The paper develops a farm producer behavior type model to analyze the impact of a input productivity and price change on farm incomes. The theoretical analysis shows the consequences of the balance between the increase of production factor prices and their productivity improvement in the condition of stable procurement price for the farm producer's income. The cost effect of the production factors price increment and its neutralization by productivity (TFP-type) growth is examined as well as - some aspects of the inputs shares (returns) and costs in the produce value. The article argues that labor input productivity as an endogenous factor, is an essential for farm incomes growth assuming the specified type of the farm producer utility function (its equations and variables) as well as no the compensative procurement price change conditions. Some empirical evidence is attached however more work in that respect is foreseen.
Financed by the National Centre for Research and Development under grant No. SP/I/1/77065/10 by the strategic scientific research and experimental development program:
SYNAT - “Interdisciplinary System for Interactive Scientific and Scientific-Technical Information”.