The Changing Structure of U.S. Agriculture Vertical coordination refers to the means used to synchronize vertical stages of the food-value chain. Tomorrow's tightly coordinated agriculture will be characterized by a hub, spoke, and wedge configuration. The nation's landscape will include few clusters. Principal forms will include marketing contracts, production contracts, and integrated ownership. Arrangements for production contracts differ greatly but, typically, the contractor furnishes baby pigs or chicks, feed, veterinary supplies, and organizational management, e.g., appropriate practices, and levels and schedules of placement.
Consolidation is defined here as the coming together of firms producing the same thing.
Consolidation results in economies of size and market power. Vertical integration is related to, but can exist independently from, consolidated firms. Timely information exchange, enhanced by electronic communication, facilitates responsiveness of integrated value chains. Electronic commerce also will influence farming-dependent rural communities. Ultimately, market cost efficiencies brought about by e-commerce will come partly at the expense of rural communities.