Agricultural Supply Chains

The effect of more competition on farm gate prices depends on the initial level of competition in that country and crop. For many crops, in particular food crops, there is already a lot of competition and further changes in the level of competition will not affect farm gate prices much. In some other specific cases, in particular in cash crops and livestock, the initial level of competition is low and more competition is likely to have larger impact on producer prices. In terms of the effect of complementary policy and other factors affecting the allocation decision of farmers, the largest impacts often come from an increase of international price where we often find a pass-through that is higher to one and from changes in the transaction cost on the production of the crop that increases the farm gate price in equilibrium. Complementarities between shocks to the structure of competition among exporters and shocks to household constraints need to be taken seriously in the design of agricultural policies