RESEARCH PAPER
PROCUREMENT PRICE LEVEL ACCEPTABLE TO BOTH FARM PRODUCERS AND PROCESSORS
 
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Institute of Agricultural and Food Economics – National Research Institute, Poland
Submission date: 2020-05-14
Final revision date: 2020-06-23
Acceptance date: 2020-06-25
Publication date: 2020-09-29
 
Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics 2020;264(3):49–74
 
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ABSTRACT
The aim of the paper is to demonstrate that for a given procurement price there is a certain equality accepting mutual benefits for both farm producers and agri-food processors. This allows transactions to be made at the procurement price level which is allowable and mutually acceptable due to the benefits. The benefits do not have to be equal, hence the concept of acceptable inequalities. The paper shows the basis for expecting the procurement price level, and therefore the benefits from the producer’s and processor’s point of view. They result from their maximised goal functions. Both parties are price-takers for the procurement price established on the purchase market, with a reference to price determination at the administrative level. The hypothesis about the acceptable inequality is proven in logical and formal analysis with the use of algebra notations and rules. By and large, this has not been addressed in the literature.
eISSN:2392-3458
ISSN:0044-1600