In this Article
According to a policy paper published by the Organisation for Economic Co-operation and Development (OECD), competition plays a key role at critical points in the supply chain, enhancing efficiency, fair pricing, and reliable quality throughout production, processing, distribution, and retail. However, market failures and limitations can lead to distortions, such as higher prices for consumers, reduced quality or reliability, and unfair outcomes for suppliers.
Image Source: OECD
The agro-food supply chain plays a crucial role in providing nutritious food, supporting farmers’ livelihoods, and ensuring sector sustainability. A food supply chain refers to the set of supply chains relevant to many different end products, which often intersect with one another.
Figure 1. Simplified representation of common characteristics of supply chains for food
Understanding competition in the food supply chain matters, as a price increase/decrease at one step in the chain will have a follow-on increase/decrease in costs at subsequent steps in the chain, impacting end-consumer prices. The extent of pass-through of price increases and decreases depends on many factors. Additionally, buyer power and monopoly power are significant concerns within the industry, particularly for farmers.
One factor that can heighten scrutiny of competition authorities in the food supply chain is food inflation. Food inflation affects not only household budgets but also child development and geopolitical risks in poorer countries. The origins of food price inflation should inform policy responses along the food supply chain, particularly by evaluating market efficiencies and failures. Additional causes of inflation include rising input costs, international supply chain issues, and market panics. The role of competition and markets in maintaining appropriate food prices is particularly important at moments of high inflation. This, in turn, affects calls on policymakers to ensure the good functioning of markets and the supply chain.
Reference: Organisation for Economic Co-operation and Development. (2024). Competition in the Food Supply Chain. OECD Roundtables on Competition Policy Papers, No. 319. Retrieved December 2, 2025, from https://www.oecd.org/en/publications/oecd-roundtables-on-competition-policy-papers_20758677.html
