Agriculture Reference
In-Depth Information
Table 2.8
Vertical coordination in U.S. agriculture: 1980
Farm product
Percent vertical coordination
1960
1980
Citrus fruits
80.0%
100.0%
Sugar beets
100.0
100.0
Sugarcane
100.0
100.0
Vegetables for processing
75.0
98.1
Potatoes
70.0
95.0
Seed crops
80.3
90.0
Other fruits and tree nuts
35.0
60.0
Vegetables for fresh market
45.0
53.0
Dry beans and peas
36.0
3.0
Cotton
8.0
18.0
Oil-bearing crops
1.4
10.5
Food grains
1.3
8.5
Feed grains
0.5
7.5
Hay
0.3
0.5
Sources:
Marion (1986), Table 2.7, p. 15, and Helmberger, Campbell, and Dobson (1981), pp. 616-618.
ghost towns. Of those left farming, however, they are still overwhelmingly organized as
family farms.
Another important feature of agricultural organization is the extent to which producers are
vertically coordinated into processing, storage, and distribution. In recent years, especially
in the livestock industries, vertical coordination has increased. This coordination may be
accomplished through joint ownership or through long-term contracting. Table 2.8 shows
data on the extent of vertical coordination in various commodities using 1960 data from
Helmberger, Campbell, and Dobson (1981) and 1980 data from Marion (1986). It is clear
that the use of vertical coordination varies across products and is most important for such
perishable crops as fruit and sugar. Although the level of vertical integration has increased
over the time period, it is interesting to note how little the ranking has changed.
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In addition to the dominance of family farming, another interesting organizational feature
is the distribution of ownership and contracting for assets, including such nonland assets as
buildings and equipment. Farmers have the option to be the complete residual claimant of
an asset through ownership, but they may also opt for incomplete ownership through lease
contracts. While leasing of land is very common in modern agriculture, leasing of buildings
and equipment is rare; although quite recently there has been an increase in equipment
leasing. Table 2.9 shows this quite dramatically for British Columbia and Louisiana, where
equipment and building ownership accounts for 98-100 percent of the assets examined. The
