Aquaculture farmer organizations and cluster management: concepts and experiences

2.7.4 Increased bargaining power 
Bargaining power refers to the ability to influence the price or terms of a business 
transaction. The bargaining power of producers increases when the product is scarce, 
when alternative marketing options exist, and when producers have access to market 
information. FOs can increase the bargaining power of small-scale farmers in a number 
of ways. By bulking or spreading production between members throughout the season, 
FOs are more likely to be able to meet the demands of buyers and negotiate better 
prices. It is easier for FOs than individual members to invest in processing, storage or 
transport facilities, giving members increased choice over when and where to sell their 
products. In market chains where buyers have most of the power, FOs can provide 
some balance to that power. Increased producer power is especially important when 
perishable products such as aquaculture products are involved or if producers have 
invested in expensive equipment that cannot be used for other purposes (this is often 
referred to as “asset specificity”). Both of these situations lead to weak bargaining 
position of producers, as perishable products need to be sold before they go bad, and 
investment in specific assets means producers will continue to produce even if they 
receive low prices. 

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The case for farmers’ organizations
2.7.5 Empowerment of small-scale farmers 
The strength and unity that comes from cooperating and working together can be 
empowering for small-scale producers, who often lack the skills, knowledge and 
experience to successfully participate in the market. By working as a group, producers can 
take increased risks and gain confidence in the market and become empowered through 
their achievements and their increased income and independence. In addition, FOs can 
also be an important way to empower women and underprivileged communities.