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Single-Desk Marketing: Assessing the Economic Arguments

Staff research paper

This paper by Lisa Gropp, Tom Hallam and Vince Manion was released on 17 July 2000. The intention of this paper is to examine the arguments for and against single-desk marketing, and to identify the strengths and weaknesses of each arrangement.

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A staff research paper, Single-desk Marketing: Assessing the Economic Arguments, by Lisa Gropp, Tom Hallam and Vince Manion was released today. The paper provides a framework for analysing the potential benefits and costs of single-desk (or monopoly) marketing arrangements in Australian agricultural industries. The paper forms part of the Commission's ongoing trade and competition policy research program. The views expressed are those of the staff involved.

The paper does not attempt to estimate the costs and benefits of single-desk arrangements in particular industries. However, the analysis suggests that the conditions necessary for the benefits of single desks to outweigh the costs are unlikely to be met in practice. This is because Australia is unlikely to have the ability to affect prices in world markets significantly, and also because many claimed benefits of single-desk arrangements can be achieved without a regulated monopoly over all exports.

Single-desk arrangements also inevitably discourage product and marketing innovations. Therefore costs may be especially large in markets where product variety and value-adding are essential for success. Evidence from Australia and overseas suggests that where such monopolies have been removed, agricultural producers have benefited from a wider range of marketing options and closer relationships with customers.

The Commission has drawn on the analysis in this staff research paper and previous reports in presenting a brief submission to the National Competition Policy Review of the Wheat Marketing Act 1989 (available on the Commission's website on Monday).

Background information

Lisa Gropp (Assistant Commissioner) 03 9653 2352

Leonora Nicol, Media and Publications 02 6240 3239 / 0417 665 443

Preliminaries
Cover, Copyright, Contents, Abbreviations and explanations, Overview

1 Introduction
1.1 What is single-desk marketing?
1.2 Background to the report
1.3 About this paper
1.4 Conduct of this study

2 Background
2.1 History
2.2 Current single-desk arrangements

3 Assessing the benefits
3.1 Introduction
3.2 Increasing export returns
3.3 Lower costs
3.4 Other benefits?
3.5 Conclusion

4 Assessing the costs
4.1 Implications for domestic users and consumers
4.2 Implications for agricultural producers

5 Pressure for change
5.1 Introduction
5.2 Institutional pressures
5.3 Market-driven pressures
5.4 Summary

6 Deregulation in practice
6.1 Deregulation in practice
6.2 Conclusion

A Discrimination in export markets

References