The Impact of Supermarkets on Farm Suppliers

There is no doubt that the market shares of the large supermarket chains have increased significantly in recent times. The Joint Select Committee on the Retailing Sector concluded that the major winners from this expansion of market share by the major chains were consumers, in terms of deregulated trading hours; a greater product choice; lower prices; and the convenience of one-stop shopping. An implication of this is that market power on the selling side is not a big issue. Conversely, the large retailers have the capacity to exercise market power against input suppliers, including farmers. Members of some farm orgnizations report instances of what they believe to be abuses of market power, including breaches of contract and unfair negotiating practices.