THE ROLE OF PRICES IN HUNGARIAN HORTICULTURAL POLICY

Two periods in this policy have to be separated. In the first period, before 1968 (the year of economic reform) most prices were fixed. There were some exceptions, e.g. producers' and consumers' prices of the various products of fruits and vegetables and some of the so-called free market products like eggs, poultry etc. were also free. There were also free prices in the mutual trade of farmers for seeds, fodders, breeding animals etc. The reform dissolved the former rigid price structure of the economy. Its aim was to introduce a more elastic system for adjusting prices not only to production costs but also to supply and demand in the market and to the preferences and dispreferences of the state.

Different pricing forms were developed. Some prices have remained fixed. Consumers' prices of basic food-stuffs, most of the agricultural producers' prices and most prices of home-produced basic materials remain fixed. But most of the industrial producers' prices were freed. One-third (33%) of all consumers' prices; but only ten per cent of agricultural producers' prices, were put into the free price category. Prices other than those mentioned were somehow limited, maximized, fixed as yearly average prices or 'from-to' prices etc. Of agricultural producers' prices 60 per cent, belong to the yearly fixed and 30% to the limited price category. Fruits and vegetables were placed into the remaining ten per cent of free prices. For fruits and vegetables only support (that is, guaranteed least) prices are fixed, and then only for contracted ones. Support prices have reduced somewhat producer price fluctuations which were significant in some former years. In some good crop years prices of some products have fallen to such a low level that even harvesting costs were not met. For instance tomatoes were sometimes ploughed into the soil rather than harvested. It has to be mentioned that the guaranteed least prices are also fairly low, even after occasional increases in them.

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