This results in power imbalances along value chains

most value chains. This results in power imbalances along value chains and creates a
favourable environment for the abuse of market power by large players. 30 If such a market
structure prevails unchecked, it effectively undermines competition in agrifood value
chains, adding further downward pressure to prices paid to farmers. If there are a limited
number of large players along value chains, this not only creates a favourable environment
for anti-competitive practices, but almost certainly reduces bargaining room for fragmented
farmers. As a result, the latter may not be able to bargain for higher and fairer prices for
their outputs. To promote sustainable agricultural commodity value chains, it is critical to
empower farmers, in the face of increasing concentration along value chains. In this regard,
policies aimed at keeping value chains competitive and promoting strong farmer-based
organizations are crucial. Such policies are detailed in this chapter.
A. Promoting competitive agricultural commodity value chains
25. As noted, the current structure of agricultural commodity value chains results in
power imbalances between highly integrated large players and smallholders, especially
small-scale farmers. Therefore, creating a level playing field for all stakeholders in value
chains, by ensuring competitive markets at national and international levels, is critical to
empowering dispersed smallholders. Typically, this entails two measures.
26. First, it is imperative to enact, or reinforce, competition law in agricultural
commodity-producing countries in order to prevent anti-competitive practices and limit the
market power of trading or processing companies that source their inputs from farmers.
Challenges in such countries with respect to competition law are often related to two issues,
namely, how to enact and enforce such law and how to address the difficulties faced by
legislators due to the extraterritorial characteristics of national markets, stemming from the
fact that major transnational corporations active in trading or processing agrifood do not fall
under the jurisdiction of producing countries. The former challenge may be addressed by
improving institutional capacities at the national level, with strong competition agencies.
Addressing the latter challenge almost certainly requires harmonization of the rules dealing
with anti-competitive practices, as well as cooperation between competition agencies at the
international level, with effective oversight by an international body.
27. Second, competitive domestic cocoa markets require a supportive environment for
local small players, such as small-scale traders and agrifood processors, to remain in
business. A key driver of the high concentration of buyers in the domestic agricultural
markets of producing countries is the difficulties faced by local small players in competing
on a level playing field with multinational corporations, as the latter have better access to
resources such as finance. Keeping local stakeholders, including local small and medium-
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