omies in vertical management to achieve. The role of price in coordi-
nating vertical flows may not be declining, as some suggest. It may
only be changing, as others suggest.
Second, feeding activities are the principal on-farm activities for
which the management role has been taken over by nonfarm firms
thus far (except for some new forms, in effect, of land leaving through
contracting), insofar as we have access to relevant knowledge. These
are not land-based activities, and adequate land collateral with which
to obtain simple trade credit is not required. The entire equity of the
grower is often less than the investment in the single lot of broilers
which takes only 8 to 11 weeks to reach market weights. Sequences
of input-output flows can be ordered through the scheduling of birds
placed with different growers to achieve continuous flows. This is
not the case for corn, cotton, wheat, and most other crops where the
growing process is seasonal and requires large acreages. Sequential
processes are much more discrete and are subject to considerable
risks in an uncontrolled market. We have no good measures of the
number of firms affiliated in a vertical pattern. Is the broiler industry
more or less integrated now than was the poultry meat industry of
thirty years ago? No one knows.
Third, preservation of foods is becoming less costly in terms of
energy requirements, and future reductions may well bring costs of
preserved foods, as a safeguard against variation in “uncoordinated”
production, below the costs of coordinating production. Also, food
analogs now being produced may increase their share of the food
market. Analogs are made from basic fungible agricultural ingredi-
ents; quality is determined in the factory, not by what leaves the
farm. Costs of quality control in analog production may be consid-
erably below costs of quality control by means of “coordinated pro-
duction and marketing.” Also, rapid increases in the relative price
of labor for the selective harvesting of top quality fruits and vege-
tables are encouraging more dependence upon mechanical harvesting
which may result in less than top quality for much of the harvest.
Such products go into canned and frozen products. Consumer ac-
ceptance of such complex processed products may be influenced by
variables other than the innate quality of the harvested product. In
this respect, “quality” can be fabricated instead of having to be
grown. And perhaps most important, the technical competence and
management ability of farmers are improving. We see no reason to
think that farm managers of the future will ignore consistent price
incentives for delivery of desired qualities at the right times and
places. Thus, one of the claimed reasons for “more coordination” has
the potential of being subverted by other trends.
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