In Swiss agricultural colleges, at HAFL in Zollikofen and among agricultural scientists at ETH in Zurich, the Russian writer Fyodor Dostoyevsky is not part of the compulsory reading. Perhaps this should be introduced, at least the reading of Dostoyevsky's novel ‘Evil Spirits’.

In it, Dostoyevsky describes a visitor to a natural history museum who focuses so intently on the small beetles that he fails to notice the life-size elephant standing in the middle of the room.

Since then, ‘the elephant in the room’ has also become a metaphor for an obvious problem that cannot be overlooked, but which people still look away from. Out of fear of personal disadvantage and repression or out of indifference.

In Swiss agriculture, there are two elephants in the room. Huge orange elephants. They are called Migros and Coop.

Migros and Coop control over 80 per cent of the food retail trade.

These billion-franc companies form a duopoly in the Swiss food market, which (together with Denner, which belongs to Migros) dominates over 80 per cent of the Swiss food retail trade. For labelled pork, the market share is 85 per cent, and for labelled veal, it is over 90 per cent. Nowhere else in the world is there such an extreme concentration of power.

Swiss farmers are at the mercy of Migros and Coop for better or for worse. Because apart from the two giants, the only other players in the market are Aldi (6.5 per cent), Lidl (4 per cent), Volg (4 per cent) and a few others that are hardly worth mentioning.

Those who produce only for Migros lose out on Coop's market share and are at the mercy of Migros‘ whims. And vice versa. But even if they produced for both Migros and Coop, the farmers would still be dependent on the two elephants. The duopoly determines the farmers’ margins.

Because there must be no market monopoly, the Nash equilibrium plays

You could think of a cartel that creates a market monopoly. Because that is not allowed officially, it comes to the so-called Nash equilibrium, named after the mathematician and Nobel Prize winner John Nash.

In this scenario, Migros and Coop each choose their best strategy, taking into account the decisions of the other: when setting producer prices for farmers, Migros looks at what Coop is doing, and Coop looks at what Migros is doing. This way, they don't compete too hard against each other.

Everyone looks the other way so as not to anger the orange elephants Migros and Coop

And the power of the two elephants goes much further: price supervisor Stefan Meierhans wanted to publish a report at the end of December 2022 about excessive margins on organic products. ‘Highly explosive information that must not be made public,’ suspects the Foundation for Consumer Protection SKS. In fact, Migros put so much pressure on the price supervisor that he finally caved in.

You would expect the Swiss Farmers' Union (SFU) and the producer organisations to stand up for themselves and intervene loudly. But the SFU and the producer organisations impressively demonstrated how loudly one can remain silent when two orange elephants are in the room. And other players also prefer to look the other way.

The Competition Commission (Weko) – formerly more aptly called the Cartel Commission – in the department of Guy Parmelin finds no evidence of price fixing or lack of competition. An investigation into ‘relative market power’ – because farmers are dependent on Migros or Coop and have few alternatives – fails because the Weko ‘has too little knowledge of the business relationships between farmers and retailers’.

Perhaps Dostoyevsky's novel about the elephant in the room should also become required reading at the Farmers' Union and in the Competition Commission.