how market transparency can contribute to a productive ... · price analysis alone (decomposition...
TRANSCRIPT
-
How market transparency can
contribute to a productive, sustainable
and resilient food system
Jonathan Brooks
Head of Agro-Food Trade and Markets
Division, Trade and Agriculture, OECD
Directorate-General for Agriculture and Rural Developmentand Joint Research Centre Workshop on Market transparency, Brussels 30-31 May 2018
-
• What is it?
– Market vs price transparency
• Why should we care about it?
– For private agents – to improve efficiency and equity
– For public policy: to guide policies that can foster a competitive, innovative, sustainable and resilient food system
• What can policymakers do to improve it?
– Disseminate publicly available information (observatories)
– Access to privately held data
Issues surrounding market transparency
-
• Transparency reflects the ease with which information is available – not just on prices, but also on production, trade, consumption and stocks, terms of contracts, structural data
• Agricultural markets are relatively transparent– Atomistic production, relatively homogenous
products, highly traded
• Food markets less so– Market concentration, heterogeneous products
• Information on agricultural markets is generally public, information on other links in the chain is mostly private
What is market transparency?
-
1. Improved price discovery can raise efficiency, dampen price volatility and reduce waste
2. It can redress unequal bargaining power that derives from asymmetric information
3. It can contribute to the identification of price collusion and other anti-competitive practices
Market benefits of improved price
transparency
-
These stem from imperfect competition along the food chain
• Rent transfers: e.g. from processors to retailers
• It could make price collusion easier
But these risks can be managed by qualifying the terms under which private data are made available
Basic aim should be for all markets to be competitive– conditions under which these concerns would dissipate
But there could be undesired effects
-
Objective Role of market information
Competitiveness Detection of unequal bargaining power and anti-competitive practices
Innovation (productivity growth)
Improved information can improve predictability and encourage investment
Sustainability Effects of pricing natural resources (and carbon) toreflect their social cost will affect market prices and outcomes. How?
Resilience The food system is subject to a wide range of risks, at the farm level and beyond. Market information can help in the design of risk management tools, and identify the role for government
Public health How do consumers determine their food choices? What can be done to encourage healthier food choices?
Market information is essential for the
design of effective public policies
-
7
So far the emphasis has been on collecting
price (and to a lesser extent cost) data
Monitoring of food prices and costs1
Level of detail
Cost
Basic national monitoring of consumer prices
Canada, Greece, Ireland, New Zealand, Norway, Poland,
Romania, Sweden, Turkey
More elaborate monitoring (geographical comparisons)
Australia, Czech Republic, Denmark, Estonia, Finland, Hungary, Israel, Japan,
Korea, Latvia, Mexico, Netherlands, Portugal, Slovenia, Switzerland, UK
Comparison of price changes at stages of the supply chain
Belgium, Chile, EU, Italy, Lithuania
Comparison of prices and costs at stages of the supply chainFrance, Spain, United States
Countries in red:Dedicated entity going beyond price data
-
Price analysis alone (decomposition of the food €, measures of retail to farm price transmission) cannot reveal whether markets are functioning competitively
But good market data (prices and quantities) are essential for effective analysis
Recent experience on the milk market demonstrates the problem
Dangers of false inference
-
Milk: Prices declined after end of quotas,
but production rose in Ireland and Benelux
Changes in milk production by
country, 2014 to 2015
EU dairy prices,
2010-2016
-
Milk: Yields in France and Italy relatively low,
but Italy commands a price premium
Milk yields of key EU dairy
producers, 2009 - 2015
Average payment for milk deliveries,
EU, France, Italy, 2009-2016
UKNL
DE
IT
EU-15
FR
EU-28
-
• Market transparency is vital for several reasons– Useful for private agents (e.g. price discovery)
– Also essential as a guide to public policies: fostering competition and innovation, ensuring sustainable resource use along the food chain, helping in the design of risk management tools, encouraging healthy food choices
• Data can be mis-used and mis-interpreted – but that is no reason not to collect data
• Need two tiers of information– Public information (observatories)
– Access to privately held information for purposes of policy analysis
Conclusion on the need for market
information
-
Beyond the farmgate (upstream and downstream) much of the necessary market data are privately held
– Need for discussion of how much data needs to be publicly available to for market participants
A much wider set of private data is needed for effective policy analysis
– Piecemeal access to those data is impeding the design of effective food and agricultural policies
– Need a discussion of how access can be improved while respecting aspects of confidentiality
– There is a mutual interest between the public and private sectors in the design of effective policies to support productivity, sustainability and resilience
The need for access to private data