Agricultural Bargaining Co-operatives and Associations: Australian Issues and Prospects

Proposed changes to the Trade Practices Act (TPA) will make it easier for farmers and co-operatives to legally form collective groups and bargain with processors over prices and other sale conditions. Initially, this paper outlines the legal status of collective price bargaining with reference to the TPA and the role of the Australian Competition and Consumer Commission (ACCC). To examine the further development of agricultural bargaining groups the paper then outlines the economic theory of price bargaining and the United Stales (US) practical experience. The traditional countervailing market power rationale for establishing bargaining groups and co-operatives is also discussed by examining the degree of market power for different agricultural commodities and industries. Drawing upon the economics of bargaining, the US experience and perceived degrees of agricultural market power the prospects for the development of bargaining groups will be outlined.