Agricultural production in the Philippines is dominated by small-scale farmers. The Agricultural Census of 2012 indicates that close to 90% of agricultural land holdings are less than three hectares, and most farmers rely on multiple layers of intermediaries to consolidate and transport their products to final markets.

The dependence of farmers on these marketing channels increases the further they are from their markets.

In these settings, intermediaries often bargain down prices without passing on the reduction to consumers.

One of the reasons for the lack of bargaining power by farmers in dealing with intermediaries is high trade costs, which allow the latter to engage in price gouging.

When trade costs are low, more intermediaries compete in both producer and consumer markets, and prices tend to decrease while farmers benefit. Studies have shown that lower trade costs take pricing power away from intermediaries. Reducing trade costs can alter the distribution of profits along the marketing chain and benefit farmers.

A version of this article appears in the print on January 4, 2022, of The Himalayan Times.