Latvian Price Reforms and Their Effects on the Production and Sale of Foodstuffs

In the past, Latvian agriculture has been characterized by low output increases and rapidly growing production costs. This cannot be regarded as the result of bad producers' work, but as the consequences of a poorly administered management system. Before 1990 Latvian agriculture was strictly dependent on the All-Union centralized producer prices set for all agricultural products and on centralized redistribution on production inputs. State-guaranteed producer prices were fixed and remained stable for a longer period of time, usually for five years, but production costs grew constantly. As a result, commodity prices did not correspond with commodity values. This deepened the disparity between the income levels of various branches, particularly between industry and agriculture. Prices no longer reflected the final result on the economic activities of the agricultural enterprises.