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