Market structure, conduct, and performance of the corn seed industry in East Java, Indonesia

Findings of the study revealed that the structure of the corn seed producers in the province was highly oligopolistic. Three multinational companies dominated the industry. Corn seeds sold in the market were differentiated through packaging, label, and varieties. The producers were well informed about the market demand. Large investment and continuous introduction of new varieties were among the dominant barriers to entry in the corn seed industry while high profits prevented producers from leaving the industry. Corn seed growing was carried out through contract agreements with farmers' groups and the marketing of the product was through selling contracts with distributors. Advertisements and customers' services were the main factors that influenced corn seed buyers' preferences. The seed producers earned high profits despite the risks of sizeable unsold products. At the wholesaler-retailers' level, the corn seed market was highly oligopolistic characterized by a concentration ratio of more than 40 percent. On the other hand, the relaters were relatively competitive. All traders were well informed about the market demand through the information they gathered from the producers, other traders, and buyers. Hybrid varieties produced by the multinational producers were preferred by the farmers due to high yields even though they were quite expensive. The wholesaler-retailers bought and sold corn seeds at lower prices and got higher profits than the retailers, in general, the corn seed market was not efficient. The government has to encourage more private investors, especially, multinationals to invest in the corn seed industry. This will lessen the highly oligopolistic nature of the corn seed market. Local producers have to be more aggressive in order to maintain their market share. Relying on a capital market will make local producers less competitive. New corn seed varieties generated locally will be more competitive if it is marketed through exclusive rights owned by the producers. The Seed Control and Certification Service must be more proactive in monitoring the distribution of commercial corn seeds in the market to protect the farmer-users' interest