Alternative. Actions of Producers 



Under competitive conditions as described above, what alternative does 

 the farmer have? Apparently there are three main ones: (l) He can continue 

 to produce and bargain individually as best he can for the sale of his 

 product sj (2) he can join with his neighboring farmers and pool his efforts 

 with that of others to create an organization which will strengthen bar- 

 gaining powerj and (3) he may call upon government to step into the picture 

 to help regulate the markets with one buyer and many sellers and help 

 establish a "fair" price (Administrative Pricing) at hearings where Gov- 

 ernment agents, processors and grower representatives each have a voice. 



A fourth alternative would be for a farmer ' s cooperative to engage in 

 processing the farmer's crops to carry the marketing operations on 

 through to the wholesaler or the consumer, in other words, a vertical 

 integration of production, processing, and marketing activities^ 



A fifth alternative might be to rely on Government regulation such as 

 the Sherman Anti-Trust Act to reduce the power of the buyers in markets 

 with one buyer and many sellers However, the present market situation 

 in the processing industry has developed since the Sherman Act was passed 

 and it would appear that in order to have efficient operations larger 

 plants are desirable rather than addition of more small plants* 



THEORY OF BARGAINING 



The Bar gaini ng A ssociation 



The realization of their weak bargaining position has induced numerous 

 groups of farmers to form cooperatives in an effort to improve their bar- 

 gaining strength. The sole objective of some associations is bargaining 

 for the sale of the products of their members. They do not handle products, 

 process or store them, but only negotiate for the price, terms of sale, 

 and other business arrangements involved in selling the products of their 

 members. 



The primary aim of such an association is to increase the bargaining 

 power of the producers by bringing together under contract a large 

 number of producers who agree that their produce shall be sold through 

 their association. The association in this manner obtains the power 

 to bargain for the sale of a large quantity, if not the entire supply, 

 or produce in a particular market. 



From the standpoint of its structural organisation, the bargaining asso- 

 ciation may be either a local or regional, centralized or federated 

 association. Farmers hold membership directly and sign contracts with 

 their association and agree to accept the prices established by the 

 association and the processors. 



- u - 



