The impacts of a co-operative versus a private monopsony marketing structure in Western Australia on the wheat grower

Abstract

The Western Australian Co-operative Bulk Handling (CBH) has been described as a regional monopsony due to its control of the supply chain. Currently, CBH is a grower owned co-operative, however recently it has been considering altering its structure. The objective of this study is to analyze price, quantity and welfare impacts on the Western Australian grower under a regime change for the CBH. Specifically, it considers the impacts to the Western Australian grower if their grower owned CBH co-operative was converted to a private firm with monopsony power. The results from the theoretical model and simulations show the negative impacts on the Western Australian grower if CBH altered its structure to a privately held monopsony. This is not surprising as the best interests of the member growers is currently the focus of CBH, whereas in a non-grower owned structure, the interests of the shareholder take precedence.