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Monopsony Power - Supermarket giants hit farmers who want early payment with hefty fees

Graham Watson

13th February 2024

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It seems that Australian supermarket giants, Coles and Woolworths, are exploiting a monopsony position to levy rebate charges on farmers who want early payment for their produce, raising concerns that the sector's a duopoly, given that they account for two-thirds of market share.

The rebate can be up to 4% of the value of an invoice and many are concerned that it is being levied on producers who are already selling below cost and likely to already be under immense financial pressure.

Monopsony power refers to the buying power of a dominant buyer in a market, such as a major supermarket chain negotiating with farmers.

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Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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