EU Agro-Food Chain and Vertical Integration Potentiality: a Strategy for Diversification?

This work utilizes Leontief input-output tables to establish, through new appropriate indicators (the new Entry barriers and Invasion indices), the strategy pursued by some branches EU countries for diversifying production, enriching thus the range of their secondary products. Our attention is focused on EU countries strategic perspectives of diversification by vertical integration, regarding in particular the potentiality of the main Agrifood Chain branches: “Agriculture, hunting and related services” and “Food and beverages”. In this context, we deal with the backward and forward linkages that are the expression of Agriculture and Food vertical integration potentialities, through their secondary production, in the main field of competence (core business) of the other (for a total of € 55 billion). In this research, we observe some basic elements: a) EU Agriculture takes advantage from the opportunity to diversify itself by vertical integration in the field of competence of Food and beverage. So Agriculture will ensure higher incomes and vital outlets for its survival. Food industry entry barriers are also feeble and can be circumvented.; b) Food and beverages does not want or perhaps is not able to exploit the upstream integration potentiality with Agriculture due to the high entry barriers that the same Agriculture has built to isolate its core business (endogenous barriers) or that it suffers (exogenous ones). It is not uncommon that Food industry invests in foreign agriculture and becomes involved in intra and extra-EU relocation diversifying itself in a context of multinational vertical integration.