Impact of Agribusiness Market Power on Farmers

Trade and Development When Exports Lack Diversification: A Case Study From Malawi

“…Sharp reductions in marketing margins potentially generate a combination of higher prices for farmers and lower prices for end users, even when a relatively small number of firms play a large role in setting prices due to shifts toward greater industry concentration (Landes et al, 2004). Moreover, in the event of industry consolidation, agribusiness firms may be willing to pay higher farm prices if those higher prices enable them to acquire larger supplies of raw agricultural materials, achieve higher rates of capacity utilization, and lower costs overall (Persaud and Landes, 2006;Persaud and Tweeten, 2002). Improved transportation infrastructure within a country facilitates competition and improves resource allocation (Coyle, 2005), encouraging the movement of food products and services from regions with lower prices to more remote, higher-priced areas.…”