A new report from the Council for Agricultural Science and Technology provides policymakers, community leaders and farmers with a landmark guide to help weigh the advantages and disadvantages of contract farming and other forms of vertical coordination in agriculture. The report, titled Vertical Coordination of Agriculture in Farming-Dependent Areas, analyzes how vertical coordination in the food chain can change rural communities that have farming-dependent economies.

The report documents that vertical coordination is increasing in the United States and will continue to expand in rural areas as farmers seek alliances with food processors and others to provide capital, technology and markets. As a result, farmers can lower risks and costs to produce more efficiently.

However, the practice is controversial because it can put traditional family farmers at a disadvantage to more integrated business structures that are typically large-scale operations. These integrated businesses have also posed environmental challenges, including waste disposal and odor issues resulting from the large number of animals often raised in concentrated areas.

According to the CAST report, a few communities in the Great Plains could potentially seize opportunities to attract value-added agricultural manufacturing through vertical coordination because their low rainfall and open spaces help mitigate waste management issues. However, no single formula works for every community to evaluate the pros and cons of vertical coordination.

“State and federal governments can assist in this decision-making process by establishing ground rules and regulations regarding the environment, building local leadership, and by providing information,” said report co-chair Cornelia Flora, director of the North Central Regional Center for Rural Development.

“The Cooperative Extension Service can help communities assemble information and develop procedures for sound decisions, including creating alternative integrated value chains based on farmer networks and cooperatives,” Flora added.

The report also addresses the role of electronic commerce in rural development. It concludes that e-commerce will at best only help rural communities catch up with technology already available to both urban and suburban communities. Rural communities will need to focus on social organization rather than technology alone.

Copies of Vertical Coordination of Agriculture in Farming-Dependent Areas are available for $25 from the Council for Agricultural Science and Technology, (515) 292-2125, cast@cast-science.org, http://www.cast-science.org