Vertical integration in agribusiness. Is it a bargain?

Abstract

This paper aims to test whether vertical integrated farms show a significant higher economic performance when compared with those not integrated. The Italian Farm Accountancy Data Network was used, for the years 2008-2011, focusing on farms producing durum wheat. Empirically, a propensity score-matching model was implemented in an attempt to estimate average differences, in some farm performance indexes, including costs and profitability, between vertical integrated and non-integrated farms. The analysis on the effects of a vertical integration showed that supply chain integration increases farms' competiveness and profitability.)