Vertical Integration and the South Dakota Farmer

Agriculture is undergoing some vast structural changes. Sometimes these changes are referred to as both a technical and an organizational revolution. These changes can be most readily seen in the way our methods of production and marketing are being organized, and in the tools with which we work. The technical revolution has been in process for many years, but in recent years its pace has increased. Technology has given us new or improved machines and equipment, improved crop varieties and livestock, and new or improved feeds and other farm production items. Most of this new technology in agriculture has increased production, saved labor, and increased the use of capital. The organizational revolution, which is now receiving most attention, involves farms as production and marketing units, and non-farm business units supplying production items and marketing services. These changes are best described· by the term Integration. Integration not only affects the marketing methods of farmers and ranchers, but also affects the organization of the farm business. Integration links the farm more closely with non-farm businesses. It is the result of fundamental economic changes occurring in agriculture and related industries today. It is not the cause of these changes. The major objectives of this circular are to describe the nature of integration, indicate the extent of current developments, show how it may affect the management of farms, and set forth some of the economic consequences associated with integration