ASPECTS OF COMPETITION IN PRODUCE BUYING
There has been repeated reference in previous chapters to the presence of competition in branches of external trade which appear to be dominated by a few firms and in which market-sharing agreements operate. This chapter and the appended note present information on the operation of competition under apparently unpropitious, and certainly unexpected, conditions. The bulk of the material is derived from the groundnut trade. Certain well-documented episodes in the history of that trade are of much interest for this study.
In discussions of the rapid growth of the Nigerian groundnut industry the two influences most frequently mentioned are the extension of the railway to Kano and the establishment of law and order over the previously turbulent regions of northern Nigeria. There were, however, two further indispensable factors. One of these was the initiative and enterprise of the Hausa peasant who rapidly extended the cultivation of this crop over large areas. The other factor was the activity of European and Levantine shippers and of Levantine and African merchants, who brought consumer goods, which served as an inducement for the cultivation of a cash crop, within the reach of the peasants of these large and often remote regions. The merchants also brought into being organizations which were able to arrange for the collection and removal of very large volumes of produce, originating in areas from eight hundred to eleven hundred miles from the coast.
The large European firms which had operated in southern Nigeria before the rise of the groundnut industry soon established themselves in the north, both for the sale of merchandise and for the purchase of groundnuts. Besides the large European firms there were also a number of Levantine traders acting both as shippers and as intermediaries, especially in groundnut buying.
There were informal market-sharing arrangements between the large European firms by the early 1920's, and a formal groundnut-buying syndicate was established in 1926. The membership of this syndicate was repeatedly extended. By the mid-1930's it comprised several of the