The degree of concentrated market power in global agricultural markets is not factored into the models and assumptions that inform the trade and agriculture debate. But it is clear that in the name of efficiency gains from economies of scale, transnational businesses have already grown to an alarming size, enabling them to undermine proper market functioning. Sound markets depend upon competition; it is therefore indispensable to enforce policies that ensure proper competition.

 

Public authorities need to subject mergers, acquisitions and inter-firm contracts in agriculture to tighter review. The first requirement is access to information, as there is a dearth of information about the size and scope of large agribusinesses, the market share they control, and the terms of their contracts. To implement anti-trust law, governments must shut the revolving door between corporations and government agencies. This could be done by requiring full disclosure of money received from agribusiness or corporate lobbies by potential staff members, or by performing more rigorous checks for conflicts of interest before appointments are made. Stronger laws may be needed to ensure longer mandatory gaps between holding public office and working for corporate interests. To establish more transparency on which firms are dominant in any given market, a multilateral institution (e.g. FAO or UNCTAD) could be charged to maintain a databank with comprehensive information on mergers, acquisitions and joint ventures in agri-food markets. Unless there is a concerted attempt to control the extent of vertical and horizontal concentration in global commodity markets, open markets cannot yield the benefits their proponents promise. State trading enterprises in developing countries should be subject to a strategy of reform, accountability and good governance, rather than abolished. Properly run, they can play a helpful role in counteracting the market power of global agribusiness and also provide services in countries where the private sector is too little developed to support strong markets on their own.

 

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