State Purchases of Agricultural Products

in the USSR and the other socialist countries of Europe, the planned provision of agricultural products to the national economy and the population. State purchases of agricultural products are a form of the economic relationship between the city and the countryside, between industry and agriculture, and between the working class and the peasantry. They represent one of the methods by which the socialist state influences the development of collective farm and state farm production.

The USSR. The Communist Party, in determining state policy concerning purchase of agricultural products, has always taken into consideration the situation of the country in various phases of development. During the Civil War and military intervention of 1918–20, the Soviet state was forced to introduce a grain monopoly and to take surplus grain from the peasants by the surplus appropriation system. In March 1921 the Tenth Congress of the party adopted the decree entitled On Replacement of the Surplus Appropriation System With a Tax in Kind. In 1924 the tax in kind was replaced with a monetary tax. In 1928–29 this was replaced with advance contracts with peasant farms and cooperative associations for future sale of grain and other products. The victory of the kolkhoz system called forth new forms of state purchases of agricultural products. In 1932–33 compulsory deliveries of grain, meat, milk, and certain other agricultural products were instituted in place of advance contracts; these compulsory deliveries were equivalent to a tax. At the same time the payment in kind was instituted for labor performed by machine tractor stations at kolkhozes; this became an important source of agricultural products for the state. Compulsory deliveries of grain, potatoes, and oil-seed crops were determined by fixed per-hectare quotas; at first the actual planted area was used, and later the planned area was used. Deliveries of livestock products were also determined first on the actual number and later on the planned number of livestock. But this system of state purchases of agricultural products had its own drawbacks: it did not give many farms a sufficient incentive in increasing social production, since increasing the planted areas and the number of livestock meant a corresponding increase in the size of deliveries required of them.

In 1939–41 the per-hectare principle of selling agricultural products to the state was initiated. Deliveries of field farming products (except for industrial crops) were set on the basis of stable rates for each hectare of arable land, and deliveries of livestock products were determined per hectare of agricultural land assigned to the kolkhozes. State purchases of the most important industrial crops were made on the basis of advance contracts. In 1940, as production increased and state need for food grew, state purchases of agricultural products at higher prices were introduced. A complex system took shape for procurement of kolkhoz output; it consisted of compulsory deliveries, payment in kind for work by machine tractor stations, and advance contracts and state purchases. As the national economy developed, serious weaknesses were also found in this system. It did not adequately consider the specific features of agricultural development in particular zones and at particular farms and constrained the initiative of agricultural workers in making fuller use of production reserves. The state purchase prices for agricultural products that existed until 1953 were low and did not pay back kolkhoz production expenditures. After 1953 the prices were raised several times, which fostered a rise in production and purchases of agricultural products. In 1958 a uniform system of state purchases of .agricultural products based on uniform purchase prices was instituted.

The March 1965 and July 1970 plenums of the CPSU Central Committee made important changes in the system of state purchases of agricultural products. Firm plans were established for 1966–70 and 1971–75 for sale to the state of grain, seeds of oil-seed crops, potatoes, sugar beets, raw cotton, livestock and poultry, milk, eggs, wool, and other agricultural products. State purchase plans delivered to each raion and farm took account of their specializations and prospects for development.

The dimensions of purchases of agricultural products in the state plan are determined with due regard for growth in the production and consumption of each product. Kolkhozes and sovkhozes determine the volume of agricultural production on the basis of assignments for sale of output to the state and of their own needs and capabilities for overfulfilling the state purchase plan; they then work out progressive farming techniques to raise the yield of agricultural crops and the productivity of animal husbandry.

A decree of Apr. 1, 1965, of the Council of Ministers of the USSR raised state purchase prices for wheat, rye, buckwheat, and certain other grain crops (and the price for sunflower seeds from sovkhozes and other state farms); furthermore it abolished the annual correction of state purchase prices for grain, sunflower seeds, sugar beets, and potatoes. For wheat, rye, oats, millet, and other grain crops sold to the state beyond the firm plan, agricultural enterprises receive an additional payment of 50 percent of the basic purchase (selling) price. In 1970, state purchase prices for many livestock products were raised. A 50 percent supplement to purchase prices was instituted for sale beyond the plan of such products as livestock, milk, eggs, and wool.

Agricultural products are purchased by state and cooperative procurement organizations on an advance contract basis.

The Twenty-fourth Congress of the CPSU took note of the need for a progressive transition to receipt of products right at the farms and delivery using specialized transportation of the procurement organizations.

After fulfillment of firm plans, kolkhozes and sovkhozes voluntarily sell remaining above-plan market products to the state. Kolkhozes may sell some of their above-plan output on a commission basis through the consumer cooperative system, or it may be sold in the kolkhoz market. Since 1967 sovkhozes and other state agricultural enterprises have been given the right to sell at their own discretion those products that do not find a market with procurement organizations. Sovkhozes that have switched to full profit-and-loss accountability are authorized to sell vegetables, fruits, and other perishables, potatoes, and poultry to the state and cooperative organizations and on the market at prices determined by agreement of the parties, if these products have been turned down by procurement organizations. These products (except those sold on the market) are counted in fulfillment of the plan for sale of output to the state. Sovkhozes that have switched to full profit-and-loss accountability sell agricultural products to the state at purchase prices with the price supplements established for kolkhozes.

The percentage of basic agricultural products purchased by the state in the USSR are given in Tables 1 and 2.

The transition to firm plans of state purchases on the basis of new, economically sound purchase (selling) prices promotes growth in the production of agricultural products.

The socialist countries of Europe. In the first years of socialist building the bulk of market agricultural output was purchased through compulsory deliveries; this was made necessary by the large discrepancy between the population’s needs for agricultural products and their production and by the necessity of distributing as much agricultural output as possible at stable prices. Even during this period, such forms of state purchases as advance contracts (Bulgaria and Poland) and purchases of agricultural products at higher contract and purchase prices (East Germany) existed. State purchases of agricultural products in the European socialist countries have been improved by replacing compulsory deliveries with purchases based on contracts between agricultural enterprises and procurement organizations, consumer cooperatives, processing-industry enterprises, and commercial organizations. State purchases of agricultural products are the primary form of state procurement in all the European socialist countries under present-day conditions.