The influence of economic production efficiency on the competitiveness of agricultural products

How efficiency forms a competitive advantage

The specific nature of agriculture lies in operating under conditions of a perfectly competitive market, where an individual producer cannot dictate the selling price. The only way to occupy a stable position and earn consistent profit is to continuously increase the efficiency of one's own production. Low production costs make it possible to sell products at competitive prices and also form a financial reserve for investments in quality, new technologies, and the development of a distribution network.

An efficient farm recovers production and marketing costs faster, which allows for the development of social infrastructure, the attraction of qualified personnel, and investment in marketing. At the same time, key indicators of product competitiveness almost entirely coincide with the criteria for economic efficiency of the enterprise.

The main production and economic indicators include:

• Labor intensity of a product: at an equal wage level, the advantage goes to products with lower labor costs per unit of volume.
• Costs per unit of production: reducing these increases competitiveness, provided the savings are not offset by an increase in marketing expenses.
• Realization costs: commercial expenses for storage, transportation, and sales.
• Quality parameters: grade, uniformity of batches, and compliance of products with the standard.

Along with economic indicators, direct market indicators are also taken into account: brand awareness of the producer and their share in the local market (for example, in the market for milk, vegetables, fruits, or berries).

Levers of influence: cost, marketing, and material intensity

In the total cost of agricultural commodity products, marketing costs account for a significant share. These expenses are directly influenced by the development of market infrastructure, the state of the road network, the distance to sales points, the availability of specialized transport, as well as tariffs for the services of intermediaries, communications, insurance, transport, advertising, and consultants.

Competitiveness and pricing are most influenced by price factors:

• quality and uniformity of products;
• ratio of supply and demand in the market;
• costs and quality characteristics of similar products from competitors;
• terms of realization and the ability to save the buyer's income.

Agricultural production is traditionally characterized by high material intensity and low knowledge intensity. In conditions where it is impossible to influence the market price, the key areas of work become the reduction of cost and labor intensity, the improvement of quality, and the active use of the achievements of scientific and technical progress.

Reduction of product material intensity is achieved in two ways:

• In physical terms: through strict adherence to technological standards, elimination of losses during harvesting and post-harvest handling, as well as ensuring full compliance of raw materials with quality requirements.
• In value terms: by purchasing resources from more profitable suppliers or developing one's own low-cost production (seed, feed, organic fertilizers, nursery plants, young livestock animals).

High production performance with the rational use of land, labor, capital, and resources allows an agricultural enterprise to reduce costs, make a profit, and ensure a normal level of profitability per unit of area and funds spent.

The level of cost of agricultural products of an enterprise is significantly influenced by the prices of industrial means and objects of labor, as well as tariffs for works and services for the industry. Even when the state compensates for part of the costs, an agricultural producer must focus on internal reserves for increasing efficiency (reducing losses, compliance with technological requirements, rational use of machinery, improvement of product quality, reduction of various kinds of waste, etc.). Competitiveness as a market category characterizes not only products in material form, but also works and services provided in specific regions.

Define product (work, service) quality. 2. Why is quality produce beneficial to the producer? 3. What is the social significance of quality produce? 4. How are product quality and competitiveness related? 5. What does the concept of "quality loop" mean? 6. What regulates product quality? 7. What is the methodology for determining the payback of costs for quality improvement? 8. Why can the ratio of the actual price of a product to the maximum possible price conditionally characterize quality? 9. What features characterize the quality of various types of agricultural products? 10. What is the essence of competition as one of the main elements of the market mechanism? 11. What types of competition manifest in a market economy? 12. How are markets classified by the degree of competition restriction? 13. What is the essence of intra-industry competition? 14. How do price and non-price competition manifest? 15. What is product competitiveness? 16. How can product competitiveness be determined for the consumer? 17. What factors influence product competitiveness? 18. What does the concept of "competitive positions" mean? 19. What quality parameters determine favorable competitive positions of a territorial unit? 20. Which competitiveness factors are considered external?

To internal ones? 21. What indicators are used to express competitiveness? 22. How are efficiency and competitiveness of production related? 23. What advantages are characteristic of an efficient enterprise? 24. What pertains to direct indicators of competitivene