Monopsony

by Luigi Guarino on November 21, 2007

Thanks to our occasional contributor Jacob van Etten for the following article on markets and agrobiodiversity. 

Monopoly happens when there is only one seller for a certain product. Monopsony, this week’s new word, happens when there is only one buyer. And when this happens, it is also likely that this single buyer will impose some rigid standards. And then the industrial buyer makes fake diversity by making slightly different mixes of standard components:

One technique retail oligopolies use is flood the shelves with a pseudo variety of similar products made in almost exactly the same way, so that minor vendors that offer real variety can be elbowed out. The beer industry is a great example of this trend.

In other words, agricultural biodiversity is being replaced with industrial diversity. Monopsony is growing in the US wine market. If climate change will push wine production to the north, will Canadian and Swedish vineyards become planted only to the few grape varieties demanded by the monopsonists1?

The role that markets play in biodiversity conservation as well as local food provision is also the subject of a recent article, published in the International Journal of Agricultural Sustainability. The article is behind a pay-wall, but the PhD dissertation (in Spanish) on which it based and a colorful brochure are available for free.

Neus Martí and Michel Pimbert explain that in the Peruvian Andes, local communities organized barter markets to exchange local food products, while the economy of the region was pushed towards commercial agriculture. The barter markets permit a commercial exchange of agricultural products that is economically horizontal (between equals) and ecologically vertical (between ecological floors in the mountain landscape), whereas neo-liberal policy promote something that is the other way around.

The barter markets also happen to be good for biodiversity. All crops that are sold for money may also be bartered, but the reverse is not true. Many crop landraces and wild foods exchanged in barter markets are never sold in money-based markets.

So, don’t blame the market. Blame the monopsonists.

Footnotes:
  1. There was a nice map in the November 2007 French National Geographic that shows how viticulture will move northwards, based on data by Gregory Jones, whose home page has a number of interesting articles on this, but none as the NG map. []

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