Market Structure and Efficiency in Agricultural Value Chains : Deep Dives in El Salvador and the Dominican Republic

Overview & Synopsis

This report builds on a prior analytical study conducted in 2024 (International Prices and Food Security: An Analysis of Food and Fertilizer Price Transmission in Central America), which examined the extent to which international food and fertilizer prices were transmitted to domestic markets across Central America, assessed their impacts on household income and expenditure, and evaluated the effectiveness of government responses to mitigate the effects of food inflation. While the previous report found that international price shocks had relatively low pass-through to domestic markets in Central America, the current report analyzes the market structures and public policies that may be able to contextualize this low transmission of international prices to domestic wholesale markets for two commodity-country pairs in Central America with high relevance for domestic food security: white maize in El Salvador and bananas in the Dominican Republic. In doing so, it seeks to answer three guiding questions that help identify inefficiencies in how each sector interacts with producers and consumers: (1) Why do these sectors demonstrate low degrees of price transmission from international to domestic wholesale market prices? (2) What do the structures and evolving characteristics of the value chains imply for market efficiency and price transmission in the two countries? (3) How do trends in market concentration and public policy implementation contribute to possible price distortions?