State Purchase Prices

the prices at which state purveyor organizations purchase agricultural products from kolkhozes, sovkhozes, and the population.

In 1924 state purchase prices which were compulsory for all purveyors were instituted. From 1926 to 1929 a system was instituted with more flexible, agreement-based prices; this system made it possible to take account of the conditions of the particular period of procurements. From 1932–33 until 1957 purchase prices were set in a centralized manner for all primary agricultural products for compulsory deliveries by kolkhozes and the population (from personal subsidiary farms). For sovkhozes and other state farms, procurement prices were established. At the same time higher state pur-chase prices were established for agricultural products sold beyond the plan of compulsory deliveries. Until 1958 certain crops were purchased on the basis of advance contracts; in this case so-called bonus payments, which sometimes amounted to 30–40 percent of the level of the procurement prices, were used in addition to the procurement prices.

With the abolition of compulsory deliveries in 1958 the multiplicity of state procurement prices was also eliminated. Uniform purchase prices were instituted with an average level established at the center and then differentiated territorially in the Union republics to take into account the level of production expenditures in the different natural and economic zones. Prices for agricultural products are differentiated by quality. In 1965 purchase prices for many farming and livestock products were raised, and a 50 percent price supplement was instituted for above-plan sale of primary grain crops to the state. In order to give kolkhozes and sovkhozes a greater material incentive to increase the production of livestock products, state purchase prices for a number of livestock products were raised as of May 1, 1970, and a 50 percent price supplement to them was instituted for above-plan sale of livestock, poultry, milk, wool, and eggs.

The system of planned price formation of purchase prices for agricultural products under socialist economic conditions allows the optimal combination of the interests of the state and of the kolkhozes and sovkhozes. State purchase prices are expected to ensure that agricultural enterprises are compensated for material and wage expenditures for production and that they receive the necessary share of net profit for savings.

The ratio among prices for different types of products plays an important part in establishing state purchase prices: where the organizational and economic levels of production are equal there should be equal objective conditions for raising the incomes of kolkhozes and sovkhozes regardless of differences in the natural conditions of different zones. This equality is ensured by differentiating prices by zones. As agricultural production and labor productivity rise and production costs decrease, it becomes possible to lower the purchase prices.

State purchase prices in the other socialist countries are generally structured on the same principles as in the USSR. Differences primarily concern the nature of the redistributive functions performed by purchase prices: the amount of net profit created that is turned over for state needs and the withdrawals of differential rent for state use. In a majority of the socialist countries of Europe the formation of state purchase prices is done either in an entirely centralized manner depending on the type of product or by ratifying nothing but maximum and minimum price levels. For some products prices are established only in contracts between parties.