Transformation of the Agrifood Industry in Developing Countries - The Oxford Topic of Food, Politics, and Society - page 799

organization.Byimposingregulations,publicinvestmentschangedinstitutions,atleast
for the portion that passed through regulated markets.
hereisemergingevidencethatthepublic-sector“wholesalemarket”segment,ater
beingestablishedandproliferating,isconsolidating(showninstudiesfromIndonesia
(Natawidjajaetal.2007),Mexico(EchánoveandReardon2006),SouthAfrica(China;
Huangetal.2007),Peru(EscobalandAgreda1997),andIndia(Minten,Randrianarison,
andSwinnen2009),andevenprivatizing(forBrazil;FarinaandMachado1999)and
multinationalizing(forexample,withParis'sRungismarketinvestinginChinesewhole-
salemarketsinjointpartnershipsin2008 www.rungisinternational.com ,andSydney's
inIndia's,seeReardonetal.2010).
On the one hand, there is some interwholesale market concentration, such as in
SouthAfrica(Louwet al.2007)wheretheshareofthemainmarkethasrisenovertime.
Moreover, within wholesale markets there has tended to be consolidation over whole-
salers.Someofthiswasdrivenbydiferentialcapitalizationthatallowedsometogrow
larger and larger based on economies of scale in transport and warehousing (for Mexico,
EchánoveandReardon2006,andPeru,EscobalandAgreda,1997),andregulationslim-
itingthenumberoflicensedwholesalers(asinIndia,Minten,Vandeplas,et al.2010,
orTurkey,Koçet al.2007),andsomehasbeenduetothedeclineofthetraditionalcli-
entsofthesmallerwholesalers(suchasthesmallshops)inthe1990sonwiththeriseof
supermarkets and competition off-market from “dedicated wholesalers” discussed next.
hereisalsoemergingevidence(suchasfromIndonesiaandChina)thatwholesalers
based in wholesale markets increasingly buy directly from farmers and compete down
the share of the rural or field brokers.
Second Stage: Liberalization and the Rise of Modern Private
Wholesale/Logistics
Building from the initial base of public-sector driven transformation of the wholesale
sector,emerginginthe1990sand2000s(again,dependingonthe“wave”)isasecond
stageoftransformation—thistimemainlyprivate-sectordriven.histransformation
has several dimensions.
First,inthe1990s-2000s,therewerereactionsagainstwholesalingregulations—with
charges that although those regulations were originally designed to quell speculation and
mercantile oligopoly, they had eventually created anticompetitive forces and a cadre of
entrenched commission agents who proceeded to earn oligopolistic margins. There were
few formal tests of this hypothesis, but the perception became strong among two sets of
lobbyinggroups—thefarmers,andtheprivatesectorlogistics,processors,andretailers
who wanted to buy direct from farmers and bypass the mandated wholesale markets.
Eventually,insomecountries,suchasBrazil(FarinaandMachado1999)andSouthAfrica
(Louwet al.2007)inthelate1990s,andhalfthestatesinIndiaater2003(Reardonet al.
2010—inTurkeythedebateisstillengaged;Koçet al.2007),theregulationswererelaxed.