additional land, increased amounts of production
capital, and superior managerial skills have been
accompanied by greater vulnerability of farmers to
the uncertainties of the market system. As
commercial farming has become much larger and
more scientific, increased certainty in both product
and factor markets is required in order to properly
accommodate the planning process of production.
The processing and distribution system has also
been changed by this technical revolution-and with
much the same result as in farming. For example, the
development of assembly line techniques in
processing and the mass distribution potential of large
scale super-markets was--and continues to
be-deρendent upon a high degree of control (or
certainty) over the quality and quantity aspects of
raw materials and product output. Thus, the necessity
for maintaining a high degree of coordination of
activities, both within and among the various
segments of agriculture, is evident. This need for
greater coordination has led to-or has been attended
by-an increasing amount of vertical and horizontal
combination throughout agriculture.
Agriculture-and especially the farm sector-has
long been dependent upon a market system which
would yield some tolerable semblance of competitive
prices, i.e., would reasonably reflect the derived
demand for farm products. However, as the degree of
concentration in the marketing sector increased, the
system of product prices generated by competitive
market forces gave way to administered pricing.
Farmers felt increasingly threatened by these
developments and sought possible means by which
their position could be made more secure, i.e., they
sought to provide themselves with a greater amount
of influence over their fate. This concern was
reflected in the recent efforts by farmers to increase
their bargaining strength and was an outgrowth of
their dissatisfaction with levels and stability of prices
and incomes. To an increasing extent, farmers came
to believe that government programs developed
within a basically urban society were more strongly
oriented toward a policy of “cheap food” than to the
improvement of agricultural income. This is
somewhat consistent with Ruttan’s contention that
farmers and farm leaders viewed bargaining power as
a potential alternative for their eroded political power
[15]. Also, as farmers observed the continued growth
of economic power within other sectors of the
economy, they came to believe that they must
develop their own power base if they were to share
more equitably in the economic prosperity of the
nation. This is in sharp contrast to the rather
novel-but not necessarily incorrect-suggestion that
38
farmers have long possessed a substantial amount of
power, but have failed to take full advantage of it
[4].
CONSIDERATIONS IN PRODUCER BARGAINING
Early in any discussion of producer bargaining, it
is helpful to establish its relationship to the term
bargaining power. The reason is that bargaining is
meaningless, in a functional sense, in the absence of a
degree of supporting power. The term market power
has a similar meaning in that it connotes a state of
POSSIBLE influence by a participant on the activities
within the market in which he operates. While a
technical distinction can be drawn between
bargaining power and market power, such difference
is of little value except in an academic sense. In any
event, it would be virtually impossible to differentiate
between these terms in assessing the benefits derived
by producers through the application of power.
The term producer bargaining power implies an
ability to favorably influence prices and terms of
trade. Therefore, farmers seek to build and use
bargaining power as a means for exerting this
influence. But the end result of the use of power
depends upon the relative strength of the parties
involved [6]. Therefore, any meaningful evaluation
of farmers’ efforts to build and apply bargaining
power should be viewed in the context of the nature
of the overall market environment in which they
operate.
Most U.S. industries now plan output consistent
with consumer demand, which they attempt to
influence at prices which yield reasonable returns on
investment [7]. Agriculture remains almost unique in
operating in a competitive environment where market
forces beyond the control of firms in the industry
determine price and output. The focal element
influencing the competitive position of farmers is the
atomistic nature of the individual producer. Given
this multitude of “independent” decision-makers in
the farm sector, it was inevitable that farmers would
be largely ineffective in dealing with forces which
affect their prices and incomes except through
concerted group action.
The substantial lack of equality in the strength of
participants in markets where farmers operate is well
understood by most observers. Paarlberg [13], in
addressing the Fourteenth National Conference of
Bargaining Cooperatives in 1970, acknowledged the
RIGHT of farm people to organize, to be recognized,
and to negotiate with a handler as a fundamental
principle of equity-(because)-the bargaining power
of two negotiating parties should be approximately
equal. Brandow [3] recognized the NEED for