The impact of competition on regional food security (the case of the milk and dairy market in the republic of Tatarstan)

Abstract

Regional food markets are important structural elements of the national market. Development of the market environment is one of the key methods of stimulating food production. As the agro-industrial policy changes its focus from import substitution towards export-oriented production, the role of competition in the agricultural sphere becomes particularly prominent. The authors propose a new indicator characterizing the level of concentration of producers on the market – the Herfindahl-Hirschman Index (HHI) for the share of gross profit of economic entities. This article is aimed at giving a theoretical justification of this approach and at providing practical recommendations for the development of regional food markets based on the regulation of food producer concentration levels. Multi-dimensional statistical calculations were used to test the hypothesis that the development of large economic entities (including monopolies) has a positive impact on the affordability and accessibility of locally produced foods. The authors measured the strength of the correlation between the socio-economic indicators that affect regional food security by using the case of the milk and dairy market in the Republic of Tatarstan. The proposed methodology is based on the decision matrix method applied to analyze the situation in local food markets, which gives us a better understanding of the situation in the whole region regarding the accessibility and affordability of foods. The correlation-regression analysis enabled us to integrate the indicators that show the impact of competition on affordability of foods with those that show the impact of producers’ efficiency on accessibility of foods in the region. The proposed approach considers profitability of economic entities, accessibility of foods and competition on the producer market and can thus be used to enhance food security by revealing the optimal priority areas for governmental policies and programs on the national, regional and local levels.