METHODOLOGICAL BASIS OF PRICE FORMATION IN THE RICE MARKET

Abstract

In this article, the methodological basis of price formation in the rice market are outlined. Economic principles of the formation of the value of the agricultural produce of the rice cultivation in accordance with the state legislation on prices and price formation are formulated. These principles rest upon logic, rules and models of economic behavior of the consumer and are interdependent as well as mutually conditioned. Furthermore, they demonstrate practical orientation by being based on perceptions of the consumers of the produce and are related to the market environment. In the research, basic approaches to the price formation in the rice market were worked out. The first one is known as a cost approach – it reflects the viewpoint of the most probable (typical) seller (manufacturer of the agricultural produce) on the established price. The second one is called a direct comparison approach since it illustrates a set of pricing factors in the rice market that are present at the moment of price formation (supply and demand, competition, constraints). And the third one is the income approach – it reflects the viewpoint of the most probable (typical) buyer (consumer) on the established price. It has been ascertained that the foundation to all above-mentioned approaches of the price formation in the rice market was laid by interests and cogent economic reasons of parties that conduct the purchase-sale of the agricultural produce for its further resale by consumers through retail trade or for using it in a flour-grinding industry. In addition, the character of the conjuncture of the rice market was established. Methods of the formation of the value of the agricultural produce of rice cultivation were also studied. A descriptive model of legal relations, which are concerned with the establishment and implementation of the civil law contracts about agricultural products in the rice market at the industrial and consumer levels, was propounded. The correlation between the price formation for industrial and consumer levels of agricultural products of the rice market was also delineated.