Summer 2017–18, Vol. 14, No. 4

Consolidation and competition in agricultural markets

The traditional model of agricultural markets, where many sellers interact with many buyers via a public price discovery mechanism, and no single market participant has what could be described as market power, has often been supplanted by markets that have a small number of dominant buyers, and which do not have a transparent price discovery mechanism. These markets structures result in an increased risk of anti-competitive behaviour, and governments have on occasions implemented regulations that aim to prevent this behaviour occurring.

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Concentration and Consolidation in the US Food Supply Chain: The Latest Evidence and Implications for Consumers, Farmers and Policy-makers

Tina L Saitone and Richard J Sexton

Despite the seeming potential for today’s multi-characteristic agriculture to create profitable niches for small-scale food marketers, food manufacturers in many industries are highly concentrated. This is especially true for farm-product procurement, joined more recently by significant consolidation among grocers and high concentration in local retail markets. These structural conditions are concerning because of their possible implications for market power abuses, the viability of small farms, and overall system performance.
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Consolidation, Concentration and Competition in the Food System

James M MacDonald

Agriculture is consolidating, but it is not very concentrated, because there are still many producers of almost all specific commodities. However, farms do face high and growing concentration in many markets with only a few suppliers of inputs or services or only a few buyers of farm products. Rising concentration across the US economy has become a matter of widespread comment and concern in recent years. Some public policies are directly concerned with concentration, primarily the effect of concentration on competition. However, farm consolidation also affects the design and effectiveness of farm, trade, and environmental policies that are not directly concerned with concentration or consolidation.
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The Effect of Consolidation in Australian Agriculture on Market Competition

Mick Keogh

The business environment in which Australian farmers and agribusinesses currently operate would be almost unrecognisable to someone who operated a farm just a generation ago. Agricultural markets have been deregulated, infrastructure and services have been privatised, and farm input sectors and commodity markets have become more concentrated and globalised. Australian farmers now negotiate on an almost daily basis with multinational corporations for their farm inputs; are fully exposed to the whims of global markets and international currency exchange rates when it comes to marketing farm products, and manage this all against a backdrop of the lowest level of government subsidies of virtually any farmers on earth.
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