Question

Module II: Market Concentration

Market failure - Market Power (Market Concentration)

Since the demand for food is elastic, farmers have two choices:

Grow larger, employ current technologies, invest in new equipment, use GMOs and chemicals, ignore animal welfare to reduce the cost of production, cut prices and raise the quantities sold. This strategy creates natural monopolies in the food industry.

or

Use sustainable methods of production and try to reduce the elasticity of demand, and cut costs that do not affect the quality of a product (retail cost, overhead expenses).

Use source below to find information about market concentration (limited competition) in the U.S. food industries, and analyze the outcomes.

Sources I highly recommend:

The U.S. market: increase in market concentration.

Market structure and competition in the U.S. food industries.

Fast Food Nation, book

Food Inc, film

Food Matters

The Big Secret

How does the market concentration in the U.S. food industry affect:

Quality - the nutritional value of food produced?

Local farmers?

The Environment, Food Waste in our case?

What can you tell about the rent-seeking behavior of large producers?

List the Sources Used:...

Answer 1

Market concentration is related to distribution of production withn an industry.It includes all the small firm that contributes to the production of food products.US food industry somehow uses supply chain management process by producing final food products using raw materials and all other inputs required,

For the production of a single type of food in US ,various steps are involved making it a complex process.As a result,both positive and negative effects are imposed on quality,environment and health.

Modern supply food chain process in US involves land ,water and labour with use of machinery and other resources for production of primary products.Over the ages,the food industry in US has witnessed many highs and lows which had a drastic affect on the quality of food products.

Local farmers of US have started a practise of selling the goods directly to consumers by using tables,stalls etc which is known as farmer's market.This process relatively yield a little more profit to farmers as it involves sale of food products directly to consumers which involves less transport and no medium is required for this process.

US food production involves a total wastage of nearly 40% every year.The longer a food product can be preserved,the less will be its chances of wastage which means longer the shelf life of a product lower will be its wastage.Hence,different methods are being used to increase the shelf life of products .For example cucumber are being preserved by wrapping it in elastics.but suing elastics will have a drdastic effect on its environment.