Table 2-4. Global seed sales by NAE based companies.
Source: UNCTAD, 2006.

countries in Western Europe are France, Germany the UK and Italy (Figure 2-7). Meat, beverages and dairy are the biggest sectors, comprising 20, 15 and 15% respectively of over EUR 600 billion production value in 2001. It is Eu­rope's leading industrial sector and third-largest industrial employer and concentration in the sector is relatively low (Table 2-5).
     Another striking feature of the food system in NAE is that the same firms appear in different sectors of the food system, from genetics to processing because of vertical inte­gration. While not a new term, or process, vertical integra­tion has accelerated rapidly in NAE since 1945. Mostly, this process combines the management (but historically owner­ship) of a series of stages in the food system. Vertical integra­tion leads to supply chain management, which when exer­cised in non-competitive markets resulting from horizontal integration, replaces the competitive market providing the coordinating function in a competitive system (Hildred and Pinto, 2002).
     We can look to NAE, particularly the US, to see some early examples of vertical integration, e.g., poultry. The poultry industry has now become the prototypical model of industrialized agriculture and is often referred to as a model of the structure that may come to characterize much of US farming in the future (Perry et al., 1999; Hendrickson et al., 2001). Before the 1950s, chickens were raised on more farms in more regions of the US than any other farm animal. The chicken farmer was supported by thousands of local hatcheries, feed mills and processors where chicks, feed and other supplies could be purchased and the birds could be sold. Following the WWII, large feed companies recognized the broiler industry's potential for growth and moved quick­ly into the production of broilers (Heffernan, 1998; Marti­nez, 1999; Ollinger et al., 2000). These companies began buying up hatcheries and developing relationships with re­tailers. By 1960, 286 firms were selling broilers (Heffernan, 1972) and the top four firms controlled 12% of the market. By 1998, only 52 firms remained and in 2007 the top four firms accounted for over 58% of the market (Hendrickson and Heffernan, 2007). Today, a typical broiler complex in­cludes breeder farms, hatcheries, feed mills, grow-out farms, processing plants and retail markets. Commercial feed firms became the major consolidators in the broiler industry, trav­eling out 25 to 30 miles in a circle from the processing plant to the growers' buildings (Heffernan, 1984). The geographi­cal layout is much the same today except the number of

Figure 2-7. EU-25 food and drink sector 2001, value of production (billion Euro). Source: USDA-FAS, 2005a

integrating firms and the number of processing facilities are greatly reduced. These firms have about 250 sets of pro­cessing facilities across the country producing broilers. Very few growers live in an area where two circles of competing integrating firms overlap. As a result, most growers live in places where they have access to only one integrating firm.
     Vertical integration has been manifested through the development of food system clusters or integrated food sup­ply chains; both terms connote a direct line of control for a firm from one stage of the food system to another (Barkema and Drabenstott, 1996; Drabenstott and Smith, 1996). In 1999 three emerging food system clusters appeared to be dominant forces in the food system from genetic material to food manufacturing (Heffernan et al., 1999; Hendrick­son and Heffernan 2002). These food chain clusters are still major entities in the agrifood system, but have significantly evolved, including mergers and divestments. Other strong firms remain that have likely formed, or will form, new clus­ters. It is important to note that much movement to reorga­nize supply chains in the early 21st century, particularly in the fruit and vegetable sector, has come from large, global retailers, all of whom are based in the NAE, especially in Europe.
     One form of vertical integration is the agricultural con­tract, manifested either as a production or marketing con­tract. In the US, agricultural contracting covers nearly 40% of the value of agricultural production, up from 11 % in 1969 (MacDonald and Korb, 2006). Production contracts exist when an integrating company retains ownership of the commodity as it moves through the chain, with growers re­ceiving a fee for providing labor and/or capital (Sommer et