Abstract
Improving market access and opportunities for value addition for small-scale food producers and family farms and properly functioning food commodity markets are among the objectives of the Sustainable Development Goals. Market structure and market concentration are important aspects that could make this goal attainable. In a case study, we explore the current conditions of pork and beef farmers in Austrian meat markets by combining a quantitative approach with qualitative inquiries. The quantitative analysis shows that the concentration of meat markets has been increasing in recent years. The rates of change differ in various segments of the value chain and across the types of markets. These results are the starting point for a qualitative analysis of the competitive situation in the observed markets. One finding is that in each market prices are set in idiosyncratic ways. Another one is that producer organizations are an appropriate means for small-scale and family-run farms to strengthen their position in the value chain. We conclude that policy initiatives to improve market access and value addition for farmers need to be complemented by targeted dissemination activities and that competition analyses should apply multi-method approaches similar to the one used in this analysis.
Highlights
Agricultural markets are typically characterized by a large number of sellers and a low number of buyers
In several sectors relating to agricultural products, the disparities existing between the number of producers and processors or retailers raise concerns regarding the abuse of a dominant market position
Based on 20 interviews with stakeholders and agricultural producers operating in the beef and pork markets, we try to gain deeper insight into the topics presented in Section 3.2: producer organizations (POs), pricing, contracts, quality programs, and political strategies
Summary
Agricultural markets are typically characterized by a large number of sellers and a low number of buyers. In such situations, economic theory predicts farmers’ prices being lower than those provided through a competitive market, as downstream firms are able to exercise buyer power [1]. Economic theory predicts farmers’ prices being lower than those provided through a competitive market, as downstream firms are able to exercise buyer power [1] Such firms may use their market position (monopsony power) to gain economic rents at the cost of producers, as recently exemplified in a study on the Irish beef market [2]. With whom do producers negotiate the contracts?. How has the design of contracts changed over the last 10 years?. How long do such contractual relationships last on average and what does that depend on?
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