Thursday 2 April 2015

Does vertical integration hurt famers?

Does vertical integration hurt famers?
Let's say: "farmers"?
And let's say a grocery chain buys the farm of a 90 year old couple whose family all are city folks, Doctors, Lawyers. The Old couple sells the farm and moves to sunny Florida. Were they helped or hurt?
A young farmer buys a farm, but doesn't sell out to the big grocery chain (vertical integrator.) He sells his produce on the open market and lives a happy life. I guess you could say that verticle integration deprives the young farmer of access to the market made up by the Vertical integrator. Why buy from him when they can buy from their own farm.
So, the independent farmer might have higher costs because he doesn't have economies of scale, so his production costs are higher; but he does have the psychic income of being his owqn boss and the opportunity to sell his farm later to a golf course or something.

No comments:

Post a Comment