Increase of the prices of foodstuffs - causes, consequences and necessary measures
2008
Popov, R., Institute of Agricultural Economics, Sofia (Bulgaria)
The present article discusses the actual price situation on the food market, the causes, consequences and political solutions to the problem and on this basis the major short-term and long-term priorities of the necessary policy are formulated as well as the priorities of the Bulgarian answer taking into account the conditions in the country. The negative consequences from the conjuncture-dependent decisions related to the interference with the price mechanism and the unstable trade policy are shown. The necessity of long-term decisions which would create prerequisites for a stable increase of the agricultural production as the only answer to the increase of the food prices is demonstrated as well. From this point of view the priorities of Bulgaria are: - Macroeconomic stability; - Successful application of the Common Agricultural Policy of EU; - In the area of sector policy: 1. Overcoming of the structural problems by consolidation of the land property and rationalization of land use; 2. Redirection of the agricultural subsidies to support the investments in the sectors having comparative advantages (fresh fruits and vegetables, essential oils, etc.); 3. Budget support of the investments in the so-called land improvements (irrigation, erosion control, etc..), leading to permanent increase of fruitfulness; 4. Reinforcing the agrarian researches and dissemination of knowledge, thought as the most important factor for increasing the productivity. - From the strategy importance for the development of Bulgarian agriculture is adjustment of the conditions for economic activity to those in EU. From the crucial importance in this relation is the lag from other EU countries, due to so called ‘historical approach’.
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