Another important factor which can influence the level of the farm income is the
monopsonistic power of the wholesale firms. They often purchase the products but
postpone payments. The payments are not adjusted for inflation between the time when the
products have been delivered and when producers are paid. A number of CCEC
governments have had to establish special credit programs and funds to help elevate this
problem. These programmes typically purchasing the outstanding debts and pay a
percentage of their value back to the agricultural producers, e.g. the Czech Republic does
this through the Support and Guarantee Fund for Farmer and Forestry (Horcicová, 1997).
Producer price index and inflation level
In general, the increase of the agricultural product prices is lower than the
general price index. While real interest rates may be negative compared to the CPI-index in
some CEE countries in some years, the interest rate has - with some exceptions - been
positive in comparison with the agricultural producer's price index. In addition, high
nominal inflation causes uncertainty, which is worsened for agricultural producers in some
CEE countries by uncertainty about future government policies.
Another important factor which can influence the level of the farm income is themonopsonistic power of the wholesale firms. They often purchase the products butpostpone payments. The payments are not adjusted for inflation between the time when theproducts have been delivered and when producers are paid. A number of CCECgovernments have had to establish special credit programs and funds to help elevate thisproblem. These programmes typically purchasing the outstanding debts and pay apercentage of their value back to the agricultural producers, e.g. the Czech Republic doesthis through the Support and Guarantee Fund for Farmer and Forestry (Horcicová, 1997).Producer price index and inflation levelIn general, the increase of the agricultural product prices is lower than thegeneral price index. While real interest rates may be negative compared to the CPI-index insome CEE countries in some years, the interest rate has - with some exceptions - beenpositive in comparison with the agricultural producer's price index. In addition, highnominal inflation causes uncertainty, which is worsened for agricultural producers in someCEE countries by uncertainty about future government policies.
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