Impact of Energy Prices on Income of Labour on Field Crop Operations

Ivanović, Sanjin and Todorović, Saša and Nastić, Lana (2012) Impact of Energy Prices on Income of Labour on Field Crop Operations. Ekonomika poljoprivrede, LIX (2). pp. 195-206. ISSN 0352-3462

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Abstract

The starting point of the paper is the fact that the economic effects of field crop operations is highly conditioned by energy prices (primarily diesel fuel prices) as well as by the raw material whose prices to a large extent depend on energy price (fertilisers). Hence, it is determined on the basis of the model of family farm (specialized in field crop production) that the change in the prices of the given inputs influences the change in gross margin and farm profit. A special attention is paid to the changes in gross margin per worker and per working hour, as well as to the profit per worker and per working hour, which is caused by a varying of the purchase prices of raw materials, whose prices depend on energy prices (diesel fuel and fertilisers). It is determined by the analysis that diesel D-2 is distinguished because of its importance for profitable business operations of the examined family farms regarding that the 20% price increase of diesel D-2 leads to the decrease in family farm profit by 35.56%. In the second place, the highest impact on the profit is created by the prices of different NPK fertilisers, whereas the prices of KAN and UREA fertilisers do not have so significant impact on the farm profit. By subsidizing the price of the aforementioned inputs for family farms, it is possible to produce greater economic effects of labour on family farms and thus influence the reduction of rural poverty. This solution is acceptable only in the short run, but in long term perspective it is needed to emphasize investments instead of subsidies.

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