Markups, organic agriculture and downstream concentration at the example of European dairy farmers

A competitive environment, highly concentrated processing and retailing sectors as well increasing decoupling of direct payments from production volumes the area under cultivation incentivizes farmers to find alternative ways improve their bargaining position towards downstream companies. This article explores possibilities organic agriculture enhance power along with role concentration in industries. Using a dataset more than 200,000 observations approximately 40,000 dairy farms, I estimate markups price over marginal cost farming measure market EU. The results show that achieve significant markup premium conventional farmers. With shares milk total diminish whereas those are unaffected. Farm-level decrease medium-sized processors increase large processors. presence multinational retail chains shows an adverse impact on farmers’ markups.