Efficiency effects of collective bargaining by chicken growers

Expert report for an authorisation of collective bargaining by members of the New Zealand Tegel Growers Association, 2022

The New Zealand Tegel Growers Association (NZTGA) applied on behalf of its members to the Commerce Commission for an authorisation to collectively negotiate the terms and conditions of supply of chicken growing services to Tegel Foods Limited.

Emma Ihaia was retained by NZTGA to provide expert economic evidence. Her analysis found a significant imbalance of bargaining power between individual chicken growers and Tegel because individual growers are entirely dependent on Tegel for recovering the significant investments that are specific to raising broiler chickens, but Tegel is not wholely dependent on any individual grower. In the context of Tegel’s strong relative bargaining power, Emma’s reports found that the benefits associated with collective bargaining, including transaction cost savings and enabling more efficient contractual arrangements and outcomes, are highly likely to outweigh any detriments.

The Commission granted both provisional and full authorisation to the chicken growers.

• Link Economics report available here