Competition in Fresh Produce Markets: An Empirical Analysis of Marketing Channel Performance

by Timothy J. Richards and Paul M. Patterson

Fresh produce growers/shippers believe that consolidations in grocery retailing may empower retailers to act less competitively. This study evaluates the extent to which retailers exercise market power in buying from growers and selling to consumers. Sales data for retail chains in six U.S. metropolitan markets are used along with data on grower prices for an analysis on apples, grapes, oranges, and grapefruit. The evidence varies by commodity but does consistently point to the exercise of market power by retailers in consumer sales; less support is found on buying market power. Market power varies over time and with produce volume.

This study was conducted by the Morrison School of Agribusiness and Resource Management, Arizona State University, under a cooperative research contract with USDA’s Economic Research Service. The views expressed are those of the authors and not necessarily those of ERS or USDA.

Keywords: Fresh fruits and vegetables, fresh produce, fresh produce marketing channels, supermarket, market power, competition, trading practices

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