76 ○
○
Special Issues in Agriculture ○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
○
provide the contestability and competitive pressure to traders, preventing them to reap significant monopoly rent from consumers if the management of the country's agricultural trade policy is managed well. At present, an analysis on the monopoly power of traders would have to rely on indirect indicators such as gross margins and net returns of traders. As mentioned earlier in the section, the gross margin-to-sales ratio of agriculture-related wholesalers are on the whole lower than the average of all wholesale establishments. Other things being equal, this suggests that agricultural traders are not gouging consumers. Nonetheless, if Table 7 is indicative of agriculture-related wholesalers, the net marketing margin seems to be robust despite the less-than-average gross margin because the marketing cost is significantly lower than the gross margin. Clearly, what is needed is an intensive and extensive analysis of indicators of traders' behavior and performance. Thus, a regular comparison of the wholesale-farmgate price margins with intermarket distribution costs for as many of the supply-demand routes as possible would provide analysts sounder basis for examining the issue of monopsony and monopoly power of agricultural traders. The price comparisons and analyses should include the less well-traveled (i.e., secondary or tertiary) routes because it is likely that monopsony/monopoly power could exist in these routes, albeit probably temporarily only.
Table 7. Marketing margin and cost: two examples Granola Potatoes From Benguet, Nov. 1993 - April 1994 Wholesale price in Manila Marketing cost of assembler-wholesaler from Benguet selling in Manila Marketing margin of assembler-wholesaler from Benguet selling in Manila Marketing margin as percentage of Manila wholesale price Marketing cost as percentage share of Manila wholesale price
P13.85/kg P1.10/kr P2.10/kg 15.2% 7.9%
Yellow Mungbean From Iloilo, December 1993 - July 1994 Wholesale price of yellow mungbean from Manila Marketing cost of assembler-wholesaler from Iloilo selling in Manila Marketing margin of assembler-wholesaler from Iloilo selling in Manila Marketing margin as percentage of Manila wholesale price Marketing cost as percentage share of Manila wholesale price
P24.33/kg P1.01/kg P2.89% 11.9% 4.2%