Horizontal Integration

Horizontal integration, an industrial business tactic utilized by agribusiness corporations, involves the consolidation of smaller companies that operated within the same sector or production level or that produced variations within the same product line in order to increase market share and decrease competition. It is also known as horizontal expansion, lateral expansion, or horizontal combination. Vertical integration is a related tactic in which a corporation seeks to dominate all aspects of production, from supply through distribution and retail. Horizontal integration can occur at any level of production or distribution. A narrow definition of horizontal integration would include those corporations that focus on a specific product, such as wheat, corn, chickens, or beef, while a broad definition would include those corporations that focus on a broader single sector, such as grains or meat. The end result of horizontal integration has been the reduction of the number of corporations operating within each sector of agricultural production and distribution.

Traditionally, U.S. agriculture was based on the small, self-sufficient family farm model in which individual farms supplied their own inputs and grew enough diversified agricultural products to support the family. Any surpluses were small and were sold or traded within the local community. This pattern began to change to a commercially based agricultural model with the advent of the Industrial Revolution in England and the United States in the mid-19th century. Growing urban, industrial populations increasingly relied on farmers to produce surplus food for the market. Consequently, the farms themselves became larger and developed into more mechanically based factory-style farms.