How Competitive Are Crop Markets in Sub‐Saharan Africa?

Abstract

During the structural adjustment era of the 1980s and 1990s, governments across sub-Saharan Africa generally withdrew from crop markets to encourage entry by private traders and foster competition. Since that time, the degree of competition in crop markets has been a central concern of policymakers, donors, and researchers. We review the evidence on that topic by first developing a conceptual framework to guide our analysis, then discussing the findings from four categories of literature. We have two main findings. First, there is a paucity of empirical evidence on this question, which hinders our ability to draw strong conclusions. Second, that point notwithstanding, the evidence that does exist is broadly supportive of the notion that crop markets are competitive. The dominant themes in the literature are that trading profits are highly variable, trader entry and exit rates are high, and price co-movements between markets suggest relatively efficient levels of competitive arbitrage. It is possible that the high costs of entry foster non-competitive conditions at the level of large-scale, long-distance subnational trade, but we find no positive evidence to that effect, only the satisfaction of certain necessary conditions.

Social networks, rice value chain participation and market performance of smallholder farmers in Ghana

“…This is in line with the increasing calls for smallholder collective action (e.g., collective marketing) to improve farmers' bargaining power, while enhancing value chain efficiency (Bernard, Spielman, Taffesse, & Gabre‐Madhin, 2010; Dillon & Dambro, 2017). In addition, smallholder farmers often rely on their social connections and goodwill with other farmers in their communities to enjoy cost advantages associated with production and sales, as well as achieve optimum benefit from participating in agricultural value chains (Ramirez et al, 2018).…”

The structural transformation of African agriculture and rural spaces: introduction to a special section†

“…() emphasize the important effect of market imperfections on the price signals that guide farmers’ investments in inputs and new technologies. Although the limited available evidence generally suggests that Africa's crop output markets are reasonably competitive (Dillon and Dambro ), information asymmetries, high transactions costs and uninsured risk exposure often impede market access for smallholder farmers who generate limited marketable surpluses (Barrett ; Shiferaw et al. ).…”

Food security and the functioning of wheat markets in Eurasia: a comparative price transmission analysis for the countries of Central Asia and the South Caucasus

“…Studies on market integration also provide evidence for market competitiveness. If we find that two markets are strongly integrated, we can also infer that they are competitive, since price differences are quickly arbitraged in strongly integrated markets (Dillon and Dambro 2017).…”