What does vertical integration in agriculture refer to?

Vertical integration in agriculture refers to owning two or more sections of the supply chain, which means a single company controls multiple stages of production, processing, and distribution. This strategy allows a firm to streamline operations, reduce costs, and enhance efficiency by minimizing reliance on external suppliers and improving coordination between different stages of production.

For example, a vertically integrated agricultural business may engage in the cultivation of crops, processing those crops into food products, and then managing their distribution and sales directly to consumers or retailers. This tight control over the supply chain can lead to reduced costs, improved product quality, and better access to market information, ultimately contributing to a more resilient and competitive operation.

The other options do not accurately capture the essence of vertical integration. Dividing a farm into various sectors focuses on a horizontal approach rather than integrating different supply chain stages. Combining several farms into one location relates more to efficiency in land use, while expanding into unrelated markets does not reflect the notion of controlling multiple stages within the same industry supply chain.