Agric. Econ. - Czech, 2002, 48(10):449-455 | DOI: 10.17221/5351-AGRICECON

The changes of the agribusiness impact on the competitive environment of agricultural enterprises

V. Bečvářová

Mendel University of Agriculture and Forestry, Faculty of Business and Economics, Brno, Czech Republic

The market extension generally affects growth performance positively by allowing an expansion of markets, by increasing outside competition as well as by more rapid diffusion of new products, processes and research output between national economies. The positive effects of considerable market on productivity are indubitable. However, two other weighty phenomena of the process are necessary to investigate, effects of regulatory policy and market power exhibits. Agriculture as a sector belongs to those, where the support policies exist for a long time. Nevertheless, the last decades have witnessed considerable changes in this sector among most of developed countries and their agricultural/regulatory policies. It has been perceived, that the agriculture for 21st century cannot be separated from the other components of agri-food sector. The economic importance of the processing and finalization stages (i.e. food industry and food distribution) has increased over time. There are concerned inter-relationships between the market structures development and the crucial factors of the interconnected markets developments in the framework of production verticals of agricultural commodities. Reflecting the steadily more sophisticated supply side behaviour, solution is based upon the demand oriented approach explaining changes of the position of agriculture within the agri-food chain. Conflict of interest between the regulatory/agricultural policy and the market power of input supply and output processing firms and retail notably has increased dramatically. Economic manifestation of the increasing market power on the demand side as well as the impact of market interrelationships and change of policy regulation efficiency within commodity chains are characterised there. The position of agriculture within the agri-food chain has changed and the influence of farmers has decreased. Success of agricultural enterprises in achieving their operational goals is still more influenced by improvements in productivity and by competitiveness of other "links" of the agri-food chain.

Keywords: agribusiness, agri-food chain, food industry, competitiveness, market power exhibit, monopsony, regulatory policy

Published: October 31, 2002  Show citation