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Competition in the Food Marketing Chain

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  • Griffith, G.R.

Abstract

Whether or not the Australian food marketing chain is competitive, or conversely whether market power exists in the chain, has been an issue of concern to farmers and policy makers for most of this century. This concern has been more focussed in recent years due to the dismantling of marketing boards for food products, other aspects of microeconomic reform through the National Competition Policy process, the growing market shares of the major food retailers and the increasing number of merger proposals in the food processing and distribution sectors. The ACCC and National Competition Policy review teams are being required to adjudicate on merger and deregulation proposals respectively, but there is little evidence on the competitive structure of the food marketing chain to guide them in these decisions. In this paper I review some of the theoretical and empirical evidence to see if there are any general guidelines which could be applied to such policy decisions. I also examine the recent report of the Joint Select Committee on the Retailing Sector and the report of the Productivity Commission on the impacts of National Competition Policy on rural and regional Australia. Then I use publicly available data on several food groups to test whether any of these groups show evidence of persistent market power and hence suggest the need for more detailed case studies. The purchasing behaviour of the grains and oilseeds processing sector is found to warrant further attention. Some implications for the profession are then presented including aspects of a possible research agenda and a call for greater attention to the data needed for such analyses.

Suggested Citation

  • Griffith, G.R., 2000. "Competition in the Food Marketing Chain," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 171911, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare00:171911
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    References listed on IDEAS

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    1. Griffith, Garry R., 1974. "Sydney Meat Marketing Margins - An Econometric Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 04), pages 1-17, December.
    2. Richardson, Bob, 1986. "Some Current Issues In The Marketing Of Agricultural Products," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 2-), pages 1-14, August.
    3. Muth, Mary K. & Wohlgenant, Michael K., 1999. "Measuring The Degree Of Oligopsony Power In The Beef Packing Industry In The Absence Of Marketing Input Quantity Data," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 2), pages 1-14, December.
    4. Barry K. Goodwin & Matthew T. Holt, 1999. "Price Transmission and Asymmetric Adjustment in the U.S. Beef Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 630-637.
    5. Timothy Park & Ananda Weliwita, 1999. "Competitive Behavior in the U.S. Food Retailing Industry," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 45-55, March.
    6. Chang, Hui-Shung (Christie) & Griffith, Garry R., 1998. "Examining long-run relationships between Australian beef prices," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 4), pages 1-19.
    7. John A. L. Cranfield & Ellen W. Goddard, 1999. "Open Economy and Processor Oligopoly Power Effects of Beef Advertising in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 1-19, March.
    8. Theodosios B. Palaskas, 1995. "Statistical Analysis Of Price Transmission In The European Union," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 61-69.
    9. Bob Richardson, 1986. "Some Current Issues In The Marketing Of Agricultural Products," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 30(2-3), pages 89-102, 08-12.
    10. Charles Hyde & Jeffrey Perloff, 1998. "Multimarket market power estimation: the Australian retail meat sector," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1169-1176.
    11. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
    12. George, P.S. & King, Gordon A., 1971. "Consumer Demand for Food Commodities in the United States with Projections for 1980," Monographs, University of California, Davis, Giannini Foundation, number 11936, December.
    13. Round, D K, 1975. "The Industrial Organization Vacuum in Australia: A Reply," The Economic Record, The Economic Society of Australia, vol. 51(136), pages 589-592, December.
    14. Albert J. Reed & J. Stephen Clark, 1998. "The Transmission of Trends in Retail Food and Farm Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1139-1143.
    15. Morrison, Catherine J., 1997. "Economic performance, cost economies and pricing behaviour in the US and Australian meat products industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 3), pages 1-23.
    16. Paul R. Messinger & Chakravarthi Narasimhan, 1995. "Has Power Shifted in the Grocery Channel?," Marketing Science, INFORMS, vol. 14(2), pages 189-223.
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    Citations

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    Cited by:

    1. Christopher J. O'Donnell & Garry R. Griffith & John J. Nightingale & Roley R. Piggott, 2007. "Testing for market power in the Australian grains and oilseeds industries," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 349-376.
    2. Kohne, Manfred, 2001. "Perspektiven der landwirtschaftlichen Betriebslehre," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 0(Number 4), pages 1-10.
    3. Freebairn, John, 2017. "Effects of Supermarket Monopsony Pricing on Agriculture," 2017 Conference (61st), February 7-10, 2017, Brisbane, Australia 258667, Australian Agricultural and Resource Economics Society.
    4. Chung, Kit C. & Griffith, Garry R., 2009. "Another look at market power in the Australian fresh meat industries," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 0, pages 1-18.
    5. Dent, Siobahn K. & Piggott, Roley R. & O'Donnell, Christopher J. & Griffith, Garry R., 2003. "Does Excluding Cross-commodity Interactions Matter? Beef and Lamb in Australia," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57859, Australian Agricultural and Resource Economics Society.
    6. O'Donnell, Christopher J. & Griffith, Garry R. & Nightingale, John J. & Piggott, Roley R., 2003. "Testing for Market Power in the Australian Grains and Oilseeds Industries: Further Results," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57930, Australian Agricultural and Resource Economics Society.
    7. Nightingale, John J. & Piggott, Roley R. & Griffith, Garry R., 2002. "Explaining Market and Enterprise Structures in the Food Marketing Chain," Working Papers 12939, University of New England, School of Economics.
    8. Moro, Daniele & Paolo, Sckokai & Veneziani, Mario, 2012. "Multi-stage Market Power in the Italian Fresh Meat Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125065, Agricultural and Applied Economics Association.

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