Market Structure and Firm Practices in Farm Supply Retailing: the Problem of Equitable Treatment

The theoretical basis for this study is the proposition that certain measurable attributes of market structure are strategic variables determining competitive behavior in farm supply retailing and the performance of price as a guide to optimum use of marketing resources.The immediate practical problem is to discover opportunities to better coordinate the decision of sellers (retail firms) and buyers (farmers) of commercial fertilizer, prepared animal feed and petroleum products to more nearly achieve optimum efficiency in retailing and the equitable treatment of large and small farmers. Empirical data are obtained from participants on both sides of key farm supply markets, from a sample of 190 Nebraska farmers stratified by size of farm, and from samples of 119 retail firms located in one-fourth to one-half of the estimated 100-135 farm supply markets in Nebraska. One of the major findings of this study is that in farm supply markets with few sellers and many buyers, uniform or flat prices generally prevail.The findings suggest that most farmers are not free to choose between a pricing system that encourages small volume buying at higher costs, or one in which economic incentives encourage larger volume buying at lower costs.For this reason it is misleading to infer from the widespread practice of uniform pricing that farmers are willing to pay prices which cover the added costs of these practices in retailing in order to conduct farming operations with a minimum of on-farm storage facilities and inventory capital, or in order to realize a degree of plurality in brand and dealer preference.Most farmers have no choice. Advisor: Richard G. Wals