The theory of bargaining discussed in this report emphasizes several 

 important factors: 



1. The function of a bargaining association is to facilitate 

 the establishment of a price in the market which would' be 

 the same as or which would approximate the price that 

 would be arrived at under conditions of pure competition. 

 Other things being equal, the fewer the processors in the 

 market the more likely the need for a bargaining associa- 

 tion and the greater its chances for success,, In a 

 competitive market it has less chance for success,, 



2. To increase bargaining strength to the point where it 

 can be effective, it is important that the growers ' 

 association control a large enough portion of the volume 

 to be sold that the buyers cannot obtain a sufficient 

 quantity for their needs without dealing through the 

 association. 



3. Efforts to gain sufficient control of volume for effect- 

 ive bargaining often end in failure c As soon as returns 

 to farmers are increased by organization, additional 

 supplies are usually produced which serve to undermine the 

 bargaining strength of the association, It is very diffi- 

 cult for farmers to gain monopoly control of supply in their 

 efforts to influence price. There are so many farmers pro- 

 ducing each product and so many others who would produce it 

 if the price were increased slightly that any permanent 

 monopoly control is not achievable. 



U* The portion of the total volume of a given commodity under 

 control of a bargaining association necessary to enable it 

 to bargain effectively depends upon several important 

 factors including; (l) the elasticity of demand for the 

 product, (2) the number of processors existing in the market, 

 and (3). the elasticity of supply of the product e Naturally, 

 the higher the percentage of total supply controlled the 

 more effect the association will have in price determination, 



5. Under situations where there is only one or a few processors 

 in a producing area, a well-organized, efficient bargaining 

 association is able to increase the bargaining strength of 

 producers and consequently increase prices for the raw product 

 Also competition is reduced among the sellers and they func- 

 tion more nearly as a single seller c The association serves 

 to protect the individual producer against monopoly on one 

 hand as well as prevent disastrous competition among unor- 

 ganized sellers. 



iv 



