Background 3 commentsupdate:Mar 9, 2016

Integrated thoughts

Recently I took part in a seminar on breeding and hatching, which was organised by Wageningen University in my home country, the Netherlands. Among the various topics covered, was one on the difference between integration models.

In the Netherlands, most farms (rearing, breeding and broiler growing) are individually, family owned farms. In most cases this also holds true for hatcheries, feed manufacturing and processing operations which are privately owned businesses. In other words, in this (horizontal) integration model everyone does his utmost to get the most out of their individual business. At the lowest possible expense of course.

In many other countries, the vertical integration model is common use. Everything is owned by one professional company. From sometimes even GPS, up till (further) processing and marketing the end product under their own brand name. Think about Betagro in Thailand, Al Watania in Saudi Arabia, Grupo Melo in Panama and Ariztia in Chile. Many more of such companies exist everywhere in the world.

Personally, I grew up on a (family owned) breeder farm. The Dutch model. And I have seen and experienced the efforts, and sometimes the struggle, my parents had to make to keep the farm moving on.. It was a modern farm with a substantial size in the mid-sixties. But not incidentally the times were tough. And there was no budget (and intention) to invest in the entire chain. And why should they? Did my parents need to invest in the quality of the chicks that were leaving the hatchery, in the next stage? Simply said, that was their responsibility. The hatchery owner had to do a good job on the incubation side. My father did all he could to supply good quality eggs. Using all his knowledge and skills. And using good input: parent stock, housing, feed, medication, whatever was needed. But he did not invest in something he was not rewarded for. Logical choice.

That's a long time ago. But the model still exists. And history has proved that this model has its advantages too. After all, everyone wants to get the best result out of their own business.

But certainly the vertical integration model has proved to be very efficient. In such companies, there will be no question whether or not breeders need to be vaccinated to obtain maternal immunity in their offspring. And feed will be formulated exactly according to the needs of that particular flock. Everything is integrated, with the aim of achieving the highest quality output possible at the lowest possible expense. And the best possible hygiene level, uniformity, logistics et cetera. Everything according to one standard. Something to learn from and an idea in this context came across during the seminar of Wageningen University. Why shouldn't individual farmers join forces and together set up a kind of vertical integration? Together strong and benefit from the choices that are made in common. Certainly a good idea and worth thinking about.


  • David Akinde

    Good thoughts Ad. Moreover vertical integrations don't have to be inflexible in business model. It can be flexible such that each composite unit may still function 'alone' to serve the open market, so that in times of sectoral stress, the group as a whole is insulate. Examples of this type include rainbow in south Africa and PHW in Germany.

  • winnie babirye

    Dear sir,am so glad to that interventation and sincerely integration is the best for quantity and productivity as well cost effective in minimising expenses.

  • Karna Bahadur Bohara

    Dear Ad Bal
    What a nice and fruitful idea of yours which totally match with mine one.
    Nepal is economically one of the poorest country in the world with more than 85 percent people live in remote rural ares.agriculture is main means of livelyhood for more than 65 percent of people. Unfortunately the country still depend on imports for feeding its people .
    Poverty, malnutrition and unemployment are major challenges of rural Nepal.
    Poultry production and marketing though growing under very no descriptive very traditional practices but seen to be potential for poverty alleviation ,reducing malnutrition and improving flood security but needs modernization.
    I developed a proposal to initiate a integration model of poultry production ,processing and marketing through common interest group of farming families of rural Nepal and forwarded to private sector investment of Netherlands for financial and technical support. Unfortunately and sadly They did not accepted the model project proposal in 2013.
    I believe that integration in food chain is essential and the model you mentioned is the best sustainable model to be suitable for majority of countries in the world .
    K B Bohara
    Valley poultry

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