Competition Issues in the Agricultural Sector
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Transcript Competition Issues in the Agricultural Sector
Competition issues
in agriculture sector in 7up4
countries
Cornelius Dube & Rijit Sengupta
Final Project Conference
7Up4 project
6-7 August 2010 Dakar, Senegal
Outline of Presentation
Why the agriculture sector?
Brief Methodology
Nature of Market in production
Competition concerns in inputs market (Seed)
Competition issues in marketing
Other areas of concern
Conclusions
A few recommendations
2
Why the Agriculture sector?
Backbone of economic activity in all countries
Largest employer of labour
Significant foreign currency earner
Significant contribution to GDP
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Brief Methodology
A major crop selected for each country, in terms of
importance to economy
Assessment done at all three levels of value chain; for
Mali and Togo restricted to the input segment
Inputs collated from country reports + analysis of
secondary data/information + analysis of primary data
Elements of Competition Assessment Framework (CAF)
utilised in overall assessment of competition concerns
Involves identification of major players, calculation of
market shares and estimation of concentration
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Nature of market in production
Competition concerns arise if production is controlled by few
large farmers, who can influence prices
Production is dominated by small-scale farmers,
uncoordinated across households
Producers have no control over prices in input or output
markets
Existing associations do not provide farmers any bargaining
power
With so many producers and uncoordinated activity, no
competition concerns were noted
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Competition concerns in inputs market (Seed)
Seed market analysed from perspective of the selected crop
Informal market dominates the supply of seeds for farmers
Formal seed market (govt deptt/research institutions) –
weak ‘extension services’
Seeds easily available from ‘informal sources’
Private sector participation is minimal (little incentives)
Governments supply certified seeds through some
programmes – weak reach-out
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Competition concerns in inputs market (Seed)
(Contd.)
Seed market is generally not concentrated in Gambia and
Senegal, moderately concentrated in Nigeria
A dominant private firm present in Burkina Faso
Two SoEs together control 78% of seed supply in Togo
Rice and maize seed supply are each dominated by one
player in Mali - supplying 98% and 76% respectively
Allegations of excessive pricing and shortages common in
highly concentrated markets
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Competition issues in marketing
A stage where several competition concerns are witnessed
Characterised by monopolies in Gambia, Ghana and
Burkina Faso
GCC has exclusive marketing rights, after licensed buying
cos. (LBCs) buy from farmers
COCOBOD has exclusive marketing rights for cocoa beans
after LBCs buy from farmers
SOFITEX is involved throughout the cotton value chain in
Burkina Faso
Dominant private firm emerged from privatisation in
Senegal
Fair competition is noted in the Nigerian rice (processing)
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Competition issues in marketing (Contd.)
Strategic, natural and policy-induced barriers to entry
influence the market structure
In Gambia and Ghana, scope for introducing competition
exist at LBC agents level
In Senegal, the dominant company is a direct beneficiary
of the privatisation process
Allegations of abuse of dominance in Senegal and UTPs in
Ghana
Farmers have remained with no bargaining power
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Other areas of concern
Structure of market greatly determined by government
policies
Subsidies and support for SoEs
Absence of competitive neutrality (exclusive rights)
Dominant firms cast high level of influence over entire
value chain
Non-transparent licensing regime
High investment and low incentives for private players to
compete with SoE
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Conclusions
Considerable competition noticed in production
Farmers (and associations) have no bargaining power
High concentration in inputs markets have implications for
low productivity
Concentration among buyer’s at farm gate impact farmers
Lack of incentives for monopolies to be efficient – no threat
of competition
Various policy-induced factors act as ‘entry barriers’ –
need to be reviewed
Little private sector participation
Improper process of setting ‘prices’ of products
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A few recommendations
Focus on reducing concentration in input markets for
improving productivity
Promote competition among LBCs through appropriate
measures
Explore ways to attract private participation in marketing
of quality seeds (public-private-partnership)
Review composition and modus operandi of price setting
committees
Competition authorities to closely monitor behaviour of
dominant players (& monopolies)
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THANK YOU!
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