяє наступне [3]:…”