Researchers have warned of losses estimated at around $2.5 billion per year, for global grain producers and price increases for consumers.
This is according to a study titled “From Farm to Futures: Competition, Financialization, and Digitalization in Global Grain Value Chains” presented at the HSE BRICS Competition Law and Policy Centre, during the 9th BRICS International Competition Conference, held in Cape Town.
Experts conducted an antitrust analysis, using innovative vertical competition interaction models, which examined the relationships between different levels of the supply chain- including producers, traders, infrastructure operators, and financial intermediaries—from the field to the consumer.
Authors of the study, said vulnerability to price flactuations, is due to major agricultural traders (oligopoly), who dominate the global grain market.
As a result, a merger of Bunge and Viterra, in Canada, resulted in a 15% increase in the cost of grain, or a loss of $412 million annually for shipping producers in Vancouver.
A 15% “monopoly markup” on logistics and trading, applied to 20% of the volume, could cost Russia and Brazil, an additional $2.5 billion per year.
Trends impacting farmers and consumers are financialisation- the close integration of financial and trading infrastructure, traders’ access to exclusive data that other market participants do not have and co-opetition-cooperation in a competitive environment.
The grain exchange has already been initiated by the leaders of the BRICS countries, and if implemented correctly, could be reduce price volatility, increase pricing transparency, and improve the quality of market competition in the global grain market.
Picture: CSPI