Consignment Marketing

(of agricultural products in the USSR), a variation of kolkhoz trade.

The economic base of consignment marketing is the social production of the kolkhozes and the personal production of kolkhoz members. The marketing is done by the consumer cooperative system, which receives farm products on consignment from kolkhozes for agreed-upon prices (in which case the kolkhozes are immediately paid 100 percent of the contract price) and which buys from kolkhoz members at local market prices. The contract prices are generally lower than the local market prices. Commissions are charged for marketing products from the kolkhozes. Introduced in 1953, consignment marketing was instituted according to the Oct. 23, 1953, decision of the Central Committee of the CPSU and the Council of Ministers of the USSR entitled Measures for the Further Development of Soviet Trade. Tsentrosoiuz was given the duty of organizing the receipt of available commodity resources from kolkhozes and kolkhoz members to sell on the kolkhoz markets.

The retail trade in agricultural products purchased and accepted on consignment by the consumer cooperative system rose from 750 million rubles in 1960 to 1.1 billion rubles in 1965 and 1.5 billion rubles in 1971 (in prices of the corresponding years). The volume of sales of agricultural products on the nonrural kolkhoz market (without the turnover of the consumer cooperative system) went in the same years from 3.7 to 3.6 and then to 4.1 billion rubles. Thus, in this period, the share of consignment marketing in nonrural marketing rose from 20.3 percent to 30.6 percent and then to 36.6 percent.

After the kolkhozes have fulfilled their obligations for sale of agricultural products to the state, they may sell their available commodity resources; this is done on a planned basis by concluding contracts with consumer cooperative organizations. The procurement of surplus agricultural products from the population by consumer cooperative organizations is a more organized system than the sale of goods by the kolkhoz members on the kolkhoz market.

The advantages of consignment marketing are many: the kolkhozes, and especially the kolkhoz members, are spared the work and time involved in hauling products to market and selling them, the marketing area for the products is expanded, and prices for the goods are more stable than they are on the kolkhoz market. Consignment marketing alleviates seasonality in trade and helps reduce handling costs, promote trade service, and improve the assortment of goods.

In other socialist countries, consignment marketing of agricultural products has been developed in a roughly similar form in Hungary, Bulgaria, Poland, Czechoslovakia, Rumania, and Mongolia.