A supply chain structure and approach begins with a different premise than traditionally used in most approaches to managing agricultural businesses - the focus is on the function performed, not on the firm or the economic agents that perform it. A supply or value chain increases the interdependence among the various stages in the food chain by using strategic alliances, networks and other governance structures to improve logistics, product flow, and information flow. Competition or rivalry occurs not in the form of individual firms competing with one another for market share within a stage, but in the form of supply chains competing for their share of the consumer's food expenditures. Supply chain thinking will also impact investment decisions - it will increase the interdependence of decisions concerning size, location, technology, and so on of food product production, processing, and distribution systems. The benefits of an integrated system are likely to result in the development of interdependent food production-processing centers as the optimal strategy for growth and expansion in the agricultural industries, similar to the location strategy of expansion in European manufacturing industries.
Food safety is a major driver in the formation of chains.
The end result will be an agricultural industry that is much more fully integrated into the overall economy in terms of not only ways of doing business, but also in terms of sourcing and rewarding resources - particularly capital and human resources. In fact, this more complete integration of the food production and distribution system into the industrial economy is quite possibly the most important structural change that has or will occur in the agricultural industry.